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Thomas Brunt -> RE: Sales People (11/11/2003 10:26:51)
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I don't have the answer for you, but I have some observations that may be of some value.
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I used to work in a large Web development company that had a complete sales staff. Those guys were nice, and they were able to fake some knowledge of Web development when they were talking to potential clients.
A little knowledge can be a bad thing, however. They were always trying to increase the size of the project to increase the size of their commission. That is a recipe for disaster in pretty much any Web project.
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I've been told by several different people who seem to be experts in the consulting industry that there are a lot of profitable consulting businesses with 7 or fewer employees, and there are a lot of profitable consulting businesses with over 100 employees. There are almost no profitable consulting businesses with more than 7 but fewer than 100 employees, however. The problem in that range is the ratio of billable to non billable employees.
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Based on what I have seen with my own business and a few other similar ones, it appears to me that a decision to add an employee or associate entails more of a commitment than may first be obvious.
A good salesperson should be able to bring in more business than you can handle by yourself. Maybe you can outsource that work or draw the line at just bringing on 1 more devoloper, but maybe not. Just 1 more developer or designer in the mix (outsourced or in-house) will bring with it a really amazing amount of communication and coordination issues, and you may find you need more than just 1 more developer or designer if your salesperson gets on a hot streak.
The logical next step is to hire an experienced project manager or become one yourself. You will probably start off by splitting your time between project management and developing, but that may become as problematic as splitting your time between sales and development. You will need more projects to keep a full time project manager busy and paid for. That may mean another sales person. It may also mean more developers and designers.
2 sales people can generate a lot of clerical issues. You will almost certianly need a secretary at that point.
The need for an extra person doesn't necessarily ever stop, but you need to either seriously plan for your growth to halt at a certain point, or you need to get some serious capital and prepare for some heavy losses while you gear up for the big time.
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Renaissance Interactive (my former employer) started as 4 college buddies. It grew past 7 employees very quickly and started loosing money even though sales soared. We were billing hundreds of thousands of dollars per month by the time I came on board. Renaissance was able to raise money to stay alive for a couple of years while it continued to add employees as fast as possible. It had no trouble attracting venture capital and raised $15 million. Then it could hire like crazy. But the Internet bubble burst. Sales slowed, but the overhead remained. It took about a year and a half to burn through the $15 million. The doors eventually closed.
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Like I said, no answers here -- sorry about that -- just maybe some interesting reading for someone thinking about growing a consulting business.
t
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