Sales is the lifeblood of startups. Getting a sales machine humming along is one of the most difficult things for an entrepreneur to do, especially if they haven’t done it before. Assuming the VP of Sales temptation was defeated and a few sales reps are on board delivering results, how do you know when to hire the next sales person?
Here are a few things to keep in mind when determining when to hire the next sales person:
- What percentage of sales reps are currently making quota? Typically, 60 – 80% of reps should be making quota for any given quarter once you have product/market fit. With higher quota attainment, you likely need more reps.
- What percentage of deals are from marketing-sourced leads vs sales-sourced leads? If sales-sourced leads are higher than 25%, you likely can support more reps.
- How fast is the market growing relative to the startup’s revenue? Markets that are growing faster can often support more sales reps.
There’s no magic formula for determining when it’s the right time to hire another sales person. Often, there will be diminishing marginal returns with each additional sales rep and it becomes clear when you have reached the limit.
What else? What are some other things to think about when determining if it’s time to hire the next sales person?