Why do most start-ups fail? Some of the biggest reasons are connected to sales. Specifically, the data shows that startups fail because they lack the experience, skills, and initiative to proactively engage customers.
It's In The Statistics
According to a recent startup failure postmortem, 42% of startups failed because there was no market need, 29% ran out of cash, 23% didn’t have the right team, 17% had a product without a business model, and 14% ignored their customers.
Successful start-ups find that they have the right mix of talent on their team and they’re smart about sales. From early on, their founders hire smart and take the time to research and study potential customers and their needs so they can fine-tune their sales strategy. I’ve been a founder myself, and my sales experience has been invaluable. It’s given me the confidence to get my ideas out there early, and the tactical skills to get meetings and communicate the value I hope to deliver.
But while many founders have a deep subject matter or technical expertise, they often lack any formal training in sales. This lack of experience can contribute to a start-up failing. But it doesn’t have to. By educating yourself and getting help from sales experts, you can ensure your start-up gets off on the right foot. You’ll also be less likely to fall for two of the top sales myths.
I call the first sales myth the “compelling product myth.”
The idea is, “if I build it, they will come.” Founders are smart and confident and honestly believe they can build products that will truly benefit society. However, it’s wrong to assume potential customers will love your product exactly as you envisioned it and will clamor to buy it. They won’t.
Part of the reason is that humans and organizations are inherently resistant to change. Why should an executive risk their money, change their behavior, or risk their credibility at work to adopt a new solution when it’s easier to stay the same? They need to be convinced. In particular, they must believe that the pain of doing nothing or staying the same is worse than making a change. It’s your job to show them of that. This is what successful salespeople do.
Entrepreneur Peter Thiel perhaps said it best. “If you've invented something new but you haven't invented an effective way to sell it,” he said, “you have a bad business–no matter how good the product.”
Myth number two is the “myth of the superhero salesperson.”
After realizing that customers aren’t coming, founders that fall for this myth are often drawn to a smooth-talking salesperson who tempts them with deep, personal contacts in their industry. But contacts alone won’t ensure success. No one’s network is large enough to sustain a business.
Data show humans only truly maintain 150 relationships. What’s the likelihood this well-connected salesperson knows just the right decision-makers - and catches them at the exact moment they’re looking to make a change? Not very likely.
Ultimately, to be successful, you need to sell your product to people you don’t know.
The right salesperson for your team doesn’t necessarily have a large Rolodex or even deep expertise in your industry. Most industries can be learned. If that weren’t true, there would be no such thing as an entry-level salesperson. Many successful companies hire salespeople right out of college. So it’s not the experience or Rolodex that matters, it’s the ability and willingness to learn the right sales skills.
That’s what you should be looking for when making your next sales hire: a salesperson with a proven track record who’s sold a similar type of product at a similar price point. Someone who has evidence of having the right mindset and skillsets. If you’re a startup, add to that list a background in building sales organizations from the ground up. Because startup sales is its own beast.
Falling for the top two sales myths can be devastating for a young company. In our next blog, we’ll look at exactly what leads so many entrepreneurs to fall for these myths.