How To Hire Your First Sales Rep: A Salesperson Hiring Guide for Startups

“It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.”

– Steve Jobs

My initial attempt at bringing in a sales rep for my first startup was a total disaster.

Money was tight for a while, but after putting in some serious work for a few years, I thought it was high time to bring on a seasoned pro.

By that time, two key areas of the business, delivery and sales, had evolved from “trials and errors” and “figuring it out on the go” to what I would call “steady state”. We were getting a steady flow of leads, converting leads, and delivering to the client’s expectations, and revenue was stable (still tight, but we were managing).

I had made an effort to learn sales, from scratch.  I took courses, read several books, and experimented with techniques, making many mistakes. Though I was closing deals, we wanted to improve our profit margins, so I felt it was a good time to reach for larger deals and accounts. I needed someone who could open bigger doors.

The terms were straightforward, and the paycheck was on the generous side. There were no red flags (so we thought). But reality hit hard: for a painful 3 months, our new sales hire couldn’t close a single deal.

Not one.

It was a hard lesson learned, and it threw us off track for many months, took a toll on our budget, and pushed back projected revenue.

Follow these 10 crucial steps when you make your first hire, whether full-time or part-time, and you’ll avoid the mess I found myself in.

Before we dive in, if you haven’t hired someone yet, and are still weighing the decision to make a new hire for sales, read my article on when to hire a sales rep.

These 10 actions are important and save you thousands of dollars. According to many studies such as this, a bad hire can cost you between $17,000 and $240,000 on top of the employee’s earnings.

10 Actions for Hiring Your First Sales Rep for Your Startup

1. Clearly define the sales role

Your task is to explicitly lay out the expectations you have for the role and the salesperson. This is especially vital if they are referred from your network. Clarity wards off conflict and preserves relationships.

Specifically, ensure you:

• Specify their role:
  • Are they working the leads you’ve generated?
  • Are they generating their own leads?
  • Are they making introductions, the first call, pitching, negotiating, following up, or doing all of these tasks?
• Draw a line where their responsibility ends and yours or another’s begins. Will they own and drive the entire sales cycle, or is it a handoff back to you?

2. Only interview qualified sales candidates with a track record

When quick revenue is the game plan, hiring an inexperienced salesperson is a luxury you cannot afford.

Down the road, you might offer sales training to junior hires. But for now, make sure your candidate possesses sales skills and a proven track record. If needed, consider bringing in a friend versed in sales to help conduct candidate interviews. They will know the questions to ask to ferret out imposters and résumé padders.

3. Investigate the salesperson’s knowledge of your domain

Once you’ve confirmed a candidate’s overall sales experience, delve into their understanding of your sector and your company’s specialization. Ask whether they’ve dealt with companies similar in size to that of your typical client.

The more their experience aligns with your company, the better the chance they’ll succeed quickly.

If their experience isn’t a perfect match but you still see potential, be aware that they’ll need more ramp-up time to produce steady results.

For example, a salesperson adept at selling management coaching services to larger enterprises might face challenges when selling cybersecurity to SMBs.

4. Explore their background: did they work in startups or larger companies?

Consider the type of organizations your candidate has experience with. Were they part of a large corporation, or did they navigate through a series of startups and small businesses?

This distinction is vital. In big corporations, sales processes are often well-established. Salespeople benefit from support systems like CRMs and dedicated teams providing data and insights about leads, as well as abundant sales and marketing assets to aid the sales process. In contrast, smaller organizations with fewer resources might lack these advantages.

This is especially relevant if the sales candidate was only part of one stage of the process previously, such as closing or appointment setting, but you are asking them to do everything from prospecting to closing. They will need resources and guidance on the stages they are not familiar with. Without that support, they may hesitate, lag behind, and underperform in those areas, leading to fewer closed deals overall and feelings of frustration.

If they’ve had success at a big corporation, that may not guarantee success in a nascent business. Before making a hire, ensure the salesperson grasps the level of process and support available, and the sales and marketing resources they’ll need to create on their own.

A traditional corporate background doesn’t preclude them from consideration, but it should prompt you to explore how they feel about being more autonomous and taking on broader responsibilities than they may have been used to.

5. What Type of Salesperson Are They: Hunter or Gatherer?

In sales, there are two general divisions: that of hunting and that of gathering. Different organizations may use variations of these terms.

Hunters (or outside/outbound sales) are those who look for leads and try to get them interested in a conversation and turn them into customers. While gatherers (or inside/inbound sales, or customer success) are those who nurture existing accounts, keep customers, upsell, and cross-sell to them.

You must consider what kind of sales representative you’re looking for, assess if your candidate is a hunter or a gatherer, and if they align with your specific needs. Consider your own strengths or the strengths of the rest of the team. You might be great at cold calling but need someone with the knack to close well – or vice versa.

6. Gauge how the sales candidate feels about continuous learning

Even if your salesperson already holds specialized domain knowledge, as I mentioned earlier, nudge them to determine how they view continued learning. Do they already think they know enough, or are they open to expanding their skills and knowledge?

Once you make your hire, encourage them to invest time delving more into your industry and the specifics of your services. Invest some of your own time in aiding their learning process. Direct them to resources like online courses or YouTube videos, underscoring the significance of continuous learning to stay competitive and on top of their game.

