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Is it ok to hire Commission Only sales reps for my B2B2C mobile startup that I've bootstrapped?

I've bootstrapped my mobile startup and developed a complete product. Investors wants to see the traction with paid customers before funding my startup. My target audience is small and medium businesses. My app requires door-to-door sales with free trial period with no contract to sign. I've subscription model. Since I'm following Groupon type business model, I need a big team of sales reps. I've few options.
  1. To hire Commission Only sales reps
  2. To hire business interns
  3. To hire some experienced sales person by sharring sweat equity.

I've read horrible stories for all these options. My questions are:

Is it ok to hire Commission Only sales reps?
What are the terms should I use in contract while sharing sweat equity? What if person doesn't perform well in this case?

Thanks in advance.
Chirag Rana | http://www.chiragrana.com | 973 552 4474

44 Replies

Shawn McCullough
0
2
Shawn McCullough Entrepreneur
Sr. Business Analyst / Sr. System Developer
Is it ok to hire Commission Only sales reps for my B2B2C mobile startup that I've bootstrapped?Yes, it is OK, but the best results come from 2-5% equity and a % of gross sales. I was told that 5 % is a HUGE amount and nothing to sneeze at. The % equity and % of gross sales is what has gotten more than a few startups up - off and profitable (source: I was told this by someone who has exited 3 MM businesses already - and this is/was his key to successfully exiting) apparently this model works well with sales people/staff personnel. --Shawn
Brian McConnell
4
1
Brian McConnell Entrepreneur
Head of Localization at Medium.com
No! Commission only is code for "I can't even pay minimum wage!" I am sorry to be blunt but you need to figure your business out before you induce people to work for you under terms like that. If you can't meet bare minimum terms of labor, you have no business bringing on (unpaid) employees. Do the work yourself and if it's too much, and you are making enough money to hire people, then do that. Sent from my mobile phone. Please excuse any typos or discombobulations.
Larry Shiller
7
0
Larry Shiller Entrepreneur • Advisor
Grit: The new dimension in college admissions
You have other options: 1) Get the first customer yourself: Critical to understanding what it takes to sell. 2) Ask your customers/prospects how they like to be sold and why. Their answers will tell you if sales reps are the way to go and what the alternatives are. 3) Find a sales/marketing sweat equity partner who is experienced in the industry you're in. 4) Partner with a large firm that wishes it had your product to sell.
Rob Gropper
1
0
Rob Gropper Entrepreneur
Director at PetHero, SPC - Member at Eastside Incubator - Principal at Tuxedo Technologies Group
yes, it's OK, but there's much more to this than just the commission rate. There are several threads around this subject on FD so take a look through those. the disparate options you are considering raises someImportant questions to answer first, especially since you are selling to SMB and :
What is the anticipated NPV (net present value) and LTV (lifetime value) of a 'typical sale'? The answer to this question informs a much of your selling model.

Kyle Else
0
0
Kyle Else Advisor
Realtor @ipoHomes
Chirag Share equity after close of first deal. Motivation. I think it would possibly eliminate bad hires. Also good for culture between outside sales and product team. I'd imagine? Good luck Kyle Else
Robert Gordon
2
0
Robert Gordon Entrepreneur • Advisor
Co Founder at OurRecovery "Because No One Can Do it Alone"
Sales people in general are all crazy... that's not a fault, they are motivated by different things. Regardless what you do, if sales growth in general or key account growth are the keys to yur business, you need someone who understands sales, sales people and ow to hire and motivate them... The equity plus override should get you there... just be darn sure you check references [including former clients] and the demonstrated growth they claim.

good luck... it's going to be a rough ride... you'll love it!!!
Gordon Miller
2
0
Gordon Miller Entrepreneur
CEO at G3Systems, Inc.
I only use Commission Only Sales Reps. If they dont perform they dont eat. Bad ones dont last long and good ones get rich. I run all ops at 20% gross margin and split profit with sales team 50/50, or about 10% of the deal. Most start at 5% until they earn those types of margins. .... Gordon G. Miller III CEO G3 Systems, Inc. [removed to protect privacy] Direct [removed to protect privacy] http://www.g3.com
Robert Gordon
2
0
Robert Gordon Entrepreneur • Advisor
Co Founder at OurRecovery "Because No One Can Do it Alone"
Actually I was thinking... I need help with UI/UX for the app I'm building on addiction... I could help you vet the sales guy/gal and process... you could help me make good decisions on design...
I am NOT proposing I want the sales job... I've had a good deal of experience with inside and outside sales forces and could give you a sounding board...
thoughts?
Jan Kiderman
1
1
Jan Kiderman Advisor
Professional
Chirag, Congrats for bootstrapping to this point! If you are looking to build a big *and competent* sales team in a relatively short time, sweat equity alone will not suffice. Consider raising a Friends and Family round of capital at this stage and depending
Andrew Lockley
0
1
Andrew Lockley Advisor
Investor and strategy consultant
Far better to use freemium
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