Why Most Agency Owners Never Make It Past $1m

Hi everyone. James Blackwell here. I built a net worth of over 8 figures by founding 3 7-figure companies I started from scratch. And in today's video, I'm going to take you back out in my Ferrari. We're going to be talking through how most agency owners never get past the 7-figure mark and they don't know why. Most agency owners I speak to are working hard. They're winning clients, their revenue is going up, but they are still further away from that million liquid than ever before. And today I'm going to share with you the reasons why. Now, with most agency owners wanting to get to that million liquid and above, one thing that I learned from Felix Dennis in the book How to Get Rich was he talks around the different stages of getting rich and creating different tiers of wealth. And he said that for most entrepreneurs, it is just not worth it. Because if you're not prepared to do the levels of risk, the levels of stress, then for most people it's just not worth it. And that's why 95% of businesses fail within 5 years. Okay, people get into entrepreneurship and do not understand what it actually takes. It's a lot harder than people think. I'm driving here in my home city in London. I'm just going to turn the aircon off because it's a sunny day here today. And we're going to be diving in today of what actually cost me to get my wealth. Okay, so there's different stages of wealth, as we know, but to get to that million and then 5, 10 million, it actually does take things out of you. So some people, I would say most entrepreneurs aren't prepared to do what it takes to get there. So a lot of people think they're going to be successful, the revenue gets there, but at the end of the day, the only thing that can get measured is your actual net figure wealth, because everything else is just theory. So net worth on valuations of businesses, how happy you are day to day, the joy, how healthy you are, your family, all of these pillars are very, very important. But they're very hard to measure. So one thing that I would do in my journal, I'd measure all of the different pillars out of 10, how I'd feel, tune in every single month. That was one hack that I would do, I'd recommend everyone to do, is just to tune in to your financial bank account, your emotional bank account, your family, your friends, who you're hanging around with, the experiences that you're having in your life. But when it comes down to wealth, then the thing that holds people back to make that first million liquid is they just get in this comfort zone. And this comfort zone is the worst, 20 to 30K a month. They're living an okay life. They've maybe got 100K in the bank account, but are they really prepared to take that leap and become that new version of themselves to get there? That's what Felix Dennis talks about in the book How to Get Rich. It's a great book I'd recommend to read. I've read it probably 20, 25 times. I love reading it because I've actually went through it where I wasn't wealthy. I hadn't even had $100K in the bank account when I read that book. And like in the first chapter, he talks about a warning. Most of you won't even make it. You know, it's a lonely road as an entrepreneur, he talks about, and it really is a lonely road. So I spend a lot of time mostly alone or with my team remotely, but A lot of the time you take everything on your shoulders. And as you go past the different levels to get to a million liquid, you've definitely had to take risks. You've had to hire employees for sure, unless you've done it all by yourself and just really grinded. But then you probably get burnt out. So you've got to be prepared to take this leap to the next stage. J.P. Getty said, and he was the richest man in history at his time. He talks about he would rather earn 1% from 100 employees than 100% from his own effort. And here's the reason why you need to take this bit of advice is because I learned this. I tried to do everything myself, be this solopreneur. It's not going to get you wealthy. You have to be prepared to hire employees, fire employees, grow the culture, grow the team. So because now when I step away, I've scaled 3 companies to 7 figures, created an 8-figure net worth, and I have done that with employees, with a team. So as I drive here recording this video today, I've got 25-ish employees all working, all grinding, all making the business money. So as I would check the bank accounts, there's money coming in every few hours. So that's probably the difference to really create wealth, like to get past that million liquid, is you've just got to be prepared to be uncomfortable not doing everything yourself. You don't have peace and freedom initially, like there is work that's needed to be done. To build a team, to hire a team, and to build the culture. And I keep asking myself all of this time, what is it, the thing that holds people back from this 30 to 40, 50 months where they don't want to hire a team? When you look at your life and you look at the units of hours and weeks and years that you have in entrepreneurship, yes, it's a long game, but you only have so many units of energy where you are really passionate You've got that high hunger, you've got the drive, you've got the enthusiasm, you're thinking about weekends and evenings. When kids come, you've got your wife or your husband, all these things that's going to take over life. And then before you know it, you haven't got these units of time and energy anymore. So looking back, I would just be like trying to get rich. Yes, fast, but done in the right way, but not be trying to be comfortable too soon. So there's too many people that I think it's just they get in this comfort zone. They don't evolve to that new version. They don't surround themselves with the right people. They don't aspire to get more wealthy. So I would say that's probably the main thing that holds these people back from what I've seen. The top 1,500 agency owners that I've mentored and the ones that actually broke past and got that million dollar liquid, it was all down to them being able to take risks, hire, be more creative with their offer and their business model. Investing in themselves, being around the right people. All of these different things were key. So that fear of that business owner is probably because you don't realize you have to spend money to make more money. And when you've took all this risk and you've got this little pot, then people don't want to spend it anymore past a certain threshold, which is why I always talk about 100K net cash reserves in your bank account at all times. As long as you've got that, everything else and above, you want to be working hard, like doing the sales yourself. So then all of that pot above will be your burn rate for your team. Okay, you could have a lean team offshore. One of the best things I did 5 or 6 years ago was build out a fully remote team in South Africa. Yes, I have team across the world still in the US, Dubai, Portugal, the UK, but a lot of the team are in South Africa because I could hire 3 people for the price of 1 and they still work very hard. And if you train them right and onboard them right, so we've got a full academy where we train and onboard everyone from marketing assistants to BD outreach people to operation integrators and personal assistants. Like, that's one of my main businesses. Remote assistance is where we place and embed these into companies, potentially like yours, is that when you hire these offshore team, then your costs aren't as high. So you don't have the stress because one thing most business owners have tried to hire and they've fired them and it's cost them a lot of money. That's