7. Determine the type of contract and compensation: salary, commission, or something else

Even if the candidate is a friend, set up clear agreements. Outline the terms and conditions of their compensation, be it a fixed fee, a salary, or a commission.

The hiring options are vast – from part-time or commission-only setups to independent representatives and full-time hires.

For instance, you might kick off with a straightforward commission structure, like 10% of sales. However, it’s wise to research what types of compensation are typical in your area or line of business.

You might contemplate offering a base salary along with commission to show your commitment to their success.

8. Legal considerations for your first sales hire

Whoever you hire will gain extensive access to your business’s intellectual property, systems, and important contacts. Even if it’s someone you trust, clarity on what can and cannot be shared is essential.

For instance:

• Implement non-disclosure and non-compete agreements.
• Tackle lead ownership discussions.
• Address queries like commission distribution if the salesperson departs.

It’s critical to seek legal advice and establish a formal agreement, even for a 3-month trial. (See my resources on finding and working with attorneys).

9. Onboard the new recruit and provide relevant resources

Invest time in onboarding your new team member. It will save them time spent figuring things out on their own so they can hit the ground running.

Onboarding means getting them acquainted with the business model and plan, the ins and outs of your service, other team members, and all relevant resources.

Review and create all the tools, templates, messaging, and talking points necessary for the new hire to thrive in their role.

Since this is your first sales hire, if you don’t already have the process and relevant SOPs (standard operating procedures) documented, take the time to do this now so that onboarding more members to your growing sales team will be more streamlined in the future.

10. Set performance expectations for your first salesperson

While assessing performance might be challenging for certain roles within the company, a salesperson’s role is straightforward: bring in paying clients.

• Explicitly outline target expectations for the steps and milestones that lead to gaining paying clients. This includes specifying the number of:
  • Outbound sales calls and emails
  • In-person or online pitches and demos
  • Proposals sent
  • Any other relevant metrics

Then continually gauge their performance against these defined metrics. Even top performers benefit from evaluations, and these metrics serve as a helpful tool to keep them on track.

Bonus Tip: Hire Slow, Fire Fast

You have a lot to do in the beginning of the business. You’re wearing so many hats; you just want to get someone hired to take some of the pressure off.

I made another hiring decision that didn’t go so well. All I needed to see was “Insert Big Consultancy or Big company name” on the person’s resume, and I couldn’t say yes fast enough. It never occurred to me to wonder why someone with such a solid resume would want to work for my relatively small company. He didn’t lie, if that’s what you’re thinking. He was let go for a series of odd behaviors as I soon learned.

It’s easier to hire someone than it is to let them go.

Because for one, when you’re hiring the first person, you’re investing time and energy into their training. If they don’t work out, you can’t get that time back.

Second, a bad hire can do significant damage to the business, your client relationships, and your systems.

No matter how desperate you are to find a person to work with, especially in a tight job market where quality candidates can be scarce, make sure you diligently qualify each candidate. Hold multiple interviews or calls, vet their resume claims, and actually call their references (28% of employers don’t perform this critical action).

Once they’re hired, stick to a probationary period of 90 to 180 days. I understand life happens. A great hire could have a family emergency or get ill, so don’t rate them exclusively on time at work. Use judgment and look for red flags such as constantly avoiding certain tasks, acting disrespectfully to you or your prospects/clients, and taking far too long to accomplish a task or project.

Address problematic behaviors immediately and directly. Coach them if they are not understanding a process, or need to be pointed in the right direction. Develop a personal improvement plan (PIP) with clear and time-bound improvement goals. However, if they make little attempt to improve, then you have to let go of them.

Firing someone is difficult. One, you are affecting their income. Two, you fall into the trap of sunk cost bias – you are hesitant to let all of the time invested in training go to waste. Let it go. Having the wrong or mismatched person in a position will cost you more over the long term. What’s worse, if you have other team members, not eliminating a problem person quickly hurts morale, as reported by 68% of employers.

Take the time to find and vet the best candidate. If they don’t perform as expected, then cut your losses sooner rather than later.

Key Takeaways and Action Items to Hire Your First Salesperson

I trust the guidelines shared in this article will assist you in the process of hiring your first salesperson. Here’s a quick summary:

• Financial Impact: A bad hire can cost $17,000 to $240,000, excluding the employee’s first-year earnings.
• Key steps for hiring and onboarding:
  • Clearly define the sales role with explicit expectations.
  • Invest time in onboarding to expedite their integration.
  • Interview only qualified sales candidates for quick revenue.
  • Investigate the candidate’s sales knowledge in the specific domain.
  • Determine the contract type and compensation structure.
  • Address legal considerations, including non-disclosure and non-compete agreements.
  • Set clear performance expectations using defined metrics.
  • Assess the candidate’s attitude toward continuous learning.
  • Explore the candidate’s background, considering experience in startups or traditional corporations.
  • Identify the type of salesperson: Hunter (leads generation) or Gatherer (account nurturing).

Action Items For Making Your First Hire:

• Write out in a few paragraphs what your full expectations of this role will be, as well as its limitations. What do you expect of your hire?
• How do you plan to compensate your new sales rep? Commission only (and how much)? Base salary and benefits plus commission? A share of equity? Something else?
• Using the information in this article, think of questions you can ask and/or people who can help you conduct interviews.