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In this episode of GradBlogger, we talk about the importance of taking a team-based approach to your online business. We discuss your options and the financial impact of being a solopreneur vs a team leader. We also talk about the fears that hold people back from building a team.
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Introduction
Chris Cloney: 00:08
Welcome to Episode #32 of GradBlogger, where we’re helping academics change the world through online business. We’re helping you the listener create a side hustle, create a business, replace your employment income, or create an online platform that can help you change the world with your research and your experience. I’m your host, Dr. Chris Cloney.
In today’s episode, we’re talking about why you need to build a team in your online business. This topic is a reflection of a lot of conversations I have with academics building out their online businesses. They’re uneasy about approaching it as a CEO or team lead.
A lot of people want to be the technician in their business: deliver everything, do all the backend work on WordPress, do all the backend on uploading posts, creating content, and putting it into the world. They don’t want to be the manager or even the visionary in their business.
Chris Cloney: 01:04
This is hard. It makes it quite difficult to grow your business, and we’re going to get into why in this episode. We are going to run the math. We’re going to go through some of the numbers on what a best-case scenario might be if you build your business without any team members, then we’re going to look at that and say, “Is that acceptable? What flexibility do we have in our lifestyle? Is this something that we’d want to do?”
If you’re on that fence right now, thinking you’ll never need a team for your online business or never be interested in that whole process, I hope to convince you that it’s going to be necessary. It might be necessary today, it might be necessary a couple of months from now, it might be necessary a couple of years from now. But if you reach this best-case scenario which we’ll outline, you’ll see that it’s quite inflexible if you don’t start thinking about building a team.
Who Can Benefit From This Episode?
Chris Cloney: 01:50
This episode will be great for intermediate folks: people who are already running a business and want to know how to expand it. Of course, we’ll talk about the specific techniques for growing a team in later episodes, so it’ll be good for those people.
It’s also important for beginners. If you’re getting started online, it’s something you’re going to need to be thinking about. If you’re in this camp of never wanting to hire, never wanting to grow a team, then hopefully you see yourself down the track in the sort of best-case scenario and see how it can be pretty difficult and a big struggle.
Chris Cloney: 02:26
In this episode, we’re going to talk about the best-case scenario if you’re the only person. We’re going to talk about some issues here and what your take-home salary might be or your take-home pay might be.
Then we’re going to talk about what your options are as a solopreneur with no team members. This comes down to two options: you can increase your price or you can increase the number of hours that you work. We’ll talk about how that affects the math in the best-case scenario.
Then we’ll talk about what the options look like if you do build a team. We’ll go through some of the fears that are holding people back, and what I want you to be thinking about today so that you can grow your business moving into the future.
Chris Cloney: 03:06
As always, you can grab the transcript of this podcast episode at gradblogger.com/32. There should be a button there to allow you to download the PDF transcript. We also pulled the numbers that we talk about into a cheat sheet that you can get in the show notes as well.
What Is The Best-Case Scenario?
So, we’re going to jump right into this calculation. What is the best-case scenario? Again, these numbers and these assumptions depend on what industry you’re in, but I tried to do it in a way that reflects the upper end of what might be possible and show you what that looks like down the road once you’ve grown things out.
Chris Cloney: 03:58
Let’s say that you can typically work 50 hours a week. I know this is probably more than you want to work, but it makes the numbers come out to be around 200 hours per month.
Let’s say you charge $100 per hour. The math is pretty simple: you’re working 200 hours a month, that’s 2,400 hours a year. And at $100 an hour, you’re making $240,000 in revenue in your business. So that’s pretty straight forward, right? It makes sense and that number sounds pretty good.
After taxes and expenses, I divide that by two or divide it in half. Maybe your taxes are 30% and then you’re spending 20% of that revenue on hosting solutions, travel, and other business expenses.
Chris Cloney: 04:47
Generally, 50% is a pretty good number to use. It might be a little bit higher, a little bit lower, but you’ll see in the end it doesn’t impact the numbers a whole lot.
So, with the 50% reduction, you’re looking at a revenue after tax and expenses of $120,000 per year. In that case, maybe you take that whole $120,000 as your salary from the business.
There are two problems here. One is that these are pretty conservative assumptions. It says that you’re working 50 hours a week every week and you’re getting a $100 an hour, every hour. We know this probably isn’t true.
Problem #1: The Glass Ceiling
The first big challenge here is that you have this ceiling: you can’t do more than that. Your take-home salary is going to be $120,000 for the rest of your life because it’s hard to work more hours than 50. Maybe it can be 60 or 70, but we’ll talk about what that might mean for your lifestyle.
Chris Cloney: 05:40
Maybe you start to charge more as well, but getting up to $150, $200, or $300 an hour is pretty hard from here. No matter where you land, you’re building this glass ceiling that you’re not going to be able to get past. I know a lot of folks today who are charging $30 or $50 an hour, so you’re not necessarily going to be at these levels.
