Ron: How’s it going? This is Ron Reich here from RonReich.com, and I’m talking to the one and only, the amazing James Schramko from SuperFastBusiness.com. And today, I’m really excited because we’re going to be talking about team members. Specifically, how big does your team need to be when it comes to going from six to seven figures?
So James, you obviously have a very, very successful business of your own. And you’ve helped so many other people go from this six to seven figure landmark with their teams, and having adding team members and things like that. So what’s your perspective? How big does the team need to be? And then I’ll tell you mine. Go for it.
James: I think it partly depends on business model. So you know, if you’re lucky enough to write a hit song or come up with some amazing software and license it, you could get there by yourself. But it is rare. I reckon, from my own experience, you’d get to a few $100,000 and then you’re going to start to need help. I got to around $300,000, a year by myself. And then I started adding in people. And I went for the roles that are easy to fill like customer support, because as you increase your business size, you will have more demands and resource required to support customers. And that’s often not the best use of an entrepreneur’s highest level time.
Then you need help with things like content and website development, and then perhaps paid traffic campaigns, etc. And if you do a podcast or a show, you’re going to need a team to edit. Now, you can use services to do this. And I coach plenty of agencies who provide these services. But I think at the minimum, you should at least have a couple of assistants who can help you clean up and sweep up and protect your schedule so that you’re only really working on things that are massively important. And even if you have outside suppliers, you’ll at least have a point person or point people in your business to deal with them.
So, bottom line is I think for a six-figure business, you could do that by yourself. But as you get into the 2-3-400,000 zone, you’re going to need to add some infrastructure. I’d say two or three people. If you want to go from six to seven, then most of the people I’m coaching in that range, they’re gonna have around five to 10 people in their team, depending on their business model.
Now, if they’re a service agency, you’re going to need more people. Because you’re selling time, that’s what you’re literally selling if you have an agency. If you’re an affiliate marketer, or an information product seller, you can make six or seven figures with a very small team, two or three people. That’s basically it. When we were doing six figures a month, at one point, we had 65 people in my business, but we were providing an agency service. And we ran that with a 50% profit margin. The biggest cost in a lot of the people who I coach as business is, actually, team members. And beyond that it’s usually traffic of some kind, whether it’s affiliates or paid traffic. But that’s basically it.
For my own business, seven-figure business, I have a team of six. And that is the sweet spot number for me, for the sweet spot size business that I have.
Ron: Okay, gotcha. Yeah, I think everything you said is that’s my experience as well.
One fact I heard this from a guy by the name of Taylor Welch, who I’m sure you know, and he said, for every $400,000 in revenue, you want to have, like, one full-time employee. And I kind of interpreted that as that could be two or three assistants that kind of maybe equal 140-an-hour person. And that kind of always was kind of a good benchmark for me. So it’s kind of like, you can kind of do the math, like how many hours per week? Or how many 40-hour-per-week people? Do you really basically need like, one for every $400,000 in revenue? If you did less than half a million dollars a year, that really is you plus maybe two assistants, and then maybe a little bit more people, as you scale from that.
And one of my pet peeves though, is that, you know, so many people, not too many of my clients specifically, but just a lot of people in the space as we say, as soon as they make their first $100,000, they want to like, build the biggest team on Earth. They want to become the CEO of Microsoft or something like that. They don’t realize that they still got to do the work. There is no, like, fairy tale where they can just kind of like, just do the one thing that they like to do and not have to worry about anything else, you know?
James: It’s a major problem. People think there’s this magical Swiss army knife. Like they keep getting told you have the team, they’ll do everything for you.
Ron: Yeah, yeah.
James: My team does that. But my team’s been with me for 10 years. I’ve put in the hard yards. And the fact is, before I came online, I was a very good leader. I was already running a $50-million business with 70 staff before I had my online business. So I had good leadership skills.
The reality is a lot of these micropreneurs have very, very bad leadership skills. And we run, my wife and I, run a recruitment business. We actually supply team to Taylor, which is really interesting. And what we found is a lot of leaders are not very good. They have unrealistic expectations. They don’t look after people well, that people leave. So another block to people hiring people is that the people they hire leave because they’re bad leaders. People leave the leader right? Warren Bennis said this. They leave the leader, not the company.
And if you plan to scale and not lose a lot of traction while you’re hiring, you need to do it right. And I agree with you, start small and be realistic. There are definitely things you’re going to have to do as a business owner. And almost without exception, everyone where I’ve seen their business model’s designed to keep them outside the business entirely, things often require them to come back in to fix up stuff, because they pulled away too early.
I believe you can get into a passive relationship with the business. There are business models that facilitate that, too. Like, especially revenue share deals, which is something I’m passionate about, that allows you to have that leadership responsibility somewhere else. So I think step one is, recognize if you’ve actually got leadership ability. And step two is, build an appropriate amount of team for the size of your business as you go. And always be responsible for those people who you hire.
And one of my favorite things is to twist the Spiderman saying. You know, the Spiderman saying like, “with great power comes great responsibility.” Well, it’s also then true, that with great responsibility comes great power. Now I’ve got a team of six. So every day, those six people are powering my business through into the marketplace, and I’m buying the time, I’m buying their time to be able to do that. And so I get the power that comes with the responsibility to be able to publish podcasts, to be able to service our customers, to keep our websites up. So there you go. That’s my thoughts on team and leadership.
And it’s really interesting, Ron, that you’ve had a similar experience where people have gone too hard, especially I think they go really heavy on high-cost Western labor, who they think are going to do everything for them, but often end up just stealing their business model and their clients.
Ron: Yeah, one of my favorite bigger pet peeves is that – we could talk about this all day, like we can many things – is that many, many people I’ve talked to where they’ll ask me, Do you know a good marketing director? They’re looking for like, the magical unicorn marketing person, that person that can like, because the owner might be a good marketer, they probably are a good marketer, they’re looking for that person that can like write copy and build funnels and understands traffic and understands all these type of things.
And that’s like, yeah, every person I know that has those skills, they’re running their own businesses making millions of dollars or doing some high-level things, they don’t really exist. So you know, everybody’s looking for the unicorn, because they don’t want to do the hard things to really grow their business.
James: You know, and just to that point, most of the people who I coach who have employed someone of that type of caliber, if you can find them, they’re usually at the $2-3 million per year revenue mark. And they’re usually spending around $150,000 to $180,000 to find that person. So to just factor reality here, you’re not getting those level of skills from an intern on $60,000 a year or whatever, you know, to do five hours a week or 10 hours a week. That’s crazy.
I always prefer to hire full time, or a dedicated service provider who’s outside my business. They’re my favorite things to do, rather than part timers. The risk with part-timers is that someone else is paying them as well. And they might be a better leader than you or they might want to soak up more of their time and then they cut you out.
Ron: Absolutely. Cool. Good stuff. We’ll definitely have to continue this conversation and much more, James. To be continued.
James: Thanks, Ron. That’s Ron there from RonReich.com. I’m James Schramko, SuperFastBusiness.
Ron: Alright, excellent. Thanks.
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