How to Build a Sales Process Before You Scale Your Team (Ask Jeb)

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0:44Describing my experience over the past few years. So I had a business and I tried to hire those folks and I just hired anything breathing. I just wanted a warm body, so I had like three salespeople. I went through them real quick. It cost me a lot of money, so right now I'm just starting from scratch again. One thing I did learn was the sales process as well has to be in place because I was the sole salesperson before. So trying to impart that knowledge real time without documenting how it's in place kind of screwed me over, I guess, basically. So the question is, you know, what's the best way to kind of put together that process, you know, where you can bring in someone in and they actually know what to do, how to do it, kind of measurable things to build on?

1:22You're describing a major problem with entrepreneurs who are trying to ramp up a sales team. I'm going to give you three basic stages that we run into as business owners. And this can happen if you work for a small company and you're responsible for ramping things up. But it begins with the entree seller. You come in, like you're the best salesperson, you're starting the company, you can sell everything, and you're cruising. You get to the point where you are getting into what the rollercoaster phase. The rollercoaster phase is that you're selling so much that you can't service what you're selling.

1:52So you switch to being the customer service person and managing the process person and managing the business person. And then your pipeline dips and then you need more. So now all of a sudden you're back to selling and you realize after a while it's a really terrible way to live. And then you move into the building phase, which is what you did. And the biggest mistake in the building phase is that we shift into the building phase. I'm going to build a sales force. You're desperate and you don't have any infrastructure for it all. Like I have no process for it. And that's because you're in the roller coaster phase.

2:21Like in the rollercoaster phase, at the bottom of the rollercoaster, you're desperately trying to get new revenue in because you need cash flow. And at the same time, you recognize that this is unsustainable. So you just hire people and you throw them at the problem. The only way to make this work, and this is terribly painful, is that you have to block time, probably the weekends. And you're going to have to do this over a month where you have to walk through and go through, how do I do this? And this would be like, if anybody's read my book, Sells EQ, hardest book I wrote. It was just awful.

2:51It was excruciating because it was my opus on selling and it required me to get out of my head. I just know how to do it and to build it out into a system that other people could consume. That's what you have to do. And really the place to do that is before you get into the roller coaster phase. You've got breathing room and you're starting to sell. Now, I'm doing that right now with our digital learning solutions group. So to give you an example, the SalesGrav University product, which is for individuals, it's for small teams, and we have it for large teams as well who integrate this into their LMSs.

3:24And we started this off in like 2019, and it's now a multi-million dollar business. And I've just basically done this through brute force. Now we have to scale up a team. What we've done is we've stopped. The first thing I did was hire a leader for the team. The next thing we're doing is that leader is doing what I've done, but they're doing it through a separate lens and they are documenting the process. And we're talking about it every day. How does this happen? It's also like with coaching. Walk me through your process. So I'm figuring this out and we're documenting it because what we've got to do, Yemi, is when we bring people in.

4:02And by the way, one of the mistakes I made this year, the$45 ,000 mistake was exactly what you did. I'm like running. I'm like, I got to grow this thing. I got to go. I'm tired trying to manage everything in the process. Our training and consulting solutions is going great. So I bring in somebody, throw them at the problem, and then I move on to the next thing. Didn't work. But what I learned from it is exactly what we're talking about now. What I learned from it is that if I don't get a leader and don't get a process in place, we're going to have a problem. Now, if I was a sole person doing all the selling, I would do this on my own.

4:33I just got a much larger company to run. So this person is step by step by step by step documenting exactly what we do. What's our sales process? How many calls do we have? What are the objections that we get? Everything. And then we're going to bring our first person in and put them into that system. And what that allows us to do is tell very, very quickly whether someone can succeed or not. Like, we'll know. And if they can't succeed, then we'll move them out. We'll move someone else in. but we don't have to wait until we've burned 45 grand to figure out that we made a mistake. We're going to know that quickly.

5:06And it doesn't put the person themselves into trying to figure out how to do it. And by the way, Yemi, you're a savant. You just know how to do it. Like, you know how to sell your stuff. And you try to teach people using your language versus a language they can understand. That's why you need to process in place. I have so much empathy for where you are in this process because I've been there more than once. And the one thing that I know to be true is you have to stop. Like you literally have got to stop, pull the car over and sit down and work through it. And the only way to get there is to like find that time.

5:39I think it's the weekends. Now, if you need some help with it, we do that with larger companies. As a consultant, that's what I was doing last week. I'm on site and I'm breaking down processes on site because as a consultant, it's a heck of a lot easier to do it for someone else's company than it is to do it for your own company. So that's what you got to do. And I know that's not an easy answer. Like I'm not telling you anything you probably don't already know. And I'm certainly not giving you an easy button to push, but that's the truth. Yeah. Thank you. And I have a t-shirt by the way that I wear sometimes.

6:05It just says failure on it for all the times that I've screwed this up.

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6:45Go to plod.ai forward slash jeb. That's plod.ai forward slash jeb and use code JEB to get 10 % off your purchase. On a B2B environment, and we're talking about financials right now, and I'm in the healthcare space trying to reach out to physician practices and all of that. How much of your gross revenues would you attribute to a sales team from a budgetary perspective? And also from a compensation perspective, I know that there's always there at Azure, your base as little as possible and all that. What was your recommendation on this then? I don't have an answer to that question for what part of your gross revenue you spend on sales.

