How should a company (say a Startup) compensate an external sales consultant?
A Founder can & should seek help from external sales consultants if they are unable to hire the right person but they can’t outsource the accountability. Keeping this in mind:
- Opt for equity only if both parties are there for the long term – atleast a year. Both should be seriously committed to each other and have ideally worked on a few deals together. IMHO an external consultant who is selling for multiple partners shouldn’t get equity.
- There should be skin in the game from the founder as well as a consultant. Only variable payment based on deals brought in should be avoided.
- Fixed fees /retainers only are also best avoided – for the same reason. If there is a significant effort required in research, planning, Go To Market – that too in a reuseable documented format – there should a separate fixed fee.
- Best model is a mix of fixed component & a big variable component based on sales value. Last – in services there has to be a certain amount of upfront payment to get started. Does it sound fair?