The Six Million Dollar Hump

Several months ago I wrote a post about companies that have a difficult time moving past the $2M level in revenue. There is another one of these revenue road bumps and that is between five and six million dollars. I really believe that many owners never see this curve ball coming. The company rumbles or chugs along, reaching the $5M level and it kind of just stays there. These companies have some of these traits:

  1. No sales manager
  2. Anywhere from 3-6 reps
  3. There has been turnover in the sales department but not enough to worry the owner
  4. The owner may be trying to manage the salespeople
  5. I’d guess that the majority of the reps are between 28 and 42 years of age
  6. There are anywhere from 5-8 large customers that represent over 80% of the business
  7. Some accounts leave and others come so the net gain is a wash. (Sometimes the reps don’t even know this is going on. Hard to believe? I’ve seen it.)
  8. Sales territories are large, making time management and account maintenance difficult
  9. At most, one of the reps is an A player and the rest are C’s and B’s

 You have an owner and several department heads running the company and I’d guess the owner is involved with everything. Around this time companies are investigating different computer systems, maybe inventory control, a larger web presence, creating or bringing on new products or product lines. In other words they’re moving into a more grown up corporate culture. But, oh, those pesky sales; they just don’t seem to be growing.

I’d love to think that the only solution the owner needs is more or better salespeople but that’s not true. The owner will have to make some key operational changes in order to support growth but something will have to change in the sales department as well. Hire a good sales manager or a consultant who can fulfill the role until a full time manager is hired. Find other places for the C players in the company and get them out of sales. If the territories are too large shrink them and hire more salespeople. Do not, under any conditions, promote your best salesperson to manager. It won’t work, as I have mentioned in past posts. Invest in quality sales training to create one common sales language that all the salespeople will use. Begin to assess the salespeople to determine if they have the right skill sets.

Here is the amazing thing that happens with so many company’s of this size. They invest in better equipment, computers, marketing-you name it but they pass gas on changing anything in the sales department. Sales departments, at times, need to be improved and or upgraded. Don’t waste money on subpar sales reps while investing in other departments.

The Final Word:     I Like this quote I dislike this quote“Wise men speak because they have something to say; fools because they have to say something.” Plato


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