Why do I need to hire a Fractional Sales Leader?

The Australian Bureau of Statistics shows there were 2.6M businesses actively trading in Australia for FY22 with 19.7% new that year. There was a 2.4% increase for businesses employing 1-4 employees, a 3% increase for those employing 5-19 employees and a 5.9% increases for businesses in the 20-199 employee range.

The US Bureau of Statistics and the Census Bureau report at total of 8M businesses, with 6M having 20 employees or less. They report a 23% increase in new business application from 2020 to 2021. 2022 looks like a similar increase.

There is more of a drive than ever to be involved in, or better still, to set up your “startup”. There are plenty of people with a crazy idea that they can change the world. Go for it!

In the early stages its all about product dev (MVP). Finally, sales come from the Founder’s ability to convince others that this is world changing. Sales are driven through passion and a focus on “why” this will change the world. You get a few early adopters, and you think “this is great, I’m changing the world (or at least my part of it) and our investors will be happy (including you). Now to scale my baby…we need sales reps and maybe a sales manager. Wow – they’re expensive!".

This is where I defer to the superior insights on hiring sales people...step in Edward Mandla. For over 20 years, Edward's business, Mandlason Search, has partnered with CEOs, Vice Presidents and Boards to identify and secure critical talent needed to grow, scale and outplay competitors in today’s high tech world. In addition, Edward is part of AltoPartners, the eight largest Search firm in the world and he sits on 10 tech boards. He lives a life of remuneration evaluation and incentive plan creation.

“In the last three years, the acceleration of tech salaries has been stunning and salespeople have been big winners. In SaaS, to a degree the US has led a remuneration philosophy that it doesn't matter what you pay because the ACV deals that are won have a 93% success rate of being 7+ year customers. So paying $500K for $1M ARR is in their eyes a good deal.

"When we headhunt enterprise SaaS salespeople today and mention remuneration around $400K on a 50/50 base/commission plan, we often elicit a yawn. What I’d like to emphasise is that my team and I don’t tell people what you are paying. We report back what they are earning. That way, we can make sound decisions, and you’ll never overpay. If we can make a saving, we will.”

Edward is also the author of one of our favourite phrases “Tech Founders hire great sales people and leave them to fail”. This is because there is no sales framework in which to survive then thrive. The Founder has no experience in building and managing a high performance sales team. OK, so now you need to hire a sales leader on top of the sales rep. More cost. Wrong mindset...you should think "what is the best way I can invest in the sales engine?".

Time also becomes a major hurdle for Founders as they start to get some success in their startup. The Founder has led the product development team and driven new business.  The demands on the Founder's time becomes a real problem at this stage.  Sales reps are hired, which can be hit or miss.  The leader of the sales team by default is the Founder.  So the new sales reps hired to try to help with removing some time responsibilities for the Founder, end up costing more time as they now have to manage more people.  And unlike product development, the Founder does not have the Sales Leadership experience required to manage the team.  Help is needed, including establishing a proven sales framework.

Our advice to investors and Founders at that stage of your growth journey is to hire a Fractional Sales Leader to lead your sales growth. A Fractional Sales Leader brings 20 years sales leadership experience, a proven sales framework (for us this is PAMICE/Value) and mentoring for the sales team members. The cost-benefit analysis of a fractional sales leader at that stage of you business is proven. In short you have $300-500K to spend on a sales manager, or spend one third to one half on a Factional Sales Leader, and spend the rest on a sales rep.

With predictable, sustainable results comes increased valuation and investment opportunities. We’ve had one Founder tell us their valuation increased simply because of the sales framework we had put in place.

That's why you need a Fractional Sales Leader.