How to get more leverage

A common occurrence with agency owners is that they will make $500k/mo, but not take home even close to that amount of profit. 

Let’s say you have one business partner, and 30% margins (not uncommon).

$500,000 x 0.20 = $100,000 per month. 

Divide that by two, you have $50k profit per month for each partner. 

So even though you make $500k/mo on paper, you are still at less than $1m per year in take home income.

It usually takes years and a lot of effort and hardship to get to 500k/mo, and then all you get is 50k/mo in personal income.

I actually hear of a lot of people taking home less than that with a higher top-line revenue.

But does that mean the agency model is broken or bad?

No, it just means you have to do it the right way, and understand why these things happen so you can avoid them.

The reason agencies don’t make enough profit is because they have no leverage:

• Low quality team

• Very little effort into employee trainings

• No brand/content

• Take on bad clients just to revmaxx

To go further, most people have a $30/hr employee who has $30/hr skills.

To get leverage you can make $30/hr employees worth $60/hr with a good employee training. 2x leverage.

Their time input is the same, but you get more output.

Most problem is that most business owners live on a hamster wheel.

Work, Slack, meetings, client calls, etc.

You are too focused on the work you will have to continually do, rather than focusing on ‘one time work’ that will pay you forever.

For example, a lot of people would rather just fulfil client work themselves than make a good training for their team so the team can fulfil on their behalf.

It’s the same way we hit the snooze button in the morning.

Making an in depth employee training takes time.

Time we don’t always have.

It’s much easier to just do the minimum work yourself, and keep everything under your control, than to carve out the hours to make some training.

After all, between making content, lead generation, managing clients and the team, it’s no surprise that you would feel overwhelmed.  

But delaying this work is the same as hitting the snooze button in the morning.

“I would rather feel good now, than pay the price of feeling good later”

When we do this, we are basically making the choice to stay on the hamster wheel forever, and shooting ourselves in the foot.

Matt made a YouTube video about this a while ago, which goes over how you can build enough leverage to grow a $10m/yr agency.

You can check it out here (link)

Talk soon,

Leo