Need a Salesperson? Recruit Three!

A startup cannot survive without revenues, and more importantly, revenue growth that will impress investors.  And, oftentimes, this success rests squarely on the shoulders of your sales team.  Therefore, your sales team will make or break your success.  Hiring your sales team is arguably the single most important hires you are going to make.  You have to get it right!!

Read the rest of this post in Forbes, which I guest authored this week.

For future posts, please follow me on Twitter:  @georgedeeb

Personality Tests: Useful Tool or Lazy Shortcut?

For decades, personality tests have been used by big corporations to evaluate candidates during their hiring process. But, more and more, I am seeing early-stage companies using these tests to help them in their hiring process. I am not sure who is pointing them in this direction, most likely the increased access to free online personality tests. But, just because they are there, doesn’t mean you should use them. They are often used as a crutch to help make decisions, instead of using true leadership by hiring managers. And, often times, the practice does not result in actionable changes within an organization. Let’s dig deeper here.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb

Lesson #243: What is Your Digital Business REALLY Worth?

I was recently reading a great blog post from Digital Exits, a business broker based in Los Angeles that has expertise selling digital companies.  Their president, Jock Purtle, has been compiling exit data from 712 digital businesses that were sold over the last four years.  In Jock's post, which he graciously allowed me to reshare with all of you below, I found the results very eye opening.

Most of the time, we are talking about high flying, venture capital backed startups shooting for the moon and "Unicorn level" valuations.  Even when we are doing early stage venture financings, big multiples like 10x revenues can be used to value early stage businesses.  But, what happens if you don't raise a lot of capital and you are growing a lot slower, or are running a lifestyle business.  The exit multiples for digital businesses are materially lower.

In Jock's analysis below, we see that the average sale multiple for the digital businesses he studied was only 2.4x profits (not revenues).  And, it ranged from 2.0x to 3.4x based on the type of digital business you had, where software businesses with recurring revenues getting a lot more than a simple mobile app business, as an example.  This reflected the full gamut of companies from $0 to $10MM in revenues, where a small business would average around 2x profits and a large business could get closer to 4x profits, showing size clearly matters.  Only 17 of 712 businesses were sold for over 6x profits (yet alone revenues).

Wow!  What a reality check.  If you don't strike it big, which you most likely won't as a risky startup, make sure your expectations are clearly managed in terms of what your business is really worth.  The only silver lining here:  If you are thinking about pursuing a rollup strategy, there could be a big arbitrage opportunity between the 2x-3x revenue multiples most successful, big digital companies achieve, and the 2x-3x profit multiples they could be paying for acquisitions along the way.

Thanks, Jock, for sharing your wisdom with our readers.

ADDENDUM:  In 2020, Jock updated the below data points for 2016, 2017, 2018 and 2019 data.  You can see the most recent data in his post at this link.  As  you will, see transaction volume and valuations are on the rise over the last couple years, as compared to the data through 2015 below.

Lesson #242: Top 50 Content Marketing Strategies

I have been wanting to write a how-to lesson on how best to optimize your content marketing efforts, and I was fortunate to stumble on a great post from my good colleague Andy Crestodina, Strategic Director at Orbit Media Studios, a content marketing agency who is expert on the topic. So, instead of writing a very similar lesson from scratch, Andy was kind enough to let me repurpose his wisdom as a Red Rocket lesson and guest post.

Stop Cherry Coating Your True Opinion!!

Too often in business, people want to be nice, avoid conflict or not upset their boss or co-workers by stating their true opinions.  All that does is create problems for all involved.  You get frustrated that the business is not going in the direction you think is most logical.  And, the listener is provided an opinion from you, which they think you are supportive of, that is potentially the wrong direction for the business and not truly what you feel is the right thing to do.  Hence, keeping the listener headed in the wrong direction.   In business, and particularly in startups where you cannot afford to waste time or resources heading down the wrong direction, there is only one mandate to live by:  always call it like you see it, regardless your role or title.

Read the rest of this post in Forbes, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

Sales Not Closing? Know When to Panic!

Most B2B businesses are sales driven organizations, often with a team of expensive sales people in the market trying to hunt down and close new clients. This is typically a really stressful process for early-stage startups, as they typically are incurring the costs of the sales team, well ahead of the sales actually closing and funds running through the income statement. The key is learning what the normal sales cycle should be for your specific business, and when the sales slowness is due to the normal cycle versus a weak salesperson or conversion process. It is critical to learn when you have a real problem on your hands, and when you don’t, so you do not unnecessarily panic when sales are slow to materialize.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.