Hiring and Team Building: When and How To Hire For Growth and Automation

This episode of Freedom Fastlane is brought to you by Freedom Fastlane tv. Hey, if you love what we do here on the podcast, you will really love what we're doing on the video show. Every week we answer your questions and we look at a live business case study. We find out what they're doing well and what they can do to make more money and improve their profits. You can find it on Facebook at facebook. Com freedomfastling. You can, you can search for the hashtag ffltv or you can find us on YouTube. Just search freedom Fastlane. I think you're gonna enjoy it. Hey, everybody, welcome to Freedom Fastlane. This is Ryan Daniel Moran. Thanks for hanging out with me today. Hey, we are just coming off the heels of another amazing event at Freedom Fastlane live. There were 500 high caliber entrepreneurs put into one room. It was magic is the word that immediately comes to mind. For me, the average person there ran a six or seven figure business. And we had people who ran 30 million dollars a year businesses, 100 million dollar a year businesses. And there were a few people who were just starting out. And when we put that type of a mix into a room, some really, really cool things happen. We're gonna do a full debrief of Freedom Fast Lane Live, including recapping some of the best speakers and my Clif event, as well as some clips of the high points of the event. We'll do that on an upcoming episode of Freedom Fast Lane Live. But today I'm going to talk about a recurring theme that has come up in both events and among some of the guests that have been here on the podcast. And it's about building teams and hiring. Now, I want to give full disclosure here that I am only improving at this point. I am certainly no expert at this, but I do have some insights here, particularly because I have had to make some very hard mistakes, particularly in the last 12 months. And if we look back at my career 18 to 24 months ago, I was essentially a one or two person show at Freedom Fast Lane. I was, you know, it was just me. I brought on one person in the middle of 2015 and in the past I had had one or two people helping me and on my physical products businesses, it was me, my partner and we might have had some outsourcers. And I have in that time built teams of, well, there's, there's about a dozen on my different projects now all together. And I've made a lot of mistakes along the way, but at the same time, Gary Vaynerchuk said from stage last year at Freedom Fast Lane Live. He said if you want to go from 10 to 100, it's all about people. I asked Cameron Herald if he agreed with that sentiment and he said absolutely. In fact, he said that's the key from going from 1 to 100 million and beyond or 1 to 10 or whatever level you want to be. This secret is in the people that you attract. So I want to carve out some time today to go through a little bit of what I've learned as well as what has been stated from stage and here on the podcast from individuals who know way more than I do now. One thing I should mention is that partnerships are very different than hiring. So partnerships we've covered here on the podcast. If you just search for Freedom Fast Lane partnerships, we've done an entire episode about choosing partners and how to make sure that it's a right fit and what makes a really bad partnership versus a good partnership. I'd also recommend that you listen to the episodes with Sean Coyne and or Matthew Davis. Those are two of my partners and we've had amazing relationships together and not all of my partnerships have been amazing. So you can listen a little bit about why it has worked with those partners versus other people that I partnered with. But hiring and building a team is an entirely different skill set and it's one that I did not have at all as recently as 12 months ago. Today I consider myself an okay team builder. I'm still a horrible manager. I don't need to get good at managing. I will hire that out. I would consider myself a leader but not a manager and I wouldn't consider myself in a place to talk about that. But I can talk a little bit about building teams and leading those teams first. I want to give you a distinction and that's this. In my opinion, there are two types of hires. There is a hire for growth and there is a hire for automation. Those are the two things that you're usually trying to get when you hire someone. You are either trying to grow the business or you are trying to automate something so that you or someone on your team spends less time on that. So when you're a one or two person show and you're doing everything together, you remember these days, right? You're doing the customer service, you're doing the product management, you're ordering the inventory, you're editing the website. When you're doing everything, you're probably looking for automation. You're looking for someone to take the things off of your plate so that you either have more free time or you can spend your time on the things that actually drive the company. That would be an automation hire. A growth hire is somebody that is gonna run ads that you know nothing about. It's someone who is an expert at product development and that's all they're gonna focus their time on. It's hiring the salesperson who has the relationships with other businesses and is going to close clients and close the big deals that are gonna move your company forward. Those are the two types of hires and they're extremely different. Here's why. When you're hiring for growth, meaning you're going in a new area and you need someone to spearhead a new project, you need to hire someone who is better than you and who has done it before.

