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  • Mike Hanna

What Sized Software Company is Right for You?



Remember the story of Goldilocks and the Three Bears? At first it was hard for her to choose which chair, bowl of porridge, or bed was the right fit. In a similar vein, you may be looking at 2022 and thinking about switching workplaces. Part of that consideration is what sized software company you’ll want to work at. Software companies go through different phases of development, and each phase has its benefits for software sales professionals.


Little Bear...The Startup


Software startups and early stage software companies offer some exciting opportunities for sales professionals. Because the company is just starting out, they may offer ground level participants some equity in the company. For some small software solutions, this means an actual percentage of ownership. For others, it means stock options. Either way, you’re looking at a potentially large nest egg if the company takes off and/or goes public. There are plenty of software professionals (both in the development and sales side) that have made sizeable fortunes in Silicon Valley not because of their salary or their bonuses, but just because they were in the right place at the right time.


Other benefits to working for a software startup include having more visibility; a sales professional has the ability to make a larger impact. With fewer reps, multiple territories may be wide open. However, the company will be lacking in name recognition and it can be harder to get your proverbial foot in the door with potential clients. But the silver lining to that particular cloud is that quotas may be lower, giving reps more chance to reach accelerated percentages. Of course, the company itself is the most sizable risk, vis-a-vis whether or not it becomes profitable. Most startups don’t last long. In fact, 70% of them fold after just 20 months. But for the 30% that don’t, there are great opportunities to grow with a company from the ground up.


Middle Bear...Growing Companies


Small to midsize software companies present many of the same risks and potential rewards outlined above, but their intensity is mitigated by the increased stability and longevity of the business. The comp plans may be the same in terms of base salary. However, as the company has developed some recognition and built up a list of referenceable customers, it’s easier to close deals and hit the lower level bonuses...but by the same token the higher end bonuses may be smaller. That means reps have less chance of falling short of their quota, but the reward of hitting the high mark is smaller.


Small to midsize software solutions have crossed the chasm (or are starting to) and can see significant growth. While an established, branded company may only grow 3-4% annually, companies in this growth phase can see growth rates ranging from 20% to 80%. These midsize companies will have more structure than a startup, but still less than a large enterprise company. Reps will have less visibility as there will be more of them, with smaller territories…which means less freedom to go where you want. But the flip side is that wherever you go, there is a better chance that your potential customer has heard of you.


Big Bear...Enterprise Companies


Enterprise companies are those software solutions that have already crossed the chasm and are entrenched in their market. They may be expanding into other markets as well. If you enjoy the structure of a large company, the enterprise level is where it’s at for you. Alternatively, you may find such structure around procedures and policies to be limiting. Either way, when it comes to retirement benefits, enterprise companies are more stable and have better performing stock plans. As far as the landscape goes, there will be a lot of reps to compete with, and you may only be handed a small number of accounts, which can feel very limiting in terms of how far you can go. These companies have already been successfully branded, and consequently that name recognition makes it easier to close deals. In terms of your lifetime sales journey, a several year stop at an enterprise company can look great on your resume.


It All Depends on You


So which type of software company is the best one to work for? Really it all comes down to you and what stage of life you are in, along with your risk appetite. If you are at either end of your workforce journey—that is, young or close to retirement—a startup could be an appealing place to work, as the risk of it’s closure may not present a serious setback to you (you’ll either find a new job or leave the workforce as planned). On the other hand, if you are in your middle years and have a family to support, the limitations (in terms of sales landscape, bonuses, and company policies) at an enterprise company may be more than made up for by the consistent salary. You may also like a more structured environment.


You will also want to consider what product the company is selling, because some verticals might be a more enjoyable or meaningful space for you. Some software sales reps just prefer selling to hospitals, while others prefer educational institutions, and still others like the banking space. There is also something to think about in terms of who you will be selling to: direct to companies or through resellers—each one has its own unique set of strategies.


I’ve been a software sales recruiter for over three decades and I’ve talked to lots of different software sales professionals at different life stages. I can help you refine what you are looking for and locate a good match if you’re looking to switch workspaces in 2022. Alternatively, if you are looking for talent, I have a large pool of qualified candidates we can discuss. Send an email to mike@michaelblair.com and let’s connect! Remember that when it comes to company size, there is something for everybody. The best part is that no bears are going to come after you once you select the right option for you.


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