If you’re aiming to attract investors or potential buyers, be prepared for them to thoroughly examine your sales and marketing processes.
For companies that sell to other businesses, investors will scrutinize where your leads come from and the cost associated with generating them. They will be interested in the technology you use to support your sales team, how your sales reps secure meetings, and the typical number of appointments a top performer achieves each week. Additionally, they’ll want to know the close rates of high-performing reps versus average ones.
Investors are looking to understand how scalable your sales model is when faced with significant increases in investment, rather than just evaluating past performance. Acquirers often seek out businesses where the primary constraint to growth is capital. They are particularly interested in companies with efficient sales systems that simply need more funding to expand. Investors have ample capital but often struggle to find businesses with robust sales systems that can handle increased investment.
How Gregg Romanzo Built a Sales System
In 2004, Gregg Romanzo founded a traditional freight brokering business. While many freight brokers operate with just a few people managing shipments for minimal margins, Romanzo saw potential for significant growth.
Romanzo’s approach involved hiring promising individuals with a modest base salary ranging from $40,000 to $60,000 per year and training them from the ground up. He equipped them with computers and top-tier scheduling software, tying their variable compensation to the gross margins of the jobs they secured. Romanzo believed that if he could get a rep to earn $100,000 annually, he could retain them long-term.
He focused on his top performers—those in the top one or two percent—and built a team around them, allowing them to earn even more. These elite salespeople could make between $300,000 and $500,000 in a stellar year.
By paying a lower base salary and minimizing equipment costs, Romanzo was able to hire a large number of salespeople. When he sold his company, it had 200 employees, with 190 of them being salespeople. That means 95% of his workforce was dedicated to sales.
How does this compare to your company? If you have a successful sales model that you believe could withstand an increase in your sales team, consider scaling it up. You might either expand your team significantly or demonstrate to investors or acquirers how resilient and scalable your sales model is and how their capital could drive further growth.
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