How Many Salespeople Do You Need to Reach $10M ARR?

A model in google sheets to support the forecast

The journey of a growing sales-led company is often filled with exciting opportunities and challenging obstacles. One of the most critical questions that arise along the way is, "How many salespeople do I need to hit my revenue goals?" This question is not as straightforward as it may seem and is often underestimated by companies. The number of salespeople needed to reach a revenue goal depends on a variety of factors, including the quota expectations for each AE, the number of SDRs and Sales Directors required to support them, the ramp-up time for new hires, and the cost of growth. These are just a few of the many complex considerations that companies must keep in mind when building and scaling their sales teams. A thorough understanding of these critical factors is crucial to ensuring successful and efficient growth for any sales-led company.

I’ll keep it short as you might be more than familiar with the problem since you’re here :D

Download the model here

Do not request access to this sheet, simply make a copy:

https://docs.google.com/spreadsheets/d/1cO2SMsHEXAzbskkdW6QtAwdi8h8y1y-f9VsAhgz6jzQ/edit?usp=sharing

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How the Model Works

• Enter your current ARR

• The model then calculates the new ARR from new customers to account for

  • your target monthly growth rate and

  • churn

• The model requires a good estimation from you on how many deals a single AE is able to close per month

  

  I’ve added a few comments to help you get started

Additional Considerations:

• Salesperson productivity: While the model assumes that salespeople will meet their quota on average, in reality, some salespeople may not meet their quota, while others may exceed it. This means that the salesperson quota is just an average expectation.

• Sales support team size: The size of the sales support team also plays a role in determining the number of salespeople needed. The model assumes that a certain proportion of Sales Directors, SDRs, and SDR Directors will be needed.

• Salesperson ramp-up time: The time it takes for a salesperson to reach full productivity is also an important consideration. The model assumes that salespeople will reach 100% productivity in month 5. However, different productivity levels can be entered.

• The model requires a salesperson to have a first productive month and to reach 100% by the end of month 5 (due to how the formula is calculated). Many AEs will not be productive in the first months e.g. due to long sales cycles or empty pipelines. The first month in this model is then simply the first month of their first closed won deal.

• The model does not include revenue from upsells, account expansions, or partners.

Big thanks to Christoph Janz

This model is based on a template from Christoph Janz. I’ve added several features to make it more flexible and easier to scale as well as some new functionalities.