I find a common dilemma for founders and directors of startups is how to approach their first business development and sales hires.
Why is business development different for startups?
For most growing companies asking the same question, it’s more appropriate to ask “when” rather than “if”. For example, if you’re the founder of an early stage tech company, sales and business development may be something that you currently handle yourself but eventually, as you gain traction in the market, it’ll become a core function that you build a team for. For you it’s more of a question of timing and funding. But when you’re running a consulting or a professional services firm, such as a management consultancy or training provider for example, the question is more complex. For a start, finding a business development manager who is capable of selling your services is usually a major challenge. In fact, I’d suggest that if you sell high value and complex products then you really can’t remove your delivery team from the sales process. In these situations, the business development role becomes primarily about “hunting” for new business.
What business development options are right for your company?
For many firms the options are generally split between hiring an in-house business development manager to fill the pipeline or outsourcing to a specialist business development consultancy or freelancer. When considering these options I think it’s worthwhile asking the following questions:
- How much new business do you need or can handle?
- What’s the level of seniority you need to engage your market?
- What’s your working environment like?
How much new business do you need or can handle?
Management consultancies and startups are different in the way that they look at business growth strategies. Generally they are harder to scale than businesses such as software vendors, plus they are particular about the type of work that they want. Whilst your ability to scale dictates how much new business you can handle, the latter point is about the type of client or the type of work that you want. Essentially, whereas a software vendor will take anyone’s cash if they are willing to part with it, services firms are concerned about client/work fit. Put this all together and the answer of how much new business you want or can handle is usually “not that much” or “one or two new clients”. Using this answer you can figure out how many prospects you need in the pipeline and what activities are likely to drive that number. Rarely do you end up with something that justifies a full-time employee.
What’s the level of seniority you need to engage your market?
This question deals with the caliber of the talent that you need to attract. If you’re selling high-value B2B services and need to engage senior stakeholders in large organisations, for example, then you’re going to need more than a graduate hitting the phone. That approach may work for companies where the sales process is more transactional, but in management consulting it’s not an option. By understanding the level of person you need you can determine how realistic it would be to attract that person into an in-house role, or whether you are more likely to find that person freelancing or running a specialist business development consultancy. Why is that more likely? In my view, good people either move up or they move out. When they’ve moved out into the freelance world, they’ve usually done so for reasons such as flexibility, freedom to choose what they work on and often higher earnings (but not always so). What this means is that smaller firms can attract a more senior person as a “client” rather than if you were advertising for an employee. And this usually fits very nicely with our first consideration around the amount of resources you need.
What’s your working environment like?
The final question I find useful in determining whether you hire an in-house business development manager or use an external freelancer or business development consultancy, is often the most overlooked. Yet, it is usually the main reason that in-house business development managers don’t work out. Now, I’m pretty sure that your office is like 99.9% of all consulting and professional services firms I know. Open plan with everyone sitting staring into their screens doing client work, right? When you drop a business development manager into that environment two things will happen. Firstly, for the business development or even salesperson, it’s just not the right environment for them to make calls. Now, I know that you might have heard that cold-calling is dead but I’m going to tell you this — sales is still a contact sport. Even if your BDM is pinging out emails and sending LinkedIn messages they will still need to pick up that phone at some point to get results. They may not be hammering out 120 dials a day like in the old days but they will need to be speaking with prospects — a lot! If they’re the only person on the phone they will become conscious of it, which more often than not leads to them doing less of it. I’ve seen it happen so many times. Secondly, the impact on the office of someone hustling away in the corner usually isn’t ideal. Sure, some might see it as creating a bit of a buzz but for others it will be a distraction. Ask yourself honestly what office culture you have; if it’s quiet and peaceful — keep it that way and work with someone externally.
In-house Business Development, Freelance or Outsource?
So, you’ll now have a better idea of whether bringing someone in-house or working with external partners is likely to work for your business. Obviously, there’s always a commercial dimension to this but any good business development manager, internal or external, should pay for themselves by contributing directly to your firm’s revenue. In my experience, one of the greatest risks of hiring in-house is when it goes wrong. For consulting and professional services firms a business development hire is high-risk and requires a large commitment to get them up to speed and generating revenue. Working with a freelancer or external business development consultancy is usually more flexible and provides the option to pilot the process to see how it works for your firm.