Coming out of COVID-19-impacted Q2, sales leaders need to make hard choices about headcount relative to their growth aspirations. In normal times, if delivering Q4 numbers required more headcount than you had today, you’d already have some jobs open and be looking to fill them, anticipating an increase in sales activity that would require ramped up bandwidth. However, due to the uncertainty of today’s economy and market conditions, there’s a risk of spending precious cash on salaries for salespeople who can’t sell at their full potential.
Here’s how to determine whether it’s time to start hiring more reps:
Review pipeline and activities: Examine your current sales activity and market conditions to determine the need for talent in the next six months.
- Is the sales team running at capacity today?
- Is the pace of market qualified leads and pipeline creation increasing as lockdowns end?
- If purchases were delayed in Q2, will they be made at all in 2020? Anything promoting virtual collaboration or that has become mandatory to the remote office is likely moving forward; large capital expenses or solutions for people together in the office are less likely to be moving forward.
Forecast with finance: Work with your finance department to run some scenarios:
- Future growth goals: What does your annual recurring revenue (ARR) and cash position look like over the next three years if you don’t make these hires? Remember it takes at least six months to onboard new SaaS talent, so a sales roster beneath scale starting in 2021 isn’t even impacting ARR as it could until almost 2022.
- Short-term risk: How much cash is burned by “overinvesting” in headcount? Are you willing to make this investment relative to growth goals? What activity and results milestones do you need to hit to be convinced you are right-sized for growth between now and December?
When in doubt, be bullish on headcount. We’re in the strongest talent market in years, and you can’t make up for lost ramp-up time. It’s possible to reduce headcount, but impossible to compress six to nine months of ramp-up time into one month. Let your new hires learn your business and sales processes now so they’ll be at full strength sooner.
Keep in mind that these decisions rely upon up-to-date knowledge of pipeline, rep activities and their delivery. You need the CRM and business intelligence to have a firm grasp of these. Make your finance department a partner in these decisions, not an adversary. Sales and finance need to collaborate on building the revenue forecast, as well as milestones for activity levels and delivered results to ensure the forecast is on track.