It’s a Trap! 3 Questions before Hiring Sales
Let’s say this is your current business on a monthly basis and you would like to double your sales.
Sales ($5,000) — Expenses ($1,000)
= Net Income ($4,000)
A reasonable solution is to hire a sales role to bring in that new business. The math seems simple — they bring in more than you pay them. But be careful…it’s a trap!
Here are three questions to help spring the trap before investing money into that sales hire.
Can you manage the new workload?
You have new clients to manage and also new staff. The trap here is increasing your hours in order to increase the business — make sure the new time commitments fit within your plan for your business or life.
Sales ($10,000) — Expenses ($1,000) — Sales Hire ($4,000)
= Net Income ($5,000)
When will you need help to manage that workload?
If you do not have the time to manage the new workload, and you need additional help, then that is a new expense to be factored in the math. The trap here is an actual expense that results in your making less money than you were with the smaller business.
Sales ($10,000) — Expenses ($1,000) — Sales Hire ($4,000) — The Trap ($3,000)
= Net Income ($2,000)
How does that work translate into an hourly rate?
As you grow the business the goal is to make more money per hour spent working. Estimate your total hours worked per month and divide that into the net income. This will give you an hourly rate that will help you anticipate the forthcoming trap.
Before: Net Income ($4,000) / Hours/Month (100) = $40/hour
After: Net Income ($5,000) / Hours/Month (170) = $29/hour
Capacity: Net Income ($2,000) / Hours/Month (130) = $15/hour
Hiring sales is a great way to grow your business, just make sure you are growing it in a way that will free up more time, make you more money, or both. The math is not as simple as it appears first glance.
These are simplified examples to generate thought — if you would like to talk over your specific small business, or would like help modelling this out, then please schedule a complimentary advisory session with us.
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