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The $3-5M Rule for Hiring SDRs Is Wrong
"Wait until you're at $3-5M before hiring an SDR" — Ray heard this from an attendee at a Dallas event who'd been given the rule by an EOS-type advisor. His problem with it: that rule treats the SDR as an expense you need to afford, not a revenue multiplier that helps you generate the money in the first place. "I can't afford to make more money until I've made a certain amount of money" doesn't hold up. At MSP Sales Partners, Ray's first two hires were SDRs — because when you're starting a business and need to drive demand, you hire the person who creates revenue, not wait until revenue shows up on its own.
The bigger lesson goes beyond SDRs. Business isn't paint-by-numbers, and most "rules" are just someone projecting their personal experience onto every business. Whether to hire — and when — depends on your demand, your constraints, and what role actually multiplies output at your stage.
What You'll Learn in This Episode:
- Why the $3-5M SDR rule treats a revenue multiplier like a fixed expense — and why that logic breaks down
- How Ray's first two hires at MSP Sales Partners were SDRs, and what he learned when organic demand changed the equation
- Why most business "rules" are overgeneralizations built on one person's experience
- The real question to ask before hiring an SDR: what's the core constraint in your business right now?
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Welcome to The Ray J. Green Show, your destination for tips on sales, strategy, and self-mastery from an operator, not a guru.
About Ray:
→ Former Managing Director of National Small & Midsize Business at the U.S. Chamber of Commerce, where he doubled revenue per sale in fundraising, led the first increase in SMB membership, co-built a national Mid-Market sales channel, and more.
→ Former CEO operator for several investor groups where he led turnarounds of recently acquired small businesses.
→ Current founder of MSP Sales Partners, where we currently help IT companies scale sales: www.MSPSalesPartners.com
→ Current Sales & Sales Management Expert in Residence at the world’s largest IT business mastermind.
→ Current Managing Partner of Repeatable Revenue Ventures, where we scale B2B companies we have equity in: www.RayJGreen.com
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Transcript
Hiring an SDR is a revenue multiplier, and it’s only an expense if you don’t do it properly. And that distinction changes everything about when you should actually make that hire.
So, I’m right now speaking at an event in Dallas. And after my presentation on hiring SDRs and training them and managing them, somebody came up to me and they said, "Hey, I was told you shouldn’t hire an SDR until you’re at 3 to 5 million." And they said it was an EOS person or somebody in a similar type of framework, and they wanted to know what I thought about that rule.
And here’s my answer—and it applies way beyond that specific question: Rules like that chat my ass (air quotes around "rules"). Business is not paint-by-numbers. You know, if you tell somebody you can’t do X until you’re at Y, you’re overgeneralizing. There are a number of scenarios and a number of factors that go into determining the answer to a question in business. And like, when you should hire an SDR? I don't know, it depends. It depends on the type of business, depends on how much demand you actually have, depends on what the core constraint in the business is today—it depends on a number of factors.
But here’s, like, at the core of it, the reason I had a problem with the question itself was: when you say wait until 3 to 5 million to hire an SDR, what you’re really saying is wait until you can afford it. And that means you view that role as an expense, because you have to reach a certain level in revenue or in profitability to afford expenses. But if you hire an SDR and you do it right, it’s a revenue multiplier. It helps you generate more money. And if that’s the case, why would you wait? "I can’t afford to make more money until I’ve made a certain amount of money"—it doesn’t make any sense.
And look, I’ll give you a real example in my own business, MSP Sales Partners, that we started a year and a half ago. The first two hires in that business were SDRs. Now, what’s funny is I very quickly realized that that wasn’t what I actually needed, because we started instantly generating enough demand from speaking, from organic content, from other channels that I already had, so it turned out to be less relevant than what I expected. But in my case, my thought was: "Hey, start a business, need to drive demand, want to grow and generate some sales." So the first person I hired was somebody who’s going to generate those sales for me—a revenue multiplier. And I made those hires early so I could grow the business and afford the expenses later.
Now, like I said, in my case, it turned out I didn’t need those two SDRs. But if I were to start another business in a year or in two years, the first two hires might be an SDR; that might be the right play. So I share this, like, for the specific tactical answer, but also for the framework that’s kind of behind this. Because these absolutes, these clean-cut formulas for everything, are generally ineffective. What they are is overgeneralizations where somebody’s taking their personal experience and projecting it onto all businesses. And that’s a dangerous mix. And then just the perception of hiring a salesperson or hiring an SDR and waiting until you get to a certain level to be able to do that makes absolutely no sense.
So, want to share that with you. Hope it helps. Adios.
