The transition from founder-led to a dedicated sales team is a critical milestone for any early-stage business states Mitul Ruparelia, Founder and Principal of Citius Partners.
Building and managing a successful sales team can be a daunting task, but with proper planning and execution, it can be greatly rewarding.
In theory, making the transition should occur after validating the product market fit and backed up by sales and a qualified pipeline. In practice, however, it often happens before these foundational steps are complete, overridden by early enthusiasm and apparent market success. Untested enthusiasm has consequences.
Studies show that up to 80% of software businesses fail or underperform in the first five years for three simple reasons:
1) Lack of product market fit
2) Poor execution from sales and marketing
3) Inexperienced leadership
Of course, simple reasons do not always equal simple solutions. Given the current state of the economy, it’s inevitable that more businesses will need help to survive and thrive. (If that's you, take a look at our piece on building economic resilience.)
It’s worth remembering the words of Albert Einstein: “In the midst of every crisis, there is always an opportunity.” So, let’s look at how to avoid those common mistakes founders make when building a sales team.
Leading a high-performance sales team
Assuming you’ve validated your product market fit and demand, how do you build a powerful, high-performance sales team?
By definition, effective founders are driven, passionate and authentic. That's why they chose to build a business in the first place. And it's also why – in that moment of transition to a dedicated sales team – we often see the founder remaining engaged.
After all, founders are typically the ones doing all the selling. So, it’s understandable that they’re eager for a new sales team to share their drive and enthusiasm. This is why we so often see newly hired sales teams reporting directly to the founder or CEO.
It makes sense, except for one thing: drive and enthusiasm alone do not necessarily qualify someone for leading a professional sales team. That requires a specific skill set.
One CEO we worked with had all the drive and enthusiasm anyone could ask for but didn’t have the commercial experience to guide his sales team properly.
As a result, the sales process lacked structure and strategy, with sales representatives trying to engage anyone and everyone. This is a classic sales mistake that negatively impacted their ability to scale. You can’t boil the ocean; you can’t take on too much and expect success. You must remain focused.
The CEO finally recognised the issue and sought to fix it by appointing a dedicated sales leader – someone who could spearhead the sales organisation and take the company to the next level. He wanted someone with industry knowledge who could lead the team and sell – at least until the company had a larger sales force.
Naturally, the CEO decided it would be easier to promote an existing sales executive than to explore external talent. This was his second mistake.
On paper, the chosen sales executive looked like a strong candidate. He was a high performer, having worked his way up to become a senior account executive. It was the obvious choice - or so it seemed.
But nine months later, the business still lacked strategy, and was no closer to its sales growth target. In fact, the sales performance was deteriorating. The expectation was that their new sales leader would build the go-to-market strategy and lead the revenue growth that would help the company achieve Series B funding. In reality, he was operating more as a player-coach, managing the team while leading some of the larger opportunities.
In addition to the worsening overall performance, the anxious sales leader was himself closing less business. This was a classic case of The Peter Principle, the idea that a competent individual is promoted until they finally fail. In other words, they rise to their level of incompetence.
In this case, the sales leader didn't have the experience and skills required to do what was expected and was therefore failing. We were asked to step in and help him (and the business) get back on track.
We began by coaching him through the must-win deals, then helped build an operating plan and go-to-market strategy. As the business picked up momentum, he regained his confidence. In turn, the CEO, founder, and investors finally started to see the growth they expected. They were lucky because they had the runway to fix the problem. Many early-stage businesses do not.
A recent study by Scalewise indicates that hiring the wrong sales leader can cost a business 18 months. This is typically the time it takes to hire someone new, bed them into an organisation, realise the mistake, then remove and replace them.
So, how do we avoid making such a common mistake? How should we hire or promote a sales leader?
Here are nine steps to help make the transition from founder-led to sales team smoother and successful:
1. Recognise your top performers and high-potential sales representatives
Ideally, this should be done with your leadership team. The goal is to identify where your team needs help and where there is potential to grow or promote.
2. Align activities with the company’s mission, goals, and values
It is not enough for a business to have a strategic plan and objectives. Everyone must understand and align their work to ‘the plan’.
3. Create measurable, performance-based expectations
Having SMART goals (specific, measurable, achievable, relevant, and time-bound) removes ambiguity and makes progress easy to track and support.
4. Develop support plans for your sales representatives and sales leaders
These should actively guide the team and build the skills and assistance they need to fulfil, exceed, and grow their career within the company.
5. Regularly meet, review and coach
Everyone should be open to being coached. Just as CEOs have Boards, your sales reps and leadership will need guidance to perform at the highest level. If you can’t provide it (as in the case above), seek outside expertise.
6. Trial promising candidates
If you have an internal candidate that seems right for the role, ask them to "do the job before they can have it". Allowing someone to demonstrate their capability before the official promotion can be a risk-free way for you and them.
7. Promote slowly
Make sure you benchmark external candidates before promoting from within. Outside hires often bring diverse thinking and experience – and can be the key to driving real change. Consider a growth plan to help promising sales reps advance their career within the business.
8. Take a 360-degree view
Once you have a candidate in mind, seek the opinion and guidance of other senior stakeholders. Does the individual have the right experience, expertise, and expectations? Will they fit the culture? Can they lead the team? But equally, don’t be indecisive – if you cannot reach a consensus, then act on facts.
9. Consider an interim or fractional Chief Revenue Officer
Explore hiring someone for a shorter-term engagement. This could be a faster way to jumpstart the engine and give you the time you need to hire a permanent candidate.
While these steps may seem like common sense, the reality is that these practices are not as widely employed as you might expect.
Transitioning from founder-led to sales team doesn’t have to be difficult. These nine steps will equip you with the right tools and strategies to make the switch smoothly.