Two speakers discuss when small service businesses should hire their first employee. They recommend aiming for 50-60% gross profit margins, using cold email and referrals to generate leads, and emphasize that finding skilled thumbnail designers is harder than it looks.
At what point would Johnny be thinking about hiring?
As soon as he can afford it. So if his burn's really low, let's say he's making $10,000 a month and his burn's like $2,000 a month, he's got $8,000 to play with. You have some margin of safety there, right? The thing you should be considering with most service businesses is you want to have a gross profit margin of at least 50%, if not a little higher, maybe 60% or so.
Meaning that I charge a client, let's say $2K, but it only costs me $1K to deliver the service. So I'm making $1K gross profit and then there's taxes and all that kind of crap. But that's a reasonable amount for an agency. So Johnny's getting to $10K a month by cold emailing and doing referrals and stuff and doing good work for the people. I see a lot of people who cold email me with work. Like I saw in a video you mentioned that you're looking for a thumbnail designer. Here are some thumbnails and they're just bad. Like we look at all of them 'cause we're always looking for thumbnail designers and it's just so hard to find someone who's actually good. So I guess a big part of the agency game is to actually be good at the thing.
You have to go the extra mile. Most people just aren't willing to go the extra mile, right?
