The #1 reason SaaS companies miss revenue targets is insufficient sales capacity planned too late. When companies need to achieve substantial revenue growth, they must account for both quota attainment rates and ramp time. New reps typically take several months to ramp, so hiring early in the year for end-of-year targets means reps only contribute partial productive time. This requires significantly more hires than simplistic math suggests. Companies that skip this math often hire insufficient reps and fall short of targets.

The timing trap compounds the capacity problem. Reps hired early in the year produce through most quarters, while reps hired late barely produce in the current year. To hit ambitious year-over-year growth targets, you need required capacity in place early in the target year, which means recruiting starts in the prior year. When accounting for ramp time, substantial net new revenue often requires significantly more new hires starting well before the target year.

Sales capacity costs are front-loaded and substantial. Enterprise AEs carry significant annual costs including OTE, burden, tools, and enablement. Large hiring classes create considerable fixed sales expense before considering ramp. During ramp, reps consume costs while producing limited ARR, creating negative ROI for extended periods until CAC payback. For companies pursuing aggressive growth, total sales costs can represent a substantial percentage of ending ARR. Under-planning capacity starves growth; over-hiring burns cash. Precision in capacity planning is critical.