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B2B Sales

High costs are killing the 'in-house' sales team for SMB's

Everyone knows that cash-flow is the ‘life-blood’ of every business.....as they say, “revenue is vanity, profit is sanity, but cash is king”.


The above is especially true for Start-Ups and small-medium businesses (SMB's) where cash-flow and access to working capital often mean the difference between business survival and bankruptcy. I now spend practically all of time working with Start-Up’s and SMB’s and business owners tell me that they are continuously worried about their ability to execute an effective sales strategy. These same owners rarely have the foggiest idea about how to transition their businesses to the new customer-pull sales models that are now proliferating in the Age of the Customer, and this post will highlight why the traditional approach to sales execution (for SMB's) is gradually dying:

Start-Ups need the following: 

  1. Time to Revenue: The biggest challenge you face in a Start-Up is acquiring those critical early customers who can serve as both a funding source for future development and importantly, a real-life focus group for that important feedback loop which then drives product pivots and business adjustments. Securing these important early cash flows is a race against time that most Start-Up's lose
  2. Demonstrated Sales Capability: When raising capital (debt or equity), Start-Up’s often require a demonstrable sales capability as part of the capital raising criteria. Having a well-defined product-market fit is great, but most investors need to see clear evidence of a dedicated sales function that will focus on driving sales. Savvy investors may also want to see that you can sell your widget into a foreign market because nearly everyone can find a few friendly early adopters in their home-local markets.
  3. Lowering Fixed Overheads: Being able to shift fixed-costs to variable costs is vitally important nowadays to give owners the flexibility and agility that they require. With increased competition and decreasing margins (generally speaking) combined with ‘in-house’ sales and marketing still making up the largest component of the cost of customer acquisition (CoCA), owners must find ways to reduce the risks associated with growing fixed costs too far ahead of the top-line revenue growth curve.
  4. Sales Best Practices: SMB’s need to be able to rapidly change direction and course correct when needed. Being stuck with a cumbersome and costly in-house sales function often hinders change, and if you have an old school sales approach that treats prospective clients like it's still 1990, then this will ultimately pose a real threat to your brand, reputation and business success in 2017. But how does an ultra busy owner ever find out what sales best practices really looks like?

Common Mistakes:

Small business owners take major risks when it comes to developing their own in house sales function. 

People in the wrong roles: owners too often resort to doing the sales themselves or they leverage a friend of a friend who’s not a specialist sales person. Business owners often don’t know where to start when it comes to identifying and hiring professional B2B sales people so they just muddle along thinking that “I can do sales – how hard can it be?”. And it’s these early stages when a business can LEAST afford to mess up on sales execution. Often the owners/founders either don't have the expertise or it becomes an opportunity cost where they could be spending their time more wisely in other activities.

Culture: The DNA of your first hires will set the culture for your entire business, and Start-Ups nearly always get those initial sales hires wrong due to misaligned expectations (yes, that old chestnut). Owners often make the mistake of over-selling their business to get the sales person on board, and the sales person often has no concept of what it’s really like to work inside a chaotic start-up where you must ‘build the plane as you are flying it'.

White Knight Syndrome: owners mistakenly believe that hiring a sales person will magically solve the problem of not enough sales.....as if a white knight has just ridden in to town to save the day. When owners make a sales hire and then take a ‘set & forget’ approach they have failed to recognize that nearly all sales of complex (or new) solutions are nearly always the result of a team effort. Rarely does a sales person do it all on their own…especially not in a Start-Up or SMB scenario where increasingly risk averse buyers need added reassurance before they will ever make a purchase decision.

The Sales Leader: Owners often fall for that old trap of simply promoting the best sales person that they had into the sales leader role which has two detrimental effects: a) now the best sales person has been removed, slowing sales growth, and b) the newly appointed sales leader is on a sure-fire path to failure because he/she has no experience in leadership. Compounding this issue is the fact that he/she often reports directly to the ‘owner’ meaning that the sales leader usually gets zero coaching or mentoring around sales because their direct manager has no idea where to start giving that advice – it’s classic blind leading the blind, and I see (pardon the pun) this all the time. 

Making mistakes in sales hiring is par for the course, but the single most important trick to managing a successful Start-Up or SMB is being able to make enough mistakes before you run out of money. With the average B2B sales tenure now as low as 16.8 months the legacy approach to building, managing and maintaining an in-house sales function is now being called into question, and not before time. SMB’s and Start-Up’s simply cannot mitigate the risks that this old approach creates for their business, especially when you consider that most Start-Ups only have a certain amount of runway (circa 20 months) before they either take off, or hit the wall. 

Given this added layer of time pressure for SMB's there must be a better way to reduce the risks outlined above…and now there is:

Against the backdrop of the On-Demand Economy, SalesTribe has been established to help Start-Ups and SMB’s understand exactly what sales best practices currently looks like, and how you can bridge the gap with outsourced sales execution, allowing your sales capability to be flexed up and down as your business needs change.

SalesTribe offers SMB's a new way to accelerate sales to help win those critical early customers and build important early cash flows, without all of the risks of running a costly in-house sales team.

Register at SalesTribe today, and ask us about our ‘free sales assessment’ to see if SalesTribe can assist your small business growth. www.salestribe.com

By Graham Hawkins