Avoid common mistakes when building a sales team

It’s a critical milestone for any early-stage business — the moment that they transition from ‘founder-led sales’ to a dedicated sales team.

In theory, this should only happen after product market fit has been validated and backed up by sales and a qualified pipeline. In practice, it often occurs before these foundational steps are complete, overridden by early enthusiasm and apparent market success.

But 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.

• Lack of product-market fit
• Poor execution from sales and marketing
• Inexperienced leadership

Of course, simple reasons do not always equal simple solutions. Given the current state of the economy, it is inevitable that more businesses will struggle to survive and thrive. (If that’s you, take a look at our piece on building economic resilience.)

For the rest of us, it’s worth bearing in mind the words of Einstein – in the midst of every crisis there is always an opportunity. Let’s look at how to avoid your business becoming another statistic.

Leading a high-performance sales team

Assuming you have validated your product market fit and demand, how do you build a powerful, high-performance sales team?

I’ll cover how to recruit and grow a sales team in a future article, but here I want to focus on the leadership challenge.

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 intimately engaged.

It feels obvious. Founders have usually done all the selling so far. They naturally want 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.

Passion, drive and authenticity alone do not necessarily qualify someone for leading a professional sales team. That requires a specific skill set.

In a typical case, one CEO we worked with had all the positive traits described above, but lacked the commercial experience to properly guide his sales team.

The result was a sales process that lacked structure and strategy, with sales reps attempting to engage anyone and everyone. This is a classic sales mistake and naturally impacted their ability to scale. (You can’t boil the ocean. Successful businesses must learn to focus.)

In time, the CEO recognised the issue and sought to fix it by appointing a dedicated sales leader — someone that could spearhead the sales organisation and take the company to the next level. He wanted someone with industry knowledge who could both lead the team and sell — at least until the company had a larger sales force.

For these reasons, he decided it would be easier to promote an existing sales executive than explore external talent.

This was the CEO’s second mistake.

On paper, the chosen sales rep looked like a strong candidate. He was a high performer, having progressed to becoming a senior account executive.

It seemed like the obvious choice. But nine months later, the business still lacked strategy and was no closer to its sales growth target. The sales performance was deteriorating. The expectation was that their new sales leader would build the GTM 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 lacked the experience and skill set required to do what was expected, and was consequently failing.

That’s when 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 out an operating plan and GTM 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.

But 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 the time it typically takes to hire someone new, bed them into an organisation, realise the mistake, and then remove and replace them.

So, how do we avoid making this common mistake? How should we hire or promote a sales leader?

(If any of these steps sounds like common sense, I can tell you that they are not nearly as common as you might expect.)

What next?

At Citius Partners, we can support you scale and grow your sales team with our hands-on expertise: fractional or interim chief revenue officer (CRO).

Do you have any specific challenges you face? Contact us.

About Mitul Ruparelia

Mitul Ruparelia is a Managing Partner of Fortius Partners, a growth transformation partner for private equity and venture capital backed businesses. He has over 20 years of growing profitable, sustainable business units, defining strategy and leading sales, marketing, product, innovation, finance, raising investment and people management for established, underperforming, and scale-up businesses. He has helped companies scale to valuations of over $1 billion.