I Cut My Team in Half and Made MORE Profit

本站添加: 2026-05-17

[00:00:00]Hi ladies and gentlemen, James Blackwell here, founder of three sevenfigure companies. I started from scratch and in today's video I'm going to be talking about how to scale to seven figures with half the team. So going to be again heading out in my Range Rover here.

[00:00:13]We're going to be driving around London and let's dive into it. I scaled to nearly 50 employees. Then I cut my team in half and made more profit. Today I'm going to break down how to build a sevenf figureure business ultra lean with the right people, systems, and tools. So, I went from lean to like a really bloated team. And one thing I realized was as you kept scaling, when you scale with more revenue, more ads, you add more people. And I've seen this with multiple seven figure businesses like a lot of my friends that that run these companies as well. And we all found the same thing, which was you end up overhiring. And then that's like aggressive scale. So, you're just scaling more ads, scaling more sales, more revenue, which means more team. But then what you realize is like sometimes there's a way to optimize because when you do that you sacrifice profit and then you'll go in at a profit stage where it's like well now I want to trim the fat. You'll end up overhiring and there'll be people doing certain things in the business. You're like you hire them because you like them or you thought they were good or you didn't really have a need in that certain department anymore but you didn't want to get rid of them so you created roles for them. And I've been guilty of that as well. you end up keeping a hold of people that you like that you think well we're making enough money so we can afford to keep them but they weren't producing an ROI and they didn't really have a dedicated role when you do cut and you keep your core people that are A players or good B players they can take on way more tasks than you would realize now with cloud AI and everything else every employee in the business should be able to do the task of two or three employees in the past so yes you can pay them a little bit more but they should be leveraging AI way more. For example, I had a full-time copywriter. I had a guy that just ran my email campaigns, an agency that ran my ads. Like all of these things now can be pretty much done by AI or remote assistant or one person in the team can do a lot of those tasks.

[00:02:04]So that was one thing that I realized was when you go in high growth stage and you're making more revenue and you can afford the extra employees, there'll be a time where you need to sort of trim back and look at the business and think because I always have a hygiene standard like minimum in my companies has to be 50% profit margins at all times. Ideally we always aim for 60 but if we go below 50% and I think one year in 2024 like we went it was round about 40% but yes the profit margin was less but my businesses are service- based businesses that I'm not looking they're not going to sell or exit so at the end of the day we needed to be really fine with the margins like I did not want to have a company that was below 50% because that's when it gets a bit risky you know payment plans don't come in cash flow doesn't come in and you've got big bloated overheads. So I think at the time our salaries were around about $150,000 a month. So maybe around about $2 million a year payroll. And that was just really fat. It didn't need to be that big. The signs you're going to see when you've got a bloated team, well the easiest way you do it is what revenue you produce per year shared by your employees. Say for example, you've got a million dollar a year business and you've got 10 employees. That's like a $100,000 per head. You really need to be looking at around about a $200,000 per head unit. Now, the caveat to that, it's not black and white because if you've got some offshore remote team, which in theory are way cheaper, then I don't really class that as one one ratio to $100,000 because you the pay might be only what $18,000 to $20,000 a year.

[00:03:47]That ratio is normally on an employee making50 to $100,000 a year. Take that with a pinch of salt. If you have got some of your team remote assistants, maybe tie them into two to one ratio. If you got a team of 10, but five of them are remote assistants, then you should be looking at like a million dollars, maybe shared by six. So then you've got a higher revenue per head, maybe 150, 160 per head, which could still be doable. But that's where you need to start to look at at the blo in the business. Revenue per head is one way.

[00:04:18]And I was doing this with my team. I would be asking like what do they do every day? I want to know a stepbystep week. So then I would start to get my assistant to look at their calendars of what meetings they're doing, what the internal meetings are, what the tasks are doing, what the delivery is, and start to look at the hours needed for that role. Then I'd start to give them more tasks. So if they're in the marketing department, but I know they can do something else, I'll stack on another 10 hours a week of workload and start to see the breakage points in them. That's probably another thing is like actually looking at each individual role and breaking down what is important. We talked about on a previous video of you doing tasks that are maybe $10 or $20 an hour tasks. There will be tasks that they're doing that they don't even need to do in the business, but they're just busy being busy because they're not entrepreneurs. They're not business founders. They still care about your company, but at the end of the day, they're clocking in, clocking out. It's 40 hours a week for them. So, you need to make sure that they are really dialed in on the actual 40 hours a week that actually matter in the business. So, that's when I make sure I align with everyone in my company that they are revenue producing assets. Even if they're back-end delivery team, I get them to upsell or they are part of something where we're actually going to increase the LTV off our clients and they're going to be some way selling. So that way you if you analyze their units of time of what they're actually doing, you'll probably be able to cut in what they're doing 30 to 40% of activity. Cuz if you don't analyze that in the business every six months, some of your employees will be doing things that you'll be like, I never even told them to do that. you know, they just started adding tasks on their plate because they want to be busy, especially with AI now and how they can automate a lot of their activity or speed it up. I'd be looking to put more onto them instead of making additional hires. When I look back over my profit margins for the highest headcount, they were around about 46% to 47%. It fluctuated but in that year when we had the most headcount like I said in the group of companies around about 50 employees it was running around about 46% which is still very very healthy by the way but I just knew the team was bloated and we were taking on more risk cuz we had to spend way more on advertising. We needed to generate way more leads and when you have a front end that's depending on a sales team that performs. If they don't perform one month, which all sales teams, by the way, we'll have a shocking month sometime. That sets you back. That's where I was looking at the business of thinking, I think we are too fat here because we're getting bloated because we make a certain amount of revenue per year and we're making great profits that we need to just constantly hire people.

