When is the right time for a VP of Sales?

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To transition from founder led sales businesses need to build a repeatable sales motion. 

And in order to do this, founders need to put in place the right sales team. But where should you start? AE, VP of Sales, or somewhere in between? 

Many founders I speak to don’t understand the nuances between the different sales titles. It’s not easy! In terms of sales leadership, you have Sales Directors, Commercial Directors, Heads of Sales, VPs of Sales, and CROs. And they all do different things. 

Let’s focus on the VP of Sales role. This is an executive level senior leadership team member that is going to come in and help build a repeatable sales process. 

The first hire

From a VCs perspective, you want to get to a point as quickly as possible where you are in a position to transition from founder led sales. But what should the first commercial hire be? 

For many business, this depends on:

  • Average Contract Value, 
  • Annual Recurring Revenue
  • Stage of the business
  • Funding raised

When I speak to seed stage businesses, it’s typically more effective for them to hire a founding Account Executive than a VP of Sales because they need someone to come in and be really gritty, roll their sleeves up, and get some of those early sales in by working alongside the founder. That’s someone in the £60k – £80k salary range. And they’ll get in the weeds and get sales moving.  

A VP of Sales at this point just doesn’t make sense because there’s so much that you haven’t figured out and you just don’t accurately know the type of profile you need at that stage. My advice to VCs and founders is to hot hire a VP of Sales until you’re delivering late hundreds of thousands or maybe even a million pounds of ARR.  

When to hire a VP of sales

Once a business hits £1m ARR, they need a VP of Sales because they now have repeatability. 

A VP of Sales will come in and build a repeatable sales motion and to do that they’re going to need to build a team around them. They’ve probably not been at the coal face of sales . They’re going to want to come in and build a team around them. To have an environment that’s going to be suitable for a VP of Sales you need to have real repeatability around customers that have bought your product or service for exactly the same reason and use case. And when you interview customers, they’re telling you that they’re using the product for exactly the same reasons. That’s what repeatability looks like. And that’s what a VP of Sales can deliver growth against.

Justifying the investment

A VP of Sales can be looking for anything around £250k. So your business needs to be ready to pay someone 250k – and in order to do that, you’ll need a multiple of their on target earnings as their targets that they would need to have a seven figure target to warrant that.

So if you don’t have repeatability or you cant sustain that type of growth, you’re just not ready for a VP of Sales and and you’ll end up firing someone because there’ll be just an expensive cost. Or they’ll leave because they can’t earn their commission. Both of which come with a huge opportunity cost that you want to avoid.

Slowing down

From a VC perspective, they’re well-equipped to advise startup founders on when to pull the trigger. And more often that not, their job is the slow the process down. To test the hypothesis on more junior people. As a result, when you bring in people at VP level, you have a seamless process, market opportunity, cash, technology and infrastructure for them to be a success. Businesses that have all of this are in a much better position to attract the very best talent. 

What you want in a VP of sales

One of the key things to look for in a VP of Sales is someone that has been at the stage that you’re at, that experienced growth through the stage that you’re at, and importantly, enjoys the stage that you’re at. 

It sounds basic, but we see it all the time. A company that is at £1m ARR wants to headhunt the VP of Sales from a competitor delivering £20m ARR. But the reality is that the role in the competitor’s organisation is completely different to the role in yours. 

Look for someone walk through in detail as to what they would do at the stage that you’re at. Someone that has done that stage and someone that is really passionate and really enjoys that stage, because it’s not easy and it’s not for everyone. The easier option could be to join a slightly more mature company, and just plug and play. But at this stage, you still want someone with a bit of hustle and entrepreneurial spirit. 

This is the person that’s going to be at events, running webinars, and building partnerships for your business. It is an incredibly really rounded role. 

And when it comes to assessing the best candidate, the most effective way is with a comprehensive interview process. At final stage, a competency based task with people from the business and VC together works best to not only ensure alignment, but to best assess the ideal candidate. 

Hiring a VP of sales too soon

Hiring a VP of Sales too soon just won’t work. You’ll just be burning a monthly cost. Because of where you business will be, you’ll end up trying to make this person an individual contributor – which will make them an expensive individual contributor. And you’ll have someone that doesn’t want to be an individual contributor. 

They’re a VP of sales because they’re good at coaching, mentoring, building repeatability, and using and implementing tools. But you’ll end up just using their experience to try and force deals and make deals happen quicker – for which you are much better off with an Account Executive. 

Hiring a VP of Sales too late

If you hold off too long you’ll have a a team that’s drowning and stretched, you’ll inevitably slow your growth down. 

I’m working with a business now that has left it too late and you can see that by looking aty their numbers over the last 18 months. Their growth has slowed because they’ve got a team of five BDMs and no sales leader. They’re delivering £2m ARR and had a funding round, but there’s no structure and no process – and they are leaving a large amount of revenue on the table. 

There comes a point where the founding account executive is be great at knocking on doors and being scrappy but once you hit roughly £1m ARR you really need to double down, implement structure, build, build a playbook, build the repeatability. Because that’s what delivers continuous growth

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