When is the right time to hire a VP of Sales in a SaaS Business?

Hiring a VP of Sales is one of the most important decisions a CEO will make and is a pivotal moment for any SaaS platform looking to accelerate revenue growth. Knowing the right time to hire will be different for every software business and be dependent on the number of employees, the company growth trajectory over the next 2 to 5 years, their target market (SME or Enterprise), and the stage of the business (Large Seed through to Series B).

Getting the timing right is vital, as both hiring too early or hiring too late can be detrimental to the success of your business.  On one hand, you do not want to hire your VP of Sales and have them leave in 6 months because you do not have the infrastructure in place.  Equally, you do not want to be the founder who cannot relinquish control of running and driving sales.

Let’s start with some basic questions you need to answer before searching for your first VP of Sales.

• Is your business currently turning over 1 million to 3 million ARR?
• Is your customer base increasing and is your revenue growing?
• Have you defined your sales process and target markets?
• Is your product a better fit for small, mid-sized or enterprise-level accounts?
• Do you have a marketing plan and know why your customers buy, stay, and leave?
• Will this person need to carry their own book of business to start?

The answers to these questions will be critical in shaping the profile of the candidate you need for the role. Take the time to lay these out before writing your job description or speaking with potential candidates.   

What is the right type of VP of Sales to hire?

The answer to this question is different for every business, whether small, medium, or large, and there is a certain VP of Sales you should consider hiring in each circumstance.

If you are a Seed-funded business, looking to go for a Series A funding round, then you might think about hiring someone who is closer to the client, is happier starting out with a smaller team, has a more entrepreneurial mindset, is passionate and knowledgeable about your software/sector and is a great cultural fit.

If you are a well-funded Series B and onwards business, then you will likely want to hire someone who has successfully taken a company through additional funding rounds or to an Exit. This typically means the individual: has managed large sales pipelines across multiple territories; has sold into large enterprise clients and structured 6-figure plus ACV deals; is proven at managing existing sales teams and building structures on top of them and is brave enough to make tough hiring structures, all without damaging the hard work that has gone into establishing the core sales team that brought you there in the first place.

For additional insights into how to think about who you should (or shouldn’t) hire for your first VP of Sales, I recommend this article from Mark Roberge, who built out the HubSpot sales team – 5 Mistakes Founders Make When Hiring Their First Salesperson.

How much should a VP of Sales cost?

It is important that you get this right, as it will not only determine the available talent pool on offer to you but also the immediate engagement and long-term future of your VP of Sales. Any good salesperson needs to have good financial incentives to win new business, but a VP of Sales needs both short-term and long-term incentives for multiplying your revenues by 5-fold to 10-fold (and beyond) over the course of 1-3 years.

The size and stage of your business typically determine the package on offer, but from what we see in the current market an attractive package should look like the following:

• $175-225k base for Seed-Series A.  $250-350k base for B-C.
• 100% Uncapped OTE
• 6-Month Guaranteed Commission (short-term incentive)
• Equity (long-term incentive) – .5-2% pending the size of your company
• Seat on the Senior Leadership Team

Summary

Great VPs of Sales operate differently from sales managers and are vital to any business looking to dramatically scale revenues within 12 to 24 months, by creating and implementing a go-to-market strategy and identifying new opportunities and directions for the business to move into.

They have a high level of EQ (emotional intelligence), know when the right time to hire is and equally when to make tough decisions.  For startups, it is also important to hire someone who is a strong operator as well as a revenue leader.

Ultimately, the VP of Sales plays a key role in determining a company’s high-growth success, takes the pressure of new business away from the CEO, and in return, should be rewarded very well for achieving ambitious growth targets.

Please do reach out to me if you would like to discuss how Zeren can help you hire your next VP of Sales – christie.hartbarger@zerenglobal.com.