If you're hiring for a new area of growth, it needs to be somebody who's done it before and better than you. But when you're hiring for automation, we're talking about editing websites, we're talking sometimes about writing, sometimes it is customer service. All of these areas. It should be somebody who's 80% as good as you or better. But it's okay to hire somebody who's 80% as good as you. Here's why. No one is ever going to care as much as you. No one is ever going to do it just like you. But 80% is good enough. It is the almost the same as you doing it for those areas that need to be automated, customer service, tech, that kind of thing. Tim Ferriss talks about this extensively in the four hour work week about giving his really automated employees the ability to make $500 decisions. If something will cost the company less than $500, they just have the authority, they have the ability to go ahead and make that decision, go ahead and spend the 500 bucks and then report back to me. I'll tell you if you did something wrong. That is automation, they may not do it a hundred percent. They may not get the decision right every single time, but they're 80% of the way there. And as a result all that time and mental capacity is cleared up. So a lot of people treat these as the same when they feel lost in their business. They want to grow. So they hire somebody for growth. But they really want is for someone to take things off of their platform plate or I've heard this said, people argue that I want somebody to take things off my plate now, but I want them to grow into a different position to where they could lead the company. You have to separate that from your mind there's two very different purposes that you would bring on help and they're to either grow the company or to take things off your plate so that you can grow the company or get your life back. So as you are setting out to hire someone, first thing to ask, are we trying to automate something or are we trying to grow something that will give you the difference, that will give you the distinction on what to expect out of the person that you will hire. Now I said recently on an episode of Freedom Fast Lane tv, it was the backstage episode at Freedom Fast Lane Live. We did a special case study edition where we went through a few of our tribe members businesses and someone asked the question, they said, at what point should I start building teams or developing systems and processes? What I said was that you can run a six figure business as a solopreneur with no systems, no processes and no help. You could probably be a solopreneur with no help.

No support to about a million dollars a year. You might not do anything but work with your time, but you could probably get by just by yourself until you're at about a million dollars in revenue. At that point it is hard. It is hard. It's not impossible, but it's hard to grow without some help. So here's what I have found to be the process and also the order of operations in which you are building a team. First, if you are under a million dollars, if you're doing under a million dollars in revenue, your help should come from outsourced people or specialized individuals. So if you need customer service, you can outsource that. You do not need to have an in house customer service person if you're under a million dollars, if you're doing more than a million dollars, you can answer this differently. But up until 1 million, you can have someone in the Philippines, you can have a virtual staff, you can have a part time person, you can have a specialized person that is there just to do customer service, either a few hours a day or a few days a week handling that piece. You might also have specialized help for web and tech, somebody to edit your website, somebody to do changes on servers, even something like social media. These are mostly part time things. You do not need a full time person. You can use agencies or outsourced help to do all of these areas and they are mostly automation areas. So up to a million dollars, there's really no reason for you to be hiring growth minded people. Because the best thing that you can do before you're at a million Dollars is develop your product, get your product selling and repeat the process. It's that whole 12 months to 1 million plan. There should be nothing keeping you from releasing new products and dialing in the sales processes for those products. Everything else you can mostly outsource the customer service, the website, editing, all of that. I did an exercise on this at Freedom Fast Lane Live last year. I call it the box Exercise. If you go on YouTube and search for Ryan Moran box exercise, you can watch the video where I taught this from stage, but the Cliff Notes version looks like this. If you make a list of all the things that you are doing with your time, the product development, the customer service, everything, everything you do with your time, answering emails, get everything out, I put it onto a whiteboard. Just put everything onto the whiteboard of all the areas where you spend your time or all the things that are on your mind would be a better way to put it. So some people spend their entire day in their email inbox, but what they're really thinking about is I need to do that product launch or I need to write that listing or I need to write that email to my list or I need to start thinking about search engine optimization. All the things that are on your brain start to become on the board and then we organize them into chunks. This looks like a marketing role, this looks like an Amazon role, this looks like a social media role. And as you organize them, you can start to chunk them into specific roles that you can either outsource or you can hire full time people to take off of your plate. So once again, we're getting everything onto a whiteboard. We chunk them into individual roles and then we can take the most pressing ones and either hire someone or outsource a specialized person to take them off our plate. And it's about a 20 minute process that I walk someone through to start to see how they can get removed from their business and start to get help in these specific areas. So if you want to watch that, go over to YouTube and search for Ryan Moran box exercise. So up until a million dollars, you can get all the help you need outsourced with part time people. There's really no reason to be hiring in house people unless you're on some sort of a crazy growth trajectory or you have funding or you have a specific challenge