How Many Salespeople Should I Hire?
One of the most asked questions I get is how many sales people does it take to get the revenue numbers needed. Personally, I believe in large sales forces because in highly competitive situations the largest army wins. That doesn't mean, however, that you can go out and hire 100 sales people if all you can possibly sell this year is a million dollars if everything goes right. So how do you decide how large a staff you need?
The first thing to do is to determine how much revenue you want. I say want because your present staff is getting you what you have and will be only able to grow so much. But if you want to double or triple your sales you will have to increase the number of people selling. It's just a fact of life. So let's say you are billing $2.5 million and want that to grow to $4 million. Your typical sales compensation is 10% commission so your potential commission pool will be $400,000. Next determine what the average sales person in your business should make. One rule of thumb I've used for new sellers is compensation for a 2 year professional just starting out. Let's say $55,000 per year. Well dividing your commission pool ($400,000) by your compensation target ($55,000) would tell you that you need 7 sellers on staff to get to $4 million. What's that you say? You only have 4 sellers and they are making a little more than $55,000? That's right and that's why you are doing $2.5 million. And you will do $2.5 million give or take a few hundred thousand until you hire those extra 3 salespeople.
Of course, the numbers given here are for example only and may differ in your situation. We can calculate the number of sellers in almost every business, however, so call me if you want to discuss your particulars.
Now how much do you want to sell? We can calculate that too but I'll save that for another column.