That’s number one with this process: if you don’t have a team behind you, you have this ceiling. You can only work so many hours a year. In this case, 2,400 is a lot of hours. That’s 52 weeks at 50 hours a week to make $120,000 salary from your business. So that’s problem number one: there’s an inherent ceiling here if it’s you.
Problem #2: Assuming 100% Efficiency
Problem number two is that this calculation assumes 100% efficiency. Every hour for the 50 hours a week that you’re working, you’ve been able to bill out $100 an hour. And we know that this isn’t true. You’re not 100% efficient.
Chris Cloney: 06:33
Let’s go through some things that might cut into this number.
Email Checking
For example, checking email. If you can get email checking down to between four and eight hours a week, you’re doing good. Other people may be spending upwards of 20 hours a week checking email. If you’re doing one or two hours a day, I’d say you’re probably ahead of 80% of people.
Traffic and Authority Building
If you’re a content creator, you have to create the content and get it online. If you’re creating podcasts, you have to record them. I pegged this at four hours a week. Again, it’s a very conservative assumption: you probably have to do a lot more than this.
Social Sharing
Social sharing can account for up to five hours a week.
Travel
Miscellaneous transit and getting around can add up to another five hours.
All in all, you’re probably spending 20 hours of your week doing non-remunerative tasks. And that’s probably pretty conservative.
Chris Cloney: 07:24
If you do speaking internationally, then maybe you’re getting paid good money on a per hour basis, but you’ve got to get there and prepare your keynotes. There are all these different aspects. So, in this case, it’s 20 hours a week, and that’s the amount of time that you’re spending on non-fee earning tasks. Again, probably pretty conservative. So, if you divide 20 by 50 hours a week, you get 40%. So, 40% of your time is spent not generating any revenue at all.
Chris Cloney: 07:50
Let’s consider that 60% of your time is spent on fee-earning work, making $100 an hour. Now your take home from your business is reduced to $72,000. The $120,000 that you were making after business taxes and expenses is now reduced to $72,000.
Chris Cloney: 08:19
Again, this is your best-case scenario. So $72,000, that’d be $6,000 a month before personal taxes. Let’s assume a 40% tax rate. Then you’re looking at $3,600 per month after personal taxes. If you do the math here, that’s $30 per hour before tax and $15 per hour after taxes.
So this would be equivalent to having a job that pays you $30 an hour. If you have a PhD and you’re going into industry, you might be making quite a bit more than this as your take-home salary before tax.
Chris Cloney: 09:00
This is getting to a point where you can charge $100 per hour in your business. Your take-home is going to be about $30 an hour. This is a good scenario. You’re charging out $100 per hour for your time. What if you’re charging a lot less?
Say you’re only charging $50 an hour, which might be closer to where a lot of the audience might be today. What does that look like? Well, then, your take-home is only going to be half, so it’s going to be $3,000 per month before taxes and $1,800 after taxes.
Chris Cloney: 09:25
So this means that if you’re charging $50 an hour in your business, you’re only making $15 per hour on your time, and you have to work 50 hours per week. Those numbers don’t sound very good. You can imagine what happens if you drop this to 40 hours a week that you’re working, or $30 if you want to work even less.
Chris Cloney: 09:51
Where does that leave us then? That’s what your take-home pay might look like, but what are your options to change that if you don’t have a team?
You only have two options. One, you can increase your rates, or two, you can work more hours. So we look at increasing your rates.
Option #1: Increase Your Rates
The big problem is that you need to increase your rates, but also not increase your overhead. So how do you increase your rates from $100 to $150 or from $50 to $75 an hour? How do you increase that by 50% without increasing your overhead as well?
Chris Cloney: 10:26
Say your rate goes up by 50% and it takes one hour a day more to do that, and that hour doesn’t involve paying work, you’re only going to end up with a 40% increase in your take-home. A 40% increase in your take-home might only be $500 or $600 per month.
Let me say that again. If you work hard and you get good at what you do and you increase your rate by 50%, only hundreds of dollars will be added to your take-home pay. If you charge $100 per hour and you pump it up to 150, it doesn’t impact the numbers that much. It only impacts them linearly and you’re still going to be struggling to get much higher.
Option #2: Work More Hours
Chris Cloney: 11:08
The second variable that you have to play with is working more hours. The math on this is linear as well. If you bump that up to 60 hours a week, then you’ve now added 10 hours over 50, so you bumped up your pay by 20%.
Again, this doesn’t sound very good when your take-home rate is somewhere between $3,600 and $1,800 per month. 20% of that is only going to be $200 to $500 by bumping up your work hours to 60 hours per week. You’re stuck in this loop. You’re stuck in this place where you can only increase your rate or only increase the number of hours that you’re working.