that you're looking to tackle, like going into retail or raising money or something like that. Once you're over a million dollars, things change a little bit. Cameron Herald has answered this question in two different ways. He answered it in one way on the podcast, and he answered it a little bit differently when I asked him on stage. So I'm going to give you my interpretation of what he suggested. And I happen to agree with his assessment because I've gone through similar changes in my career, similar progressions in my career. And that is, once you have those areas off your plate that are taking up the most of your time, like the customer service, like editing servers and websites, you have some outsourced help on either upwork, which is what I have used, or you're using services in the Philippines. Either one is fine. I've probably had the most successful with upwork. That's where I get most of my hires, when they're just specialized in something. But the first hire that you bring on that actually reports to you regularly at that $1 million point is the executive assistant. This person could be outsourced virtually. Actually, my business coach has an outsourced executive assistant that does all of the booking, the time management, the invoicing, answering emails, posting to websites, taking content and posting it. The things where you end up spending your time and shouldn't and also keeping your life organized. That's the executive assistant. My first executive assistant was in person part time. She managed my workshops, set them up, and she also ran errands. She also cooked my meals and cleaned my house. And that was a huge shift for me of being able to hand off a lot of things to that person. This is an automation role. This is somebody that is there to take things off of your plate, but it is in person and it's specialized to be in tune with you and know how you work and know how you need to be organized. That's the first hire post $1 million. The second hire post $1 million is the project manager. The project manager is the glue of your operations that manages everything. This is the person that is looking at invoices and accounts payable and is sometimes ordering inventory and is making sure that people are doing what they need to be doing according to the deadlines that they are setting. Now, this is a huge shift in your business because chances are that you have built most of your business being the project manager. So it is this person that ultimately replaces you. This is the person that might grow into an operations manager or a coo, but they start as a project manager, somebody who is learning the ins and outs of your business and managing the deadlines and managing the people who say that they're going to do what they're going to do. I have had the best the best experiences hiring project managers who are very detail oriented. And I have judged this based on giving them a, a Colby test. If you've listened to Freedom Fast Lane for a while, you've heard me talk about the Colby index, you can get it at K-O-L b e.com it's I think a $50 test. I make all of my hires take a Colby index. So I know how they work and I know what their instincts are. And I have found that the best project managers have high fact finder in them. And what that means is they like to get as many details as possible and then they're going to pass those details on to someone else. That is who I have seen be the best project managers. So your project managers are really replacing you because the chances that you are acting as a project manager right now. Now, I have heard a lot of pushback from entrepreneurs at this stage because they ask themselves the question, if I replace myself with a project manager, what am I going to do? Now I've been operating in my business for so long, what am I going to do? And that's exactly the question that you should be asking because that is the question that ultimately decides if you're going to automate your business, if you're going to grow your business, and if so, how. It is the answer that comes on the other end of that question that will really drive the growth of your company. Most entrepreneurs start with the idea, they grow it to their capacity and then they stay stuck at that capacity rather than building the infrastructure that needs to be in place to make that idea happen and then freeing you up to say, how do I make this even better? So if you don't know what is on the other side of, of automation, that is a good sign because it means that your mental capacity will be freed up for you to actually grow the business. Let's talk about payment and compensation. At this point, a project manager who is coming into your business to take things and automate them, you're looking at a salary, a median salary of about $50,000 a year. Everything under that, everything up to the project manager is probably going to be entry level or is going to be part time or outsourced. The project manager is probably going to be that first full time person that you're paying a real salary to. All right, so once we've hired that person or when we're thinking about hiring that person, the question then becomes, do you want to just let this be an automated business that is a small little business that makes Money or do you want to grow this thing? Is this the thing that you want to scale? If it's the thing that you want to scale now we're looking at, okay, what are the growth hires that we're going to be hiring that are better than you? They're going to bring your company into a new area. That is how we're going to grow up. Until this point, we are mostly automating. This is the switch. Now you're in a CEO or a founder's role and it's up to you to decide how big this is going to go and who your team is going to be to get you to the vision that you have. So if you want to grow bigger, the next hires that you're probably going to go after. Cameron answered this on stage. Cameron Herald said the first hire at this point would be a sales director. The person who comes with the relationships where all they're going to do is sell. All they're going to do is call the big account. All they're going to do is go to the biggest clients and sell them more. It is the person who is motivated by money to cash the check, loves what you're doing in the world and is gonna go out and get as many checks as possible. That gives you a different level of freedom. Now, if you're a physical products entrepreneur, it means it's the person who is going out and closing accounts. If you are a.

