Most technical founders are not comfortable with the sales process or the disciple of selling. They tend to treat it as beneath themselves and “sleazy”. Given that most entrepreneurs I interact with are engineers, I usually walk them through an engineer’s approach towards selling, which tends to mirror the agile development process they are familiar with (more about this in a later post).

Many entrepreneurs do try to sell, and not seeing quick success, come to a conclusion that they should outsource their sales efforts to an “expert”. Usually this is after they have exhausted their initial contacts and get frustrated with the constant rejection that comes with sales, or after they have finished tapping into their entire list of first level contacts who could possibly be a customer. They tend to be more comfortable “convincing” people they know well rather than “selling” to people they dont know at all. Which is why I ask them to “dig their well before they are thirsty“.

Without sales there is no business.

Without sales there are no customers. No customers means what you are building is a side project.

Without sales there is no revenue. No revenue means what you are working on is an unsustainable venture.

I have heard of enough companies who have died because they could not sell, but rarely heard of companies that died because they could not develop or build a solution that was sold.

To me, sales is the headlights to your business. I would never recommend outsourcing your sales function in your startup.

Even large companies I know in other areas besides technology, outsource manufacturing, engineering, finance or customer service, but rarely outsource sales or marketing.

I dont consider selling via channel partners as outsourcing your sales. That usually means you have to “sell” and convince your channel partners.

There are 3 reasons why I dont like sales outsourcing.

1. You dont “own” the customer and dont get direct customer feedback. In the initial days of your startup, its absolutely important to have direct customer connections, feedback and input. Even after you grow larger, customer connections are the biggest source of innovative ideas. Without direct customer access you will get a warped view of the real problems and pain points they have, which results in a sub optimal solution.

2. It is very hard to predict predict consistent closure of deals and commit to financial milestones. When you outsource sales, the outsourced company has the eyes and ears on the ground to understand what moves deals, whose budgets are cut and when deals might happen. That information is critical for you to plan your quarterly projections. Without that information you will also find it hard to understand how to allocate resource towards projects and features the engineering team should be working on.

3. Even if sales is “outsourced” most outsourcing vendors will require your help to constantly tweak your positioning, handle customer objections, change pricing, etc. Even after 5+ years at a large software company with over 500+ in a direct sales function, I found us to be constantly changing messaging and positioning each quarter to keep up with customer trends.

Can some parts of the sales process (like the initial lead generation) be outsourced instead of the entire sale process? Possibly. If you feel that the biggest challenge for you is to get the initial meetings and you get a sense that after your get those appointments you are able to move the sales process forward, then I would suggest you look to getting help from a firm that sets up appointments, or does targeted lead generation.

Yesterday I had a chance to talk with a software entrepreneur who has built a security product that’s primarily sold to mid-sized and larger companies. Over 8 months have gone into the development and he has been able to get fewer than 5 customers for the product. Surprisingly he’s been able to get enough interest from investors who have provided early funding to the tune of several hundreds of thousands of dollars. He has been able to also generate lots of interest from partners but that has not translated into customer sales. Given his developer  background, he was keen to talk about sales and how to generate some initial traction in the market.

Here is what I have learned from all my initial startup selling in the B2B space (i.e. startups selling anything – software, hardware, services, juice bars, etc. to other companies, not consumers).

There are only 2 reasons why companies buy from startups – The person buying has a very good relationship with the entrepreneur, or the person buying has a dying pain that she feels can be solved by the startup’s solution.

That’s it.

This is dramatically different from why they buy from Cisco, Office Depot or any other large company – where politics, budgets, executive management preferences or any other of over 100 factors also come into play.

Lets drill down into both those reasons.

I have personally only been able to sell the first 10 or so first customers for all my software companies through relationships that I built earlier. Which is why I always advocate digging you well before you are thirsty. Most of the software that I have built (B2B) did solve a problem, but I found that it was never an “immensely-horrible, I’ll-die-if-I-dont-fix-it” kinda pain. I avoided those because I did not have as much confidence in my ability to solve that type of problem since the scrutiny & pressure of “must-work-or-you’re-dead or this-better-work-or-you’re-out” causes buggy software.

So I focused on building relationships with key people (that usually took a few months), without me talking much about my product or service. It was purely to help the other person who I wanted to be friends with.

When you build a strong relationship, you will find people are more willing to forgive bugs, try unproven software or even give a no-name startup a chance.

Given my engineering background, I have a “formula” that I believe that will help you understand relationship building.

Relationships = Time + Trust + Mutual interest.

In this case, + is not addition, but an operator. More about this formula in a later post, but the summary is building a relationship takes time (quality not quantity) spent together, building trust by small commitments you deliver on and mutual interests you share with the other person.

The only other reason larger companies buy from small startups is that they are in a huge pain and they believe startup has a unique solution, offering or product to solve that pain in the fastest possible time. I emphasize “they believe” because they are really not sure yet since they have not built a relationship with that individual.

Relationships trump everything in sales. Everything. She who has the relationship wins.

Which is why you are better off getting a referral from one of your customers (who you have a good relationship with presumably) to another potential prospect (who they have a good relationship with).

So before you start you own B2B entrepreneurial venture, build relationships.