7:19The answer is going to be getting out a calculator and thinking about where you need to be in terms of sales, like why you need to be there. So, for example, if you were growing your company and your goal was eventually to sell your company, then you would say, what's the valuation basis going to be? Is it going to be on a revenue or is it going to be an EBITDA? If it's going to be an EBITDA, then you may have a different calculation than if it's going to be on revenue. The next thing is how fast do you want to grow? If you want to grow super fast, then you might allocate more of your gross revenue into sales than if you wanted to be more conservative.

7:48The last thing that comes into play is supporting the sales that people make. That becomes a real issue, right? So if you're calling in a physician groups and you sell a bunch, but you don't have a support team to back it up, the salespeople will eventually quit selling because they spend all their time servicing. and then you end up on this roller coaster. But you know, as a business owner, like every time you add a support person, that support person is non-revenue generating and they're impacting your bottom line. So you have to have the sales to back up the support person. I know you do these calculations all the time in your head.

8:18So the answer is not something that I could tell you, but it would be something that you would figure out. As your business gets bigger, this gets more complicated because as my company's gotten bigger, we're investing more on the support, on the back end, on the leadership. than we are in hiring new salespeople. And we're trying to do both at the same time, but there's a lot more money going into infrastructure. And it's the complete antithesis of where I was 10 years ago when revenues were a lot lower, when I was like, just throw everything at the sales team. I think you've got to look at what stage you're at and what you need in order to support it.

8:50And I'm sort of in that place where I need to slow down and build a team before I can really speed up. It's a gut-wrenching bet that we don't get it wrong because we're talking about adding over the next 18 months, somewhere between$600 and a million dollars in additional payroll in order to support this, it's gut-wrenching. It's a tough thing to think through, but I have to have faith that if I do the right things and to having a system, it'll work. Now, when it comes to paying the salespeople, this is another thing that I've wrestled with as well. So I come from a place, and this is my mindset of pay me nothing.

9:21I want the largest commission you can give me because I'm going to go make it rain and I want to make as much money as I can possibly make. That's the entrepreneurial entrepreneurial way of looking at things, right? Then you go out and try to hire people and you're like, hey, I've got this great plan for you. And they look at you and go, what's my base salary? Like how much are you going to pay me? And you go, well, I want to pay you a whole lot. I want you to make a lot of commission. Now, one of the reasons why this becomes a problem for you is because if you don't have a process, like you have no process to send them into, you have no machine to send them into, you have nothing that's going to guarantee that they're going to be successful.

9:53What do you naturally do as an entrepreneur? Pay them as little as you possibly can with as high commission as you possibly can because if you screw up and make a mistake it doesn't cost you that much money on the flip side for mesh if you have a system to own board them and ramp them up quickly if you have all the tools that they need that you can plug them directly into like a large organization can if you have training to get them moving and there's a great place where you can get some amazing training called sales gravy you should check it out sometime if you have a way of knowing very quickly where they're going to make it if you've got a way of hiring so you're testing to make sure you're hiring the best people, then what you can do is you can start increasing salary and reducing commission.

10:34If you get the calculator out and you think about the way that entrepreneurs typically want to hire people, pay the least amount as possible. I mean, as you said, throw bodies at it, right? I'll pay you tons of money. What you'll find is that essentially when you start looking at it, your cost of sales in that model is a lot higher than it would be if you pay a higher base salary and a much smaller commission. I mean, significantly higher. So what I would suggest that you do, Ramesh, is that you start looking at what do you want your cost of a new sale to be? Don't include product. Don't include your support system.

11:06Just what do I want the salesperson to cost me of every sale? And an easy way of looking at this is think about it in million-dollar chunks. For every million dollars I sell, what does the salesperson cost me? And then as you look at that, think about the highest level I'm willing to accept. So is it 5%, 10%, and 15 % of them are willing to pay 20%, that's going to be predicated on what your particular profit model is and what your EBITDA is on those sales. So if you have a much higher margin sales, then you can afford more at the cost of sale. If you have a much lower margin sale, then it's got to be like super low.

11:39So this plan is working with, they're modeling like 1 % to 2 % as a cost of sale for the salespeople. And the salespeople make pretty good money, good six figure salary, but the salesperson's got to go out there and sell$7 million in order to make it. But if you've got a much higher margin, then you only need$500 ,000 and you're making your margin. But I would figure that out. And then this is the thing you got to start thinking about in hiring on the market is what does my salary need to be? Even though Ramesh, right, in your heart as an entrepreneur, it makes you want to go throw up in a bucket because you can't believe I'm paying someone a salary to do what I would normally do.

12:14But they'll be happier with the salary because it makes them feel better. and your cost of sales will actually go down because the people that you're hiring aren't smart like Sarah over here who says, I wanna make as much money as I possibly can, pay me the highest commission rate that you can possibly afford, which I do, by the way. And I respect that, like I'm totally good with that. Like I want people around me that would say, don't pay me anything, I wanna make as much as possible, but that's something that you can think through. And I'm sorry, Ramesh, I don't have the exact answer for what you're looking for, but that's what I would be looking at at least from a calculating standpoint on what I'm gonna do.

12:47in your role.

13:17Getting started is easy. You can book your first visit with a clinician right away. Midlife needs MIDI. Visit joinmidi.com to book your first visit today. That's joinmidi.com. Insurance coverage varies. Check with your plan for coverage.