just the part of doing business. You learn from those mistakes. You then hire more effectively next time. And I think a lot of things that holds people back is they don't attract the right talent because they haven't become the person they need to become to hire good B players, let alone even A players. That's a different game. Even just to get to good B players first, you've got to be aspirational. You've got to have good energy. You've got to be driving the business to be successful. So then those people can learn more and come up with you. People have asked me, James, how do you have this hygiene standard of like 60% profit margins in your business? Like, where does that come from? I think like being in a service-based industry and realizing that in a service-based industry, it's really just people and you're providing a service. So it's manual, the fulfillment cost is just human capital and skill set. So especially with AI now, like the way everything's growing with great AI tools, you can get so much more done and deliver so much more value to businesses that haven't even adopted that yet. So the gap of profit margins is really high because you actually don't need as many employees. So all of our remote assistants that we have offshore, they are fully trained on Claude, ClaudeBots, all of the different AI tools that they can get more leverage. So then they can do a 5-person job with 1 person, and they are a third of the cost. So that means you've got like almost a 10x leverage on the service offering that you can bring. I always wanted to make sure that I maintain those profit margins. Now, some months or quarters you might run between 40-50%. One key hack is to have a CEO dashboard. You can get it built in code. I look at the cash in, cash out every single day. So my assistant and my accountant, I have a sheet I go on and it's different tabs. So it's every single month, it's year to date, and I look back over the years and months and all of the columns is each day. So it's the revenue in from different departments, the actual cash collected from those departments, and any backend cash collected. And then the operational costs. So we factor in our average costs of the team salaries, the commission, the overheads, the software, the tech stack, and then our corporation tax because my company is in the UK. And then I'll see the profit margin every single day. So I can see at the end of the week, end of the month, and the run rate for the month of where we are profit margins. And I spot things straight away. So if I see that a business did 67% profit margin last month, 'But this one, for the minute, it's only on 45% profit margins. What's the reason?' 'Oh, okay, maybe we increased ad spend, or we had a bit more costs in there.' I can see predictability. But then over time, I can start to see if maybe we are bloated in a certain part of department. So yeah, those are the reasons why I always try and maintain that hygiene standard. 60% is a good threshold because you can fall below to 50%. That's okay, some months or some quarters, depending on if you're in growth and scale mode. If you're onboarding new employees or you've just spent more on ads. But over the long run, you want to make sure you've got this 60% hygiene standard. Some quarters you might get to 70%. When you get into 70% profit margins, make sure you're still bringing good value to your clients and customer base. And maybe you're doing that at a point where you maybe skim down on ads or marketing costs or employee costs, and maybe you do need some more employees. But normally having that sweet spot, 60%, 50%, is normally the holy grail for a service-based business. Felix Dennis talked about in his book Overheads Walk on Two Legs. It just stuck with me for so many years because I think at the point I read that book so many times, I was in my first agency, my recruitment company, and I just remember reading about this. And this was at a point where I think I hired 4 or 5 recruiters that were really experienced on £60,000 to £70,000 basic salaries. I was just doing my nut with them because they weren't performing. They were a big cost that came in, upset the team. And ruined the culture. And I was like, wow, overheads really do walk on two legs because our burn rate and overhead employee costs were tripled. One thing I realized with this overheads walk on two legs is the fact that you do need to hire right. To take risks, you're gonna have to fire employees, but they are big costs. Now, how Felix Dennis talks about it is if an employee has been with you for 4, 5, 6 years, at some point they have this trajectory, they get better and better, they know your business inside out, they bring in more and more value. At they will plateau, get comfortable, reach a ceiling point of what you're paying them salary-wise, and then they'll start to drop off a cliff. That's the point when you need to cut them, because then you're paying for past things they've done, not what they're doing right now. So you have to be very careful with that to make sure that you are looking out for these overheads, that maybe you've got someone in the team that has been very loyal for a long time, but you're starting to maybe overpay them. So you've just got to be careful with the team as well. You You need to cut when you need to cut. So one of the things that I would give you as a tip would be to make sure that you tie every employee to being a revenue generator, which means most of your employees have a goal that they target, whether it's upselling clients, whether it is delivering a good service, a satisfaction score, even in operations, cutting working hour time down for your team or myself. Their role needs to be attached to some sort of revenue figure. If you do that, then it's a lot easier to keep on top of your employees because they know what good looks like and they know what great looks like. And then you incentivize them for that. So you put different bonus tiered structures into what is average, what is good, what is great. So normally when I'm redoing salary packages for my team and, and bonus structures, I always give 3 different scenarios so they know in a good month and a great month, what they get paid and what that looks like. So I remember going to Dan Peña's castle for the mastermind for 8 days, and he said, when you walk out of here, 90% of you will get a divorce or split up with your partner. I was like, that's just crazy. But you realize that you transform and you become that new person. So you need to make sure you're with a partner that actually understands that, can walk that path with you, that isn't holding you back because you need to push outside your comfort zone. Before, you need to be in different rooms, you need to be in different environments, potentially changing city. Very important that you have a partner that can be with you on that journey and is prepared to also level up with you, which is very hard as an entrepreneur. It's very hard to find someone that really understands what it takes to be with an entrepreneur because we never switch off, our brains never switch off. Every evening we are studying, we're reading, listening to podcasts, watching YouTube or whatever, or working on the business. So you need to make sure that you are prepared that in your personal life things might change. The person that you're with now, you might not be with them in the future. You might be with someone new and you just need to be focused. Your goal should be to be a millionaire first, because after that it gets so much easier with everything in life, with the partner you attract, the person that you're with. You need to make sure that they are with you on that journey.