Sales is the blood and the backbone of any company. Many technology founders and founders in general do not realize this because they usually focus somewhere else. Their focus could be HR or product development, or engineering or anywhere else but sales. Smart CEOs are thinking about sales, product development and their company development throughout the whole time.
No sales, no money in the bank and no growing business
Why b2b sales is important and why there will always be jobs for salespeople? There is a simple reason behind all that. Sales is essential because without sales, without transactions our company would not exist. If we don’t have a flow of income into our company, then we cannot pay wages, we can not pay rent, and our P&L is going to look very, very bad. So generally speaking without sales there is no business, and that’s the core of it.
That’s why we at Out2Bound believe that sales is one of the most fundamental skills and every business should invest in this.
How much time CEOs/Founders spend on distribution
Throughout our experience – meeting more than 600 technology companies – SMEs and startups, we have noticed that between 90-95% of the founders/CEOs are focusing entirely on the product or the service. So if it is a product company the focus is going to be the product development and everything related to how to make the best product out there and if it’s a service company, of course, service companies rely more on the HR, so the focus of the CEO shifts there.
Out of those tech leaders that we have met, 95% + of their time is focused into managing the product or managing the service and quite often they are focusing less than 5% of their time in distribution.
It is crucial to mention what is distribution. In distribution, we have sales and marketing — the two main disciplines through which we can potentially acquire new clients. By focusing 95% on the product or the service and only 5% on distribution what usually happens is the product or the service is very well built, very well developed but at the same time they are lacking on having a very clear picture of where the market is going.
How to balance distribution and product/service development
We are advising technology founders/CEOs to have at least 35% to 45% of their time focused on distribution and the rest 55% to 65% they can spare on developing the product or the service.
If the CEO or the founders of the company are focusing on client acquisition, they can earn potential new business for their companies, and they can solve a lot of the problems of how the market is when it comes to developing the best product they can create out there.
How you split time for distribution and product/service development also depends on the stage of your company development. For example if you are a startup in a very early stage especially when you haven’t got a fully proven product-market fit or service market fit, probably more than 55% to 75% of your effort, time and energy should be focused on talking to potential customers and testing how good a product or a service is.
Meaning that probably you need to invest even more than half of your time as CEO or founder/co-founder to understand what the need of your market is. After you close your first one, two, three, four deals you can shift back your focus and energy on the product/service so you can have a scalable thing. But first, you need to find the niche, to see the real problem your product or service is solving.
One of the most important things that we are reminding founders is that product or service is just one part of the equation. They have to be sales savvy, and especially if the company is in the early stage, they have to be the first salespeople within this company either through referrals or through a personal network, or anything else. First five to ten deals that a company would close should be done by the founder/s themselves.
There is an article in Financial times regarding selling for technology companies. One of the very prominent VCs in the UK is saying that on a lot of occasions he is meeting tech founders who have the false belief that if they built, it is going to sell by itself.
It is not how the economy works! You have to know how to market before you start building whatever you are creating. Going to my point from the intro part of this post: sales is the backbone, sales means transactions. If you don’t have deals and if your the line in your bank statement is narrow and there is no business.
Why you should be the first doing sales
By going through all parts of the sales cycle founders and CEOs will see the process first hand, they will do first customer interviews, they will get to know what the customers are looking to receiving. And quite often it is different than what the founders/CEOs had initially had in mind when they’ve been building this product or service. And also by going through all of the stages of the sales cycle, later on, it will be much easier for them to hire salespeople, to manage and to lead salespeople, too.
CEOs and founders should know the role and process of sales themselves to understand how to manage sales people or how to work with an outsourced agencies. They need to have a proper understanding of their clients and what are the problems they face daily and based on that they can build their product or service that people.
From day zero you should pay equal attention to both product/service development and distribution. In an ideal world you or your co-founder should be 100% on distribution and the other one should concentrate on building the technology or the service.
Author: Theo S. Shikov, CEO and Founder, Out2Bound