[00:06:57]That was where the profit margins were.

[00:06:59]When we trimmed back and cut the team in half, the profit margins went up to 62 to 64%. Which is where the business has sit at now on average. It fluctuates a little bit depending on the sales conversion on the front end. There's always ways to optimize your business, you know, but one of them is is definitely bloat and team bloat, especially with leveraging AI. Now, you don't need a big team to do multi-millions a year. There's articles Forbes are saying there's going to be the first billion dollar company with the team of one. For sure you can do a million dollars a year with a team of maybe one and maybe when I say a team of one you as a solar prneer founder maybe one or two remote assistants and then AI you could definitely leverage that but as you're scaling and you want to get to multiple seven figures you for sure need a team so I'm not going to be saying here you just cook all of your team no you don't the only way you're going to get free is by having a team and a great team for sure but just keep the great employees and just give them more to do you will be surprised what they can achieve and what they can add on to you in terms of business revenue revenue and business profits. How do you decide who stays and who goes? We do like end of day reports in the Slack channel. I don't really check them. My team checks them or my assistant will. But then I'll start just to look at every department.

[00:08:10]Every six months or so I'll take a deep dive into the business and I will look at who's performing, who's not, and who maybe we need to hire. There'll be positions that might open up that we need to hire and improve on. looking at performance, trying to tie them back to revenue generators. I don't really care if they're working 40, 50 hours a week.

[00:08:30]If they're doing something in 30 hours a week, but they're delivering and they're making money, the our clients are happy.

[00:08:35]So, it'll be like, are the clients happy? They really like them in the business, they're delivering. And then also, are they generating revenue for the company? Front end and backend team all have revenue producing targets. If those two metrics are good, then I'll leave them alone. But if they're not generating the revenue that they should be, they actually are cost to the business. There is employees in the business that will be a cost especially on operations. So the first thing would be that and then it would be attitude.

[00:09:00]So am I seeing that they're off sick occasionally? Are they putting in loads of holidays? I don't mind my team taking holidays, but I like people that are hungry. Are they sick a lot? Am I seeing that they're not online on Slack much?

[00:09:12]Because obviously most of the team work remotely. I'm not checking in on them all the time. So if they're not online on Slack checking out on Netflix or YouTube or whatever and not actually doing the work, another thing is making sure that they turn up to team meetings.

[00:09:24]So I always say with all my remote team, we do a 9:30 a.m. meeting every single day, Monday to Friday. Have to be on camera not being late. I make it 9:30.

[00:09:32]So there's no excuse to be late. If they're taking kids to school or they're going to the gym before work, totally fine. But their goal is to show up at 9:30 and be on time. If I'm seeing persistent things of them being late or falling sick, that's probably the next thing that I look at. Or if I have clients complaining about them or they're not doing the tasks that they should be doing, those are all little signs and you as a business founder, you should be on the pulse with that. You'll start to see the trends. The emotional side of letting people go, like if there's good people that have been loyal to you, but you have to let them go. It is tough, but you do have to sometimes be fair to them and be ruthless.

[00:10:06]There'll be people in your company that take you from A to B and other people from B to C and so on. So as you grow with the company, hopefully they can grow with you. But if they're not growing and leveling up, then there's going to be a time you need to cut them.

[00:10:18]So Felix Dennis talks about overheads walk on two legs and he talks about that part where you hire potential first. So you're underpaying them and you're getting a lot of value. Then they level up and they show their potential and they're overd delivering in the company and you start to pay them good because of everything in the past they've done and delivered. You pay them really well, but at some point it's going to tail off and you're paying them from the past experience and the past things they've done, but they're not actually helping you grow the business any longer. That's obviously when you need to cut. Most founders hate firing people. And I would say there's no logic with that apart from just going through the process. And I think especially businesses that are remote, it's way easier. It's on Zoom.

