Hiring your First Sales Rep – The Financial Impact on your Business
Hiring your first sales representative is a big decision for any company. It can have consequences both good and bad so it’s important to know what your business stands to lose or gain, hypothetically, by taking such a step.
You may be considering hiring a sales rep because you want to find new customers, increase company profitability or simply grow the size of your company. If you’re currently undecided on the wisdom of hiring a sales rep, there are many things you’ll need to consider.
In this article, Maple Accountancy will give you the facts so you can make an informed decision.
Pessimism – could one bad apple spoil the whole bunch?
A recent UK survey found 27% of companies claim hiring the wrong sales rep leaves them out of pocket by over £50,000.
This is because there is a lot at stake when hiring your first sales representative. You’ll be spending time, effort, and money creating leads for your sales rep and if he or she can’t convert them into sales, it’s cost you in wages and missed opportunities.
There may be widespread effects on the rest of the company too. If your sole sales rep is struggling to hit the targets you’ve set them, then they will need to receive added support from other team members.
These helpful members of staff may spend a lot of time with the sales rep to no avail, impacting on their own performance and productivity.
Alternatively, if the sales rep has a bad attitude, the morale of your whole team can be severely impacted. No-one likes to come into work with someone they don’t like.
The damage that one inept and careless sales representative can do is substantial when they’re out in the field meeting new and existing customers. People buy people first and if your existing customers don’t buy your new rep, that’s bad enough. Even fewer prospective customers will be swayed by their charms.
You will need to put your new sales rep through training. If there is no one capable of sales training in the business you will need to get an outside trainer in. That’s a hassle and a cost. What if, after the sales training, that training does not translate into results?
Arguably the most substantial loss a company could suffer by hiring a bad sales rep is the loss of opportunities. Lost deals and customers can cause real harm, especially if you’re operating on tight margins. If it goes on for too long, the outcome doesn’t bear thinking about.
Optimism – talented sales rep will do wonders
Hire a skilled sales rep and your company could grow faster and be more profitable than you had predicted. With the help of a sales rep, you won’t need to go on the road – you can work on your business and not for your business. With this extra time, you can get back to being a businessperson, not a general do-it-all person with a nice job title. In fact, with the extra revenue they bring in, they can increase your revenue allowing you to grow the business.
Secondly, a good sales rep will not only strengthen relationships with previous clientele but also build relationships with new clients. They not only hit their targets but regularly but exceed them. They know how to position themselves, the company and the products well – they will quickly learn to recognise who their ideal customer is.
Although talented sales reps are in limited supply, there are things you can do to improve your chances of hiring one. And by doing this, the risk to your business is smaller.
During an interview, ask questions which only the right candidate would know the answer to. Such questions you might ask include ‘how much new revenue did you create in your previous job?’ and ‘how often did you hit your sales targets?’. Better still, ask them to bring in their three top payslips in the last 12 months.
Do you take the risk?
The bottom line is that sales representatives can come at a high cost but if you hire the right person, they will bring in new customers and increase order values across the company. However, as with anything in the world of business, things come with financial risks and employing a sales rep is no different.
Each company is different. Their teams of employees, the products they sell, and their financial strength and history. There is no ‘one size fits all’ so what may not work for one company may work well with yours.
If you’re looking to hire your first sales representative or if your business is in its early days, the risk associated with hiring a sales rep may be higher for you. On the other hand, it may be a risk you can’t afford to take.
If you are contemplating hiring a sales representative and want to talk with your accountant about how much the business can afford to pay them and the potential financial impact of them joining is, contact us today and let us help.
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