WHEN TO BRING IN A SALES REP. A SIMPLE FORMULA THAT BUSINESS OWNERS SHOULDN’T IGNORE (FORMULA AT THE BOTTOM)

Whether a business already has a salesforce or the owner is the only rainmaker, it’s important to remove the guesswork when increasing the cost base to drive further revenue and underlying profit.

Hiring a sales rep can unlock new revenue, reduce owner dependency, and bring consistency to the sales pipeline. But hiring too early can drain cash, and waiting too long can stall growth. The key is spotting the signals that the business is ready.

Here are the most common indicators that it’s time to add to the salesforce:

1. The Owner is the Only Salesperson

2. Inconsistent Lead Follow-Up

3. Pipeline Visibility is Weak

4. Growth Has Plateaued

5. Customer Relationships Need More Depth

6. Preparing for Exit or Scale

By raising the sales rep question in your business, you can see the cost of inaction. Numbers make the decision clear: a sales rep is not an expense, but an investment.

Here’s a simple formula to test and benchmark this in your business.

A sales rep should pay for themselves out of gross profit, not revenue.

1. Work out the fully loaded cost of a rep

   Salary + commissions + on-costs (super, payroll tax, car/tech).

   Example: $120k salary + $20k on-costs = $140k/year.

2. Divide by your gross profit margin %

   This shows the amount of new revenue the rep must generate to break even.

   • If gross profit margin = 40% then $140k ÷ 0.4 = $350k in new revenue required.

3. Check cash reserves

   The business should have at least 3–6 months of the rep’s cost in the bank to cover their ramp-up period (most reps don’t hit target in the first quarter).

	Sales Rep Affordability Test
Annual Salary ($)	120,000
On-Costs (Super, tax, car, etc.) ($)	20,000
Total Fully Loaded Cost ($)	140,000
Gross Profit Margin (%)	40
Required New Revenue ($)	350,000
Cash Reserve Months	3
Minimum Cash Reserve Required ($)	35,000

What to Look For

• Sustainable Margins: If margins are already thin, adding a rep won’t fix the problem; it may make it worse.

• Market Opportunity: Is there enough demand and lead flow to justify the hire?

• ROI Expectation: A strong sales hire should return 1.5x–3x their cost in gross profit within 12–18 months.

Run this affordability test to determine if you are ready to hire sales staff. It turns a “gut feeling” into a clear, numbers-based decision.