Grow Quickly vs. Grow Responsibly
Congratulations! You've just raised a nice big round of funding. Now what? Time to grow, but how? For some, the focus for so many months, the goal for so many months, has been raising capital. So once you get there, panic can set in because you haven't done much planning for what happens next. You get across the finish line you and then realize that, in fact, you're actually at the starting line of another marathon. A lot of people associate the growth of the business with one specific role: sales. And so, with that in mind, the first thing many companies will do is write up a job description and start posting sales openings on every job board around. More salespeople = more sales, right? To borrow a quote from Lee Corso, "Not so fast, my friend!"
The truth of the matter is that simply adding headcount in the sales department does not equate to revenue growth. The operational foundation of the business must be sound before adding stress to the structure. Even if your sales metrics are sound in terms of CAC, LTV, etc., you may be setting yourself up for long term failure if the pressure to grow quickly outweighs the need to grow responsibly. As you add inefficiencies to the sales process those same important metrics will begin to deteriorate. This is why it's so important to understand your companies readiness for growth before going out into the talent market and advertising for sales openings.
Before making your first sales hire, you have to make sure your house is in order. You don't want to have guests over until it's cleaned up. Ask yourself whether you are bringing someone into an environment where they are set up to succeed. The sales department does not operate in a silo. The department relies on every other department in order to hit their revenue numbers. Products must be functional, marketing must have meaningful content, finance must be set up to bill and collect efficiently, etc. Having a really good sales team will highlight inefficiencies throughout the business. You'll never completely optimize the sales function but making sure you take care of the big things is critically important to the long term success for the sales team.
On top of relying on every other department in the business, within the sales department itself, there are several things that should be in place before you start adding to the team. What are the specific roles needed to fill out your team, how are those individual roles compensated, what technology will be used, and what kind of culture are you trying to create? These are just a few of the questions that need to be answered before aggressively adding to your sales team.
So what happens when you invite guests over before your house is in order? Well, the first one or two guests will either clean up on your behalf (keep in mind, they don't know where you keep the cleaner) or they won't stay at your party very long. The more time a salesperson is trying to fix broken processes, the less time they spend having conversations with prospects and closing business. If they spend half their time dealing with an internal struggle, you can expect them to achieve half their quota. If this problem isn't identified, the salespeople turnover, new talent is brought in, and the same problem occurs. If this cycle repeats even just once, you are looking at significant underperformance and a down round the next time capital is raised.
You have to understand where your business is currently to make the right hire. Do you need a salesperson or do you need a sales leader? If you've done your homework and gotten your house in order, you can hire a few salespeople to go out and build pipeline and close business. Then once you've grown, you can bring in a sales leader to further optimize and grow. Otherwise, you'll need a more senior resource that can build pipeline, close business, and develop processes to grow upon all at the same time. These are expensive and hard to find.
In any case, having a strategic plan for growth tends to be something that seemingly gets tossed aside after capital is raised. But, in reality, it is the most meaningful way to spend that newly raised money. Getting your growth plan right and executing on it effectively the first time can save you quarters or even years of stunted growth. Spend the proper time and money to understand where you are, where you are going, and how you are going to get there.