Chris Cloney: 11:45
Any of you who are familiar with personal finance and personal development literature may have heard this before. When you’re not making as much as you want and your only options are to work harder to try to make more money or work longer hours, it’s called a job.
Chris Cloney: 12:06
You’ve created a job for yourself in this case. So best-case scenario, you’re making $100 an hour, you’re working 50 hours a week like a dog, and the only thing you can do is work more hours or charge more, although we talked about how that’s only going to affect your rate linearly.
In Rich Dad, Poor Dad, Robert Kiyosaki calls this the rat race. It involves getting into a job where you can’t get above where you’re trying to get to, and this is a big struggle. The reason I want to point this out here is that I see new business owners saying that they don’t want to build a team.
Chris Cloney: 12:41
Then I see those same people two, three, four years later. Maybe they started building out a little bit of a team, but they haven’t committed to it as a business necessity and they’re struggling because they’ve hit this ceiling.
They’re billing out their max hours and they can’t spend any more time on overhead. They’re struggling to build their business because they haven’t developed solid fundamentals like building out a team and building themselves as managers into their business. You end up at this place where you’re building a job for yourself, and it can be quite difficult.
Chris Cloney: 13:09
Those are the numbers that I wanted to run by you regarding what the best-case scenario might look like. If you’re working 50 hours a week and you’re able to get the point where you’re charging $100 per hour, your take-home will potentially end up being around $30 per hour.
Chris Cloney: 13:35
If you trade that with getting a job and working 40 hours a week at $30 an hour, you get the same aspect to it. Plus, you’re going to be working a lot harder because you have to do every job in your business and nobody’s there to help you.
What If You Build a Team?
So what’s the difference then if you build a team? Well, if you think about this early on and build it, it removes the two problems that we have.
It Removes The Ceiling
Number one, it removes the ceiling. Each additional full-time person adds another 2000 hours per year. If they’re working 40 hours a week for 50 weeks a year, that’s another 2000 hours to help grow your business.
Chris Cloney: 14:12
If you added one person to your business, you can go a lot higher than if you had 10 or 20 people. There is this limit where you have to manage them, but I wanted to make that as the first note.
The ceiling is gone when we start to build a team. Without having a team behind me, I wouldn’t be able to run the Combustible Dust Incident Database where we’re uploading 10 or 15 posts a week. I wouldn’t be able to run these two podcasts: GradBlogger and DustSafetyScience. There aren’t enough hours in the day for me to do all that, but because I’ve started to add a team to the back end of my business, we can do more.
It Removes The Rate Problem
Chris Cloney: 14:50
It also removes this rate problem. If you hire a person who costs $40 an hour and you know that you can generate $50 an hour with them and your team because you are freed up to do other tasks, then the return is infinite. You’re making $50 for spending $40 and you don’t have that rate issue anymore. You could hire one, two, three, four, five, six, 10, 15, or even 60 people if you can maintain that balance where you’re paying less than you’re able to charge for that work.
Chris Cloney: 15:32
A good example of this might be website development. If you have a website development company where you hire developers who cost $50 an hour and you’re able to sell to commercial clients for $75 an hour, you’re generating more revenue than the cost.
It adds a whole new dimension. You no longer have to worry about the ceiling. You no longer have to worry about this rate problem. This is not to say that you’re without worries though. You have to worry about being an effective manager and not spending too much money in the business. You have to worry about the budget. It opens up this whole host of difficulties but also closes the door on a bunch of problems that you might have.
Chris Cloney: 16:15
The reason I bring this up again is that I see people who don’t want to do any team building, and then they get to some point where they are the only technician, they’re the only hands on the ground, and they can’t go above that ceiling. They get stuck there and often, unfortunately, it’s at a level that’s not financially viable for them to continue. That’s where they end up closing up shop and getting a real job and entering the rat race in another way.
Chris Cloney: 16:39
Some of the big benefits of growing out a team is that we get rid of this problem of having a ceiling, we get rid of the rate problem, or at least change the rate problem to a question of how much are you spending and how much can you get for the services or products that you offer.
It also frees us up to do the work that we’re probably the most afraid to do. That’s being the visionary in our business. Every Monday I sit down with whiteboards and fill them out with thoughts. I take a picture, send it to myself, and fill out the whiteboard again with thoughts about how to improve our business. I also come up with new innovations and decide what new team members can be doing.
Chris Cloney: 17:18
That’s what I do for half the day every Monday. The other half, I either spend getting ready for podcasts or taking a break for the rest of the afternoon. Then Tuesdays, Wednesdays and Thursdays are my big workdays. Tuesdays and Wednesdays are spent on external work, and Thursdays are all about content creation.
