The path to growth for a startup isn’t cookie-cutter, and neither is building a successful sales team. Instead, every stage has its own challenges and opportunities, driven by different needs and necessitating different strategies. Here’s a look at the key milestones in a startup’s journey and how to navigate them from a sales perspective to ensure sustained growth.
1. Zero to $500K Annual Recurring Revenue (ARR)
These early days are all about founder-led sales. After all, a great percentage of startups are created by founders to solve a problem they’ve experienced firsthand. Since they often come from that industry, their personal network and relationships are crucial to gaining buyer trust and getting sales off the ground.
As such, sales tactics in this stage tend to work best when they’re informal. Given their familiarity with the space and the people they’re pitching, they also thrive on a founder’s intuition. Founder-led sales are a great stepping stone in the beginning and frequently get companies to $500K or even $1 million in ARR.
2. $500K to $2M ARR
Of course, a founder’s network is only so big and can only be worked so hard. After their connections are exhausted, it’s usually time to make the first sales hire. This might be someone who the founder already knows, but even if not, they tend to become an extension of the founder from an evangelist standpoint. They believe in the product and sell mainly from a place of passion and drive.
This first hire, who may be called an account executive (AE) or who the founder may call a vice president (VP), for no apparent reason, doesn’t have strict processes. They practice guerilla sales, evangelizing and working on climbing the revenue ladder. This person is often unintentionally the one who starts the rat’s nest in terms of the startup’s systems. They might say they need HubSpot or Salesforce, and the company starts buying software and using it without a roadmap.
3. $2M to $5M ARR
Many startups get to $2 million in ARR by beginning with founder-led sales and then relying on that first sales hire. But once you hit this stage, you need more of a team and more formalized processes to move forward. You might hire a Sales Development Representative (SDR), but sometimes this person isn’t organized enough to run a whole team.
Regardless, if your product is good, you’ll likely begin to gain traction, start closing deals, and draw the attention of seed-stage investors, who typically bet on the founder and the promise of product market fit. From there, you get to the point where you need to raise a Series A, which is when a bigger institutional investor will come in and expect a lot more. They’ll need to know your structured sales processes, messaging, go-to-market channels, and what your pipeline looks like on a detailed level. This is when your sales processes and systems need to be clearly defined and firing on all cylinders.
4. $5M to $10M ARR
With a relatively small sales team, you’ll be limited in how far you can go. So, when it’s time for you to capture more market, you need a bigger army. As you hire more staff, you need to move from simply having processes you can articulate to having processes that can be done at scale.
Having the right technology at this point (and set up properly) is crucial. This is because tracking, measuring, and managing at scale is very different from doing so when you have only three individuals on the team. If you don’t have your systems and processes locked down and optimized by now, they’ll start to break as you bring on more people.
5. $10M to $25M ARR
By the time you’re running a $10 million-a-year sales operation, you most certainly should have a solid operational blueprint in place. But then, to jump from $10 million to the next inflection point at $25 million, you need to change or add a market, whether it’s a vertical or market segment.
Typically in this stage, you’ll hire an enterprise team and start going upmarket and selling bigger deals. The nuances explode in this range, as managing multiple market segments requires distinct approaches for each, including tailored sales strategies, team structure, and leadership.
Winning Tips for Every Sales Stage
Whichever stage you’re in, there are a few pieces of advice to keep in mind that will help you go further faster:
- Slow down to speed up. Don’t assume that people want to see a demo and are eager to sign your contract. If you move slower, you’ll have much more success in the long run.
- Get curious. Ask questions and leave time for the buyers to ask questions, too. Follow up on any nuggets you glean about what matters to them rather than moving on to the next slide in your deck and trying to regain control of the conversation.
- Aim for smaller commitments along the way. Most folks aren’t going to jump into something new quickly and with both feet. Work to gain trust and build a relationship, slowly asking for small commitments so you can ultimately build up to asking for a big one.
In Closing
Sales at any stage in a startup has its own challenges and opportunities, but understanding what makes each part of the journey unique is the first step in mastering it. By recognizing the distinct needs and strategies required at each phase, founders and leaders can better adapt, optimize their approach, and drive sustainable growth.
