Michelle Terpstra, Chief Revenue Officer, advises against commission-only salespeople for MSPs. Long sales cycles run 2 to 6 months, so you need to pay a base salary of at least $30k to $60k to cover runway. Have a proven sales process first, then hire.
So one of the most common questions that we are asked is should I or could I hire a commission only salesperson? So I have our Chief Revenue Officer Michelle Terpstra here with us. We are live here from our Indianapolis quarterly event and I would love to hear your opinion on this. Michelle, what do you think? Can we hire Commission only?
MSPs will fail with a commission only salesperson. Unless you are selling solar is is not the solution for your business.
Oh, tell me more, tell me more about that.
It's solar is really one of the only industries left like solar panels, solar vehicles. It's the only industry left that is still seeing success with commission only. But they often actually work for multiple brands and it's a commodity sale and they price to the bottom. So I'm assuming we don't want that. Right? We want somebody who is loyal to our business who is looking to grow and stay committed because we're going to pay a salesperson on our mrr. So it is entic them to stay with you long term and you cannot do commission only. It does not give them the breathing room or the comfort with the, with the company in order to kick off the career with them and feel like success and be able to pay their bills and be able to focus on doing this right. So you absolutely cannot be successful with a commission only salesperson. So sorry to disappoint, but it's really critical that you're able to pay at least six months of a base.
Okay.
In order to make sure that you can train and get someone to be successful in your business without being stressed out. So if we say the average base would be 60k. So do you have enough of that to pay, you know, 35,000, you know, $35,000 or $30,000. And if you, if the answer is yes and you got that in the bank or you can afford it each month, then you're ready to go. That's just one indicator of being able to hire that salesperson.
Nothing that's really good. Also, keeping in mind the top time leap that it takes to close someone in the MSP industry. Yes, it's a long sales cycle. So from the point, especially if you're running the play as we talk about in tons of our content, if you're really taking them through that cyber security risk assessment, it could take up to six months in some, I mean, hopefully not, but it can take anywhere between two to four, even up to six months to close the deal. So if you are hiring someone on commission, think about like six months is a Long time and people have to eat.
Yes.
No one pay their bills.
No one in their right mind is going to work for free for six months. Like and all you're going to get is somebody who is either a brand new salesperson or someone who is moonlighting. Is that the right word? Yeah.
You do something like side hustle.
Yeah, side hustle. So do you really want the person who has to bartend every single night waking up at 8am to try to also build their business and you just don't want those things. So just have enough money in your bank or being able to pay them in comfort for those first six months and just make sure that you also clearly have that sales process ready to go. Ready to go, but you want to pay a base plus commission.
So I have a follow up question on this.
Yes.
Okay. What we find a lot with our MSPs is that they're not quite in that place for that budget to be allotted. Right. So would you consider like taking out a loan to afford that or getting funded? Like it's almost like this rock in a hard place where they're like, I just need help to get to the next level, but I don't have them. So like which one comes first? Getting the money or getting the salesperson? Like it's like chicken or egg kind of thing.
Yes. Well, I mean, I guess I'm going to challenge that a little bit.
Okay.
Just because if you think about like 30, $35,000 in the bank and you're about a $3 million per year company who's ready to hire, like, oh, I'm going to say you might need some financial support to figure out how to budget for that. Because I think you can do it. I really do think you can do it. Especially if you're following what we teach, which is the 80% profit off of your stack and every sale that you make, like there needs to be room for that. And if you're still stressed out about this conversation, can you start saving right now and putting some money away for, you know, six to eight months to be able to have that Runway for that person. That's another recommendation. But also at the end of the day, like no shame if you want to take up a loan in order to scale your business, just make sure that you feel comfortable to pay it back.
Nothing that's so good.
Some of the richest people in the world have debt.
But that's not a bad thing.
That's not a bad thing if you're leveraging it the right way.
So also that tells me if you have a three. Or let's say they're not a $3 million company. Let's say we're like 500,000. Or maybe we're peaking. We're getting close to that 1 million mark. You probably need to work on your own sales skills. Right. So wouldn't that come first? Yes. 100.
So we want your sales process to be proven repeatable.
Okay.
Proven, Repeatable.
Proven and repeatable. So how do I prove it so that it.
When you sell it, it sells.
It sells. Does it sell? Does it convert? Do people say yes. Okay. And then how do we repeat?
Yes. And we have some standards and we'll actually like. Let's throw that into the, into the video here. So, like, we'll take a little bit of a pause here and you'll see what I'm talking about. Some benchmarks. The reason why it's important to have benchmarks for identifying if your business is ready to make that sales hire is a sales hire is not going to come in and do better than you. Like, I hate to break it to you. Okay. So your expectation cannot be for someone to jump in, and the first six months they're outselling you. Like, pipe dream, baby. Not going to happen. We, what we want to do is have them sell as well as you have and then gradually get better. Right. And they can't sell as good as you. Right. If there isn't a proven sales process that they're following so it can't be broken, don't hire a salesperson to come in and fix something that's broken. You, the business owner, the MSP needs to figure it out first.
So. Good. We cannot just like divest this responsibility to someone else blindly and say, here, fix it.
So I can't seem to figure it out myself. So you try.
Yeah, like they'd be building their own business. Yeah, right. Yeah, exactly. That's good advice, Michelle. And what would be the next best step? If someone was curious about maybe hiring their first salesperson or if they wanted to kind of learn what is the proven sales process? Where would you direct them?
So go to strategy.seven figure msp.com and you can jump on to our next training.
