There are lots of great articles on the Start Weekend blog about what to do in a startup, so I thought I would share a couple of examples of what not to do. Based on my own trial and error over the years, but things I also see other startups regularly fall into these traps as well.
So, try and avoid these if you can…
The two degrees distributor
This is where a friend of a friend, a relative or someone connected to you looks at what you are doing and offers to be a distributor in their local country. In some cases they are not connected to you but have somehow found what you are doing and have made an approach.
Its possible this person and/or their company will work out to be the best decision you ever made. But that is about one in a million (not an official statistic).
What often happens is you get a lot of positive affirmation at a time when it is most welcome (you are still seeking validation) and the honeymoon starts. The main problem is these relationships use up resources and most often fail.
It takes a lot to get a distribution partnership right, but its fundamental that they already have a strong base of the type of customers you are after and an existing ability to supply them. Your auntie’s friend in London probably doesn’t.
The commission only sales person
There are some awesome commission only sales people out there. They are focused, driven and get great results. They sell houses and Audis and they make a lot of money.
If you are heading down a path of employing commission only sales person in your young company because you ‘can’t afford’ to pay a good sales person, then stop and reconsider. You will probably waste your time and effort, and that of the person coming on board.
The best commission sales people share these characteristics:
- Able to get on with it without supervision
- Will work to a process and focus on closing deals
- Don’t get caught up in delivery or project management
- Expect a good level of internal support from the organisation (marketing, sales assets, delivery)
If they are good enough at what they do, they can make very good money selling houses or cars where the support and infrastructure suit them.
If they are not so good at what they do, they will come on board and immediately do the following;
- Spend the first month sitting at the desk learning about your product
- Spend the following two months developing brochures and other sales materials that ‘they need’ before they go out and sell.
- Somewhere in the first 3-4 months they will close a deal, then because they believe (rightly or wrongly) that your new company cannot deliver well they will jump in and project manage the delivery process.
And so it goes.
So make sure that you are bringing on a hunter not a farmer and that you can and will provide the support they need to be successful.
Otherwise talk to your fellow directors and shareholders about how you can find a way to afford a good sales person. Below market remuneration, backed with options to earn equity or profit and added commission might get you there.
If these situations feel familiar, then reflect on what you really need, do some due diligence and make the call you think is best for your startup.