[00:10:57]Like most of the fires that I've made in terms of the first 20 people I've fired have all been in office in person, which is way harder than just firing someone over Zoom. So, you've just got to get used to that. Like I said, me having an inerson office and building a team on around about 20 employees in a physical office gave me great experience to build a culture, build a team, manage a team well, and deal with everything that goes on in an office environment compared to remote. So in my group of companies we have 30 employees but none of them are managers. We just have leaders in divisions. I don't want to have a bloated team and have managerial layers.

[00:11:38]I'm the leader of the companies and then I have many leaders within there but none of them are managers. When I've hired managers in the past I've never worked out. They've really upset the team. Most of them aren't very good.

[00:11:49]Obviously homegrown management I'm a big believer in that. Now obviously there's economies of scale. If you're a 50 person company, you have different managers, might have MBAs, like they might have processes, but for most businesses that are service- based agencies, for example, or online, there's no need for managers as such.

[00:12:05]You just need good leaders that can get the job done. You incentivize them in their department. You want to try and have different profit centers within your business in different business units. So, they are just responsible for that and they get an upside of a certain amount of revenue or profit. And that way, you know, they're going to be looking after the rest of the team. We do one-on- ones, progression plans. You tend to find like when you make certain hires that they'll grow with you anyway because as long as you're a good entrepreneur and you're growing, you're making more money, you're building more offers. You've got a lot of growth, which I've been fortunate enough to like people have been with me. I started off with one company, grew that seven figures, my recruitment agency, and then I grew the agency blueprints, our education program that then turned into remote assistance, AI, so our VA service off in South Africa. All of those departments, people have moved across three different companies with me and so that was like instead of having management layers like that's a progression as you grow like depending on what your goals are. If you got ambitious goals to get to 10 million, 50 million, 100 million, then people will stay with you and can progress. But they're just responsible for themsel like to do the job to deliver on the role. So the offshore versus onshore, my team structures around about 50/50. I would say 50% are offshore in South Africa, 50% are onshore in a mixup between the UK, Dubai, US, Portugal, all around the world really the employees.

[00:13:32]So I would say the 50/50 split is where we are at. Having that 50/50 split gives me the profit margins. The hygiene standard above 50% is important. 60% for us is the reason why 50% is offshore. So if we had 100% onshore in UK or US on all big salaries then our profit margins would probably be like 40%. Maybe 45%.

[00:13:55]But I really think the biggest multiplier now is AI. So what I did with our AI expert in our company was build a clawed AI brain for me unpacking all of my IP in my head, every bit of logic, strategic decision- making, my knowledge base and put that into an AI agent. So then my team have access to that. And I think bolting that with like your offshore remote assistants makes them a lot better to be able to do a lot of the tasks, but also just leveraging them with AI cuz you're only paying a remote assistant really like around about $10 an hour. So say you're paying between $10 to 12 an hour. If you can get them to leverage AI, which is like copywriting, social media posts, automating a lot of tasks, delivering reports, there's so much they can do, you're getting so much more leverage now of AI. So like you using AI is great with Claude or whatever. But imagine your remote assistant doing the tasks with AI. That means for $10 an hour, you're getting probably 30 $40 $50 an hour of output because they're leveraging AI. So they're doing things quicker. So the $10 an hour you'd pay for 40 hours a week, you're probably getting 80 hours a week worth of work.

[00:15:09]So really for $5 an hour, there's never been a better time to build offshore with AI, there's no reason why your profit margins shouldn't be so high, like 50 60%. I remember watching my first million podcast with Sam Paw, and he talked about how service-based agencies used to be a pain in the neck.

[00:15:28]No one wanted to run them because you'd run 30% profit margins because you had high overhead cost people in the US, the UK, uh we had to pay the staff team members, sales people, all the fulfillment and it was very hard to exit. private equity were acquiring SAS companies and this AI model has flipped the agency model on its head because one person can do the task of seven and that AI as a multiplier means that you can run 50 60 70% profit margins on an agency and that's why private equity are getting more involved with this now where you can actually sell your agency because you've got leverage you don't have high headcount costs the great book built to sell by John Warlord he talks about building the systems and processes having repeatable processes so you can actually sell your agency. Imagine now bolting on AI with your offshore team and higher profit margins in an agency.

[00:16:22]This is also why you could have a great cash flowing agency that's spent around 50 100k months easily with high profit margins and you could work like 20 hours a week in that business and then build your second business have that as a cash flow producing asset. So yeah, again, for those that are interested in hiring a remote assistant, there'll be a link down below where you can book a call.

[00:16:42]We'll map everything out. We walk you through the step-by-step process of where there's time that needs bought back from you or in your business. We'll do a diagnostic on your business and the team, and we can walk you through what can be put offshore and the actual money that you can save. So that's it for this video. I hope you enjoyed it and I'll catch you on the next