Contractor or meaning you have clients, it's the person who's going out getting new clients. If you sell bulk, it means they're closing the wholesale orders. It's the person in your industry who knows your business, who's going to go open new accounts and bring new money in. If you sell information products, it's the person who is either writing copy or they are managing your list or it is the person who's identifying who are our highest paying clients and what else do they want. They are completely there to manage more sales. That's your sales director.

Now at this point, you've got the sales director working with the project manager to take sales and to fulfill what you're promised. And you are free to keep thinking about how big do we want to make this and what do I want my role to be in this position. So according to Tom Bilyeu, who spoke at Freedom Fastlane Live just a few weeks ago, he said that the most important hire for them at this point was their chief marketing officer. And their chief marketing officer was solely responsible for driving awareness about their brand. And he or she did that via social media right at the time where social media was still a little bit of a wide open west and Quest was new to the industry. So at that point it was the person who understood the way that they were going to distribute their message. So the sales director is the person who's cashing the check. The marketing director or the CMO is the person whose job is to spread as much awareness as possible. That's the job of the chief marketing officer. Sales and marketing are different. Sales is cashing checks. Marketing is getting as much distribution or as many eyeballs as possible. You need both. But those are the two people that are going to be in growth positions and the first hires that you might want to consider once you have your operations or your automations in place.

Some people will argue at this point that it might be time to hire a controller or a cfo. Now I have personally never hired a cfo. I have hired bookkeepers or people who part time just send me profit and loss statements so we can see where or how money is being spent. I have heard the argument that a CFO or a controller at this point is able to inform you as the owner of the company how to make better decisions based on how the numbers look. I've never run a business where that was necessary or I've never felt like that was necessary. But I have heard other people argue that that is the case at this point in the business. And from here it is really a process of identifying where you want to grow and hiring people who have done it before and are better than you. So up to a million, outsourcing as much as possible at a million, getting an executive assistant and a project manager. Once operations are automated it is then how are we going to grow? And the next people that we hire are probably going to be sales directors and marketing directors or a chief marketing officer. Now I don't consider myself a good manager, so I tend to assume that everyone is doing their jobs, which may or may not be the case. So this opens up a new area of questions. Do you need somebody on the team who's there to manage the other people who are there? And these are all decisions for you to make and mistakes that you kind of have to make along the way, or at least I have had to make along the way until I have kind of figured it out. I've had to practice courage while going through this process because it's been uncomfortable for me. So I hope this outline gives you a little bit of context for what your team might look like let's talk about finding talent. It's really easy to simply say I need somebody for this role, so I'm anxious to hire that person and then hire everyone. The old adage of hiring slow and firing fast I have found to hold true. I have also found it true that the more I like somebody, the worse of a hire they tend to be. Now, the reason for that isn't anything personal, but more if I like somebody, it probably means that they're a lot like me. And that does not always go well in terms of getting things done. I'm the idea guy. I shouldn't be hiring people who are just like me because then someone is unnecessary. If your partner or your team member is exactly like you and you're expecting them to replace you, what's really happening is they're duplicating you and now nothing is going to get done. So that's why I prefer to look for somebody who has done something before and put them into that place and expect them to develop the systems and processes that are going to make that role successful. There are two places that I have had the best success in finding really good people, and the first one is through personal referral or recommendation. I always post on Facebook when I am hiring someone or I ask people in my network or people on my team who they know that might be a good fit. I email my list about this because if someone already believes in what we're doing or what is already a customer of one of my companies, that usually makes for a pretty good culture fit. So personal referral is the obvious one. The next one is LinkedIn. I've had really good success going on LinkedIn, looking at companies that are bigger than me, looking at the teams that are in place that are doing exactly what I want out of a specific role, and sending them a message asking them if they're open to talking about other opportunities. That's where I've had really good success getting outside people. I hate the process of going through resumes. I would rather directly reach out to someone. Now, Cameron Herold has talked in the past about using headhunters and search firms. I have not had good success with those, but I know plenty of people who do use them successfully. So I'm usually the one looking hunting for somebody. I'm going on Facebook. I'm going on LinkedIn. I am usually not posting on Monster and Craigslist, although I know people who do. My strategy is to make an outline of who I want and going after them. Specifically, Jeff woods and I did a podcast on this here on the Freedom Fast Lane podcast that was specifically about this process. He works with Gary Keller over at the One Thing and they have a more sophisticated process for this. They call it their missing persons report. And they describe that person in detail and start looking for that exact person. But sometimes it's a really long process for finding that person. So that's not my style. My style is to go find that person at the companies that are already doing what I want to be doing in my company, where theirs is to get a very specific person and start putting it out there until they're there. But Jeff has more insight on that and he shares that on the episode that we did here at Freedom Fast Lane. Let's talk about compensation.

