salesNeed some advice.
I recently got an email from someone overseas offering to sell my product in their country. The person who emailed me is not from a company, but instead has 20+ years of experience in sales. I am very tempted to get him on board as he seems to be a perfect fit for my startup.
I just have a few questions about the offer:
Is it safe to engage the services of someone in another country since I cannot know what they are doing and whether or not they are doing a good job? How can I trust this person?
He expects a monthly salary which I cannot afford to give since I am just an early stage startup with no revenue or funding. Is there any other way to pay him (commission etc.)
What type of legal documents will I need him to sign?
Any other advice/tips?
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Thank you!
Is it safe to engage the services of someone in another country since I cannot know what they are doing and whether or not they are doing a good job?
The word safe in your question is ambiguous and requires further definition. The unknowns variables you describe are present. Whether it’s a good idea to hire this person is a business decision that you will have to make. You will have to weigh the risks against the benefits. The risks depend on many factors. One of which is: what type of product does your company produce? Without knowing that piece of information, it is difficult to give any useful feedback or advice.
How can I trust this person?
You can’t. I would strongly advise against trusting a person you have never met. Particularly one who lives in a foreign country with which you have no connections. But can you trust this person? is a different question than can you do business with this person?
He expects a monthly salary which I cannot afford… Is there any other way to pay him (commission etc.)
Salespeople should be paid 100% commission IMHO. Earned after funds are received from the customer and clear your bank account. Otherwise, your risk goes way up.
What type of legal documents will I need him to sign?
You should memorialize the terms of your engagement with a written agreement of some kind. Either hire a lawyer or look around the internet for boilerplate forms. Whatever you do, run it by an attorney first. Make sure you pay the attorney to represent you.
Any other advice/tips?
Be smart. Assume the worst in people. Put your agreements in writing. Hire a lawyer. Pay salespeople commission only.
Ask yourself the following questions
What I would do:
And, as Mowzer said, involve lawyers, who know the target market in terms of at least commercial and employment law.
For a lot of tech founders, sales is the activity they would love someone to take off their hands. So when an opportunity like this comes up, it’s tempting to dive right in. I’ll hit your questions, but first, a few general points.
First, any sales person, good, bad or indifferent, will be great at pitching themselves. But beware. Unless you can sell, you’re a poor judge of sales ability. Your benchmark isn’t, “Can this person sell better than me?” but “Can this person I’ve never met sell a product like mine with only the resources I already have?” So ask for current and recent testimonials, and contact their referees. If they aren’t delighting other startups today, it’s unlikely they’re a fit.
Second, the world didn’t change because you received an email. Entrepreneurs are optimistic opportunists. We know the huge part serendipity plays in success. So we want to believe that what we just heard is evidence that the luck is running our way. Beware your instincts, and consider the odds. Which is more likely, that the first email you’ve had comes from a sales genius who’s stumbled across and fallen in love with your startup, or that you’re the hundredth email on a list titled, startups who may have cash in the bank?
Now to your specific questions.
How do I trust someone I can’t watch?
Your problem isn’t that they’re overseas, it’s that you can’t oversee what you don’t understand. So just like commercial founders need to learn some tech, tech founders need to learn some selling, at least if direct sales is part of the marketing mix.
You’ll discover that selling isn’t magic. It’s a structured process with activities that can be defined and instrumented, and with results that can be measured. So if you want to build a sales partnership, build in that culture of transparency from day one, and get advice from an experienced sales manager.
How do I pay someone when I have no money?
Step one is to write an email that makes one thing crystal clear: you’re only willing to discuss commission-only remuneration. The first response is likely to be all about the time they’re going to invest. So you reply in a way that respects their professionalism, that reassures them that the compensation will be generous to reflect their commitment, and that reminds them that commission only is the only offer: are they interested on those terms? Without a “yes,” the conversation ends.
If the way you price involves a significant up-front fee, there’s a good chance that you can keep a commission plan simple and risk-free. But if you’re a SaaS and making your money mainly from monthly fees, there’s a challenge. The sales person wants to be rewarded for the expected value of the sale, but the cash is going to come in slowly.
You can do a lot of thinking and reading to solve this. I’ll make one suggestion, but whether it’s workable for you, I can’t know.
So I would think about creating an offer that’s not available through your website, that amounts to a substantial discount for annual (or at least six months) prepayment. That’s a tool for them either to close a sale, or to lock in a customer who’s getting value. And if your commission plan is all about collected revenue (so that you carry no cat risk), it’s a tool for them to earn somewhat less, but much faster.
What agreements do I need to put in place?
Take qualified advice. Personally, I would require a one way NDA, a standard commercial agreement with an overall expiry date and a way for you to terminate without notice in the first (say) three months, a schedule laying out the product offerings included and the pricing subject to change, and a schedule laying out activity and outcome targets and commission plan, subject to change with (say) three months notice.
Your test today is, Would it be a no regrets deal for me to make the exact same agreement with five people in other countries? If that makes you uncomfortable, you need to get tougher.
Which brings me to my last point. In my view, offer no exclusivity. If that’s something they want, set a review date with a sales target. If they smash the target, then on that date (and not before) you’ll be willing to discuss exclusivity. Don’t tie your hands unless and until you can trust not promises but payments.
What else?
In your private life, when someone tries to sell you a product or service, your default is “no.” And you very rarely invest more than loose change in a purchase you don’t understand. The same is wise in business.
Selling is a structured series of activities. A lot of those activities don’t need sales skills, and some call for different kinds of sales skills (“hunting” and “farming” for instance). In a new and unfamiliar market, if you don’t see the data, you may end up with nothing. A great sales person will be (fairly) happy to discuss the best way to progress each of those activities, because they’d love someone to do the routine work for them, freeing them up for the selling coal face. If they take offence or try and blind you with science, most likely they’re someone who knows about the sales process but doesn’t have the skills or the hunger you need.
If your home market isn’t all you need right now, shouldn’t you make it a priority to pick the best new market to attack? A distraction looks very, very similar to an opportunity. And an apparent opportunity becomes a distraction if it gets in the way of your strategy.
When you subscribe to a service, you can stay in control. But when you hire a person, you have to invest a lot of time. Bear in mind this could be the right person but the wrong time. If you’re still seeking product/market fit, a great strategic hire may cost you time and focus you can’t afford. Positioning the conversation as a future possibility rather than a current decision may be better for both of you.
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