Chris Cloney: 17:43
So that’s a big thing. If you have a team, it frees you up to do the work that’s most important for your business. It also allows you to become self-tenured, so you can build the world that you want to create. When you’re freed up from doing all this stuff, like uploading posts and editing podcast episodes, you can focus on changing the world.
Because we’ve grown this company, DustEx Research and DustSafetyScience, I’m now able to do things like:
- Take on projects with academics and research supervisors
- Start to mentor masters and PhD students
- Dictate what research is needed in the world around my field
I can do this because I built this team that takes care of the profit of our business. It takes care of the content creation and authority building, and we’re developing it into a full-fledged platform that’s profitable and able to facilitate change in the world.
What Is Holding Us Back?
Chris Cloney: 18:39
So what then is holding you back? After discussions with many people on this topic, I have concluded that there are all kinds of fears.
Fear #1: Not having enough work
One is not having enough work to keep the person busy.
You don’t need to bring on somebody full-time right away. When I brought my first hire onto DustSafetyScience, it was for two hours a week. I found them on Upwork and hired them to do online research for articles about combustible dust explosions and fires. The articles that they found every Sunday went into my newsletter. That was the start of the Combustible Dust Incident database. I have a lot more team members now, but that’s how we create the 10 to 15 posts a week on fires and explosions around the world.
Fear #2: Not knowing where to start
Chris Cloney: 19:51
It all started over three years ago when I had my first hire for two hours a week. So start small, start today and start easy.
For me, this one was easy. I knew the task. I had done it for probably six months at this point. It involved Googling this list of 25 keywords, pulling out the top articles, putting them into a Google Doc, and sending them off. It was an easy task. The big point about starting small, start today and start easy with a small number of hours and simple tasks.
Fear #3: Not being “good” at it
Chris Cloney: 20:30
If you want to engage people to support you with website design, content management, editing your podcast, and that sort of stuff, you need to be able to manage them You need to have proper systems in place, and that’s a learning adventure.
Nobody’s good at it in the beginning. Maybe if you were in a Fortune 500 company and you had all this management training, it would be different. Or if you ran a research lab for a number of years and had a ton of graduate students come through, you might have some management experience and that’s great, but a lot of people aren’t going to have this experience. You need to get it, and the only way to get it (trust me because I’m doing it and I’ve done it) is to do it.
Chris Cloney: 21:07
When I had my first hire, I had no idea how to build a team, no idea about the systems that would be needed. And we scaled up within the first year to three or four people, and now we have maybe eight people in the whole team, if you include bookkeeping and accounting.
Managing that number of people is quite difficult. It takes a lot of managerial focus, a lot of managerial effort and you’re never going to get those skills if you don’t get started today.
Chris Cloney: 21:37
So those are the three ways I’d recommend: start small, start easy, and start today on building a team. We will go into detail in subsequent episodes on subjects like:
- How to find team members
- How to grow your team
- How to be a better manager
- How to be a visionary in your business
But today I just wanted to show you that this is a road you’re going to have to go down if you want to build a successful business.
Chris Cloney: 22:06
I went through what the best-case scenario might be for take-home revenue or take-home income if you’re working 50 hours a week and you’re able to charge $100 an hour, and it’s not very good. The only way to make it better is to work more hours or be able to charge a higher fee, and that’s going to be tough.
There’s a better way: to get over your fears and be able to walk down that road of becoming a manager and building a team. We’ll talk about more complicated aspects in the future, but the goal of this episode is explaining the need for a mindset shift to get ready for what’s coming down the road and admitting to yourself that you might need to build a team, you might need to become an effective leader in your business if you want to build something that’s big enough to change the world.
Chris Cloney: 22:50
So that’s it for this episode. As always, the show notes and the transcript are at gradblogger.com/32. We put the numbers and the calculations that we did in some of the examples in a one-page cheat sheet. If you don’t want to read through the transcript or you don’t want to go back and scroll through the show notes to grab these numbers, you can get them there.
Chris Cloney: 23:16
If you liked the content in this episode, please give me a shout out on social media. It’s @gradblogger on Instagram, @gradblogger on Twitter. This lets me know that I’m hitting the mark. If I’m not hitting the mark, then give me a shout out too and say, “Hey, Chris, you’re talking about the wrong thing,” or shoot me an email at chris@gradblogger.com.
If you have any questions or things you want me to cover on the podcast, you can leave them at gradblogger.com/ask. You can leave them as a voicemail or text. We’ll answer those questions and help you get through those issues that you’re having with building your online business, building your authority, and creating the mission that you want to put in the world.
Chris Cloney: 23:54
So until next week, I look forward to continuing to bring you amazing interviews and amazing information on how to build out your online business, become self-tenured in this world of academic entrepreneurship, and change your life and change the lives of others with online business.
Resources
Companies
DustSafetyScience
GradBlogger: Twitter | Instagram
Books
[Affiliate] Kiyosaki, Robert. Rich Dad, Poor Dad