I laugh because this is such an interesting area where entrepreneurs are so willing to invest money in pretty much anything but people. But people have the most upside when it comes to growing a business. My buddy and business partner, Clement Wan has spoken, has taught me something about this and he learned it from actually one of Gary Keller's books, which is ironic, but he made the argument that if someone can't pay for themselves in 90 days, you hired the wrong person. If you don't have a clear outline for what you want out of a role and how it's going to be profitable, you probably shouldn't be hiring there. I tend to look at middle level people or high end people if they have done it before. So I'm usually not looking in the under $30,000 a year unless we're hiring interns or outsourced people.

I'm looking for middle level people or high end people if they've already done it before. So in the automation area, we're looking in the 30 to 55 or $60,000 range. If it is somebody in a growth role, then they're going to be higher than that because they're heading up a new area and I'm leveraging their expertise and expecting them to build that out. But if we don't have a plan together, if we don't make it clear what the goals and expectations of that role are, part of it being that this role is paying for itself within three months to six months, then we probably got the wrong person. And if that doesn't excite the person, we probably got the wrong person. It's okay to set expectations up front and to say this is what I want out of this role and this is what success looks like and the more clarity that you can give to that person, the higher the probability of them being incredibly successful. I've also done things where we set a three month test drive together and if we don't like working together after three months, we're going to wash our hands and be done with it. And there's a salary increase if we make it through that, that three month period. So we might do a starter salary with something that kicks up later. That's totally cool to talk about too. So, so many people are afraid to talk about salary and compensation and they look at it as an expense, but it is not. It is an investment and it's an investment that has the highest upside because it's that person or that group of people that are going to be what grows your company from 1 million to 5 or 1 million to 10. You as the entrepreneur, it's your job to make sure the company doesn't run out of money, gets the best talent in the world and has a clear vision of how that talent is going to move you forward. It's not your job to make sure it all happens. It's to make sure that the talent you bring on has the vision to follow and the funding to be able to do it. And that is your job as an entrepreneur. You cannot do that without other people. I've had the best people from personal referrals and from LinkedIn, from setting expectations right up front and expecting them to build the systems and processes for the role that they will fill. I also like to ask them, how do you propose that we accomplish the goal that we've set together? Because I don't want to hire people that I just have to train all the time. I want them to tell me what we're going to do and I will pay for those expertise because I know that I am not good at everything. I'm good at a very, very few things. Mark Cuban has said the reason he is so successful is because he's very, very clear what he is not good at doing. That is the secret to being an entrepreneur. Doubling down on where you're strong and getting the heck out of the way of the things that you are not good at doing and getting qualified people who love to do that. This shocks people. But there are people who love doing customer service, there are people who love doing social media, there are people who love doing the things that you hate doing. You just need to go out, put it out there and see what shows up. I hope you found this episode helpful. I know this is a sticking point for a lot of especially new entrepreneurs or Internet based entrepreneurs because we got into this for freedom. So the idea of building a team sounds like we're working ourselves into a job but this is actually the next stage of your evolution as an entrepreneur and the next stage of your freedom. If you found this episode helpful please share it with an entrepreneur who would find value in it. And please as always I appreciate your subscribing over at itunes and leaving us a review if you found this helpful and I can't stress enough if you like these episodes you will really really like the Freedom Fast Lane TV show. You can find it on YouTube or you can find it over on capitalism.com if you want to watch the web based version. Hey I believe that entrepreneurs are the key to solving all the world's problems and that capitalism is the best shot that we have of creating the world that we want. Thank you for being part of that show. Thanks for listening to Freedom Fast Lane and I'll see you guys on the next episode.