Should you take the risk of applying to a fast-growing startup, or slowly work your way up at a more established enterprise company?
This is a question most salespeople have had to ask themselves at some point in their career. And it’s not an easy decision. There are pros and cons to both.
I have been an early employee at a very successful start-up (and several not-so-successful ones), and I’ve also been in Sales and Management at large, enterprise corporations. And although Sales is Sales, there are several big differences.
Today, I’m going to walk you through the quirks and differences between selling in a start-up or small to medium business (SMBs), versus selling in a large enterprise organization so you can choose an organization you’ll thrive in.
And stick around, because we’ve put together a short infographic at the bottom of this article to help out.
Start-Ups VS Enterprise
Let’s start by looking at some more obvious differences between start-ups and enterprise organizations, and then we’ll move on to some more subtle differences.
Perhaps the most obvious difference is that start-ups and SMBs tend to be less structured than enterprise. They are often leaner, looser, and hungrier than the larger organizations. They’re usually more entrepreneurial (even if they have been in existence for many years) and tend to be agile and embrace change easier than larger organizations.
These organizations normally have an exit strategy of going public or being acquired within five years, and they conduct themselves accordingly. This includes scrutinizing most large expenditures.
Their planning timeframe is this quarter, whereas enterprise is more concerned with this year and the next, and they judge their success by quarterly increases in earnings per share.
Enterprise organizations often organize and assign territories geographically or vertically and have at least two levels of sales management, such as a District Manager and a Vice President of Sales.
The structure of start-ups is often much more informal. Everybody is expected to help out where needed. The plus side of this is that it leads to a comradery at start-ups and SMB organizations that is often hard to replicate at the enterprise level.
Salespeople are not as tightly managed in start-ups or SMBs, and most of us like that. You can feel like you’re your own boss.
Salespeople have been able to work remotely at start-ups and SMBs, with flexible schedules, well before the COVID 19 pandemic forced bigger companies to do the same.
Procedures and Workflows
Enterprise sales organizations usually have well-established procedures, workflows, customer relationship management, and forecasting systems. They also have well-developed workflows for lead-processing and drafting and revising of contracts.
Start-ups often develop informal workflows from “scratch.” There is no “we have always done it this way.” Pipeline reviews often occur via telephone or Skype, sometimes at odd hours.
Enterprise organizations, on the other hand, have regularly scheduled pipeline reviews, where each salesperson discusses the status of their accounts and must defend their forecast and tactics. Action plans are agreed upon for each account, and the results are measured the following week.
ADP, a large organization that sells payroll and human resource services, for example, is well known for its rigorous, mandatory weekly sales meetings. As such, they look for salespeople who will conform to a standard with less individualism.
Start-ups and SMBs are more likely to tolerate cowboys and cowgirls — high-performing outliers that are non-conformists.
There is rarely an opportunity to own stock in the enterprise unless you are at the executive level or if there is a stock or options plan available for all employees. Although, their fringe benefits package, including paid time off (PTO), will usually exceed that of the start-ups and SMBs.
Some SMBs may be owned or controlled by one or more families, which introduces another dynamic. In that case, the decision making is almost always made by members of the family, not the non-family management team (I learned this the hard way).
The advantages of these family-owned businesses are that they’re usually stable, do not take risks, and have more mature products than true start-ups.
If a start-up or SMB is successful, turnover is normally very low, and this is largely due to the comradery I mentioned above. Usually, their primary problems are staffing (finding qualified people) and space. If they aren’t successful, they’ll spend most of their energy seeking private funding to sustain operations.
At some point, the founders of successful start-ups will recognize they need to hire professional managers to run the company and will take a more specialized role or leave the company entirely. People with key roles become in-demand and are often pirated by other start-ups.
As the company scales up due to growth, more formalized procedures and processes will be put in place.
Enterprise organizations usually have staff devoted to pre-sales activities, sometimes at a 1-to-1 ratio with salespeople, but generally no greater than 4-to-1. They also usually invest in fulfillment and customer support functions.
Start-ups and SMBs don’t have the resources to devote to these critical needs, and, in general, are often less selective about their customers. They will often sell to as many customers as possible to quickly capture market share, rather than spending time on pre-sale activities.
Many enterprise organizations have established, well known, products in the marketplace, and will appeal mostly to those that desire mature, well-tested, and accepted products with less risk to the company when selected.
Product introductions consist primarily of product extensions, such as different flavors of a soft drink or a slightly different insurance product. Some try to enter new verticals. Others try to re-invent themselves in order to be more cost-efficient and decrease time-to-market for new products.
Start-ups, on the other hand, often need to fight the battle of recognition, financial stability, and reputation in the marketplace.
They often have products that appeal to buyers who want to purchase the latest and greatest gadget — the early-adopters. Their offerings are typically more technologically current, being recently developed by founders who saw a need, or an opportunity to cut costs, and developed a product to do just that.
There are thousands of very successful SMB companies that offer lucrative sales careers. And they usually offer more opportunities for promotion and greater responsibility for those who are willing to put in extra work.
You will have the opportunity to learn more about the company’s various functions, as they may move you around to fill immediate needs.
Foreign-based start-ups are always eager to gain market share in the United States, and they can be an attractive option for many, as a lot of new products are developed outside the U.S.
If you work for one of these foreign start-ups, you will operate much more independently, as the headquarter is thousands of miles, and several time-zones, away. Your sales territory could be very large, as well.
Which Organization Is Right For You?
The type of organization you should work for depends largely on the culture you prefer to work in, as well as your risk appetite — since you have much less job security at a start-up.
According to Forbes, 90 percent of all start-ups fail. But there are ways to protect yourself and mitigate the risk of taking one of these roles. For instance, if a venture capital firm backs them, the percentage of failure drops to 75 percent.
That’s still only 1 out of 4 that will make it. However, if you are very interested in job security, maybe you shouldn’t be in sales.
We all know about the recent successes of Facebook, Zappos, Airbnb, Instagram, and Pinterest. But it’s important to remember that these companies are the exception, not the norm.
Only 2 out of 5 start-ups earn a profit. And this will influence how much the management will spend on staffing, marketing, travel, commissions, and offices.
If you are cash conscious and tend to be anxious about receiving a steady paycheck, then working for a start-up may not be a good match for you. Sometimes you may receive shares in the company instead of compensation. The shares will only have value if the company is acquired or has a public offering.
If you are a gambler, have the resources, like to invent new processes, and are looking for a large payback for taking the risk, then you’ll likely thrive in a start-up environment.
If you care about long-term stability, and having dedicated resources available, then enterprise may be your best bet.
And in case you’re still struggling to decide, we’ve put together an infographic to summarize the most important differences at a glance.
Choosing the type of organization you want to work for is an important decision, but it’s not an eternal commitment.
Remember, your sales skills are transferable. Prospecting, qualifying, discovery, and closing are all valuable skills regardless of where you are employed.
So focus on choosing the type of organization that best fits your personality and risk profile, and if it doesn’t work out, you can try your hand somewhere else with a wealth of new experiences under your belt.