In this pivotal episode, Scott Ritzheimer, Founder of Scale Architects, shares how to decide whether to stay in level 2 as a thriving solopreneur or move to level 3 by building a team. If you’re in level 2 feeling pressure to hire but unsure if it’s right for your vision, you won’t want to miss it.
You will discover:
– What signs show your vision truly requires hiring a team to reach level 3
– Why staying in level 2 can let you command premium pricing and focus on mastery without added complexity
– Why raising your prices and decommoditizing your services is a more efficient path to higher income than increasing organizational complexity
Episode Transcript
Scott Ritzheimer
Hello, hello, and welcome, welcome once again to the Start Scale and Succeed podcast, the only podcast that grows with you through all seven levels of your journey as a founder. I’m your host, Scott Ritzheimer, and today is part three of our Should You Really series, where we explore how you can find the best level for you, not for your friend, not for the internet, not for your mom, just for you. What’s the right level? What’s the best level for you to get to and thrive in? Now, if you didn’t catch the first episode, you probably want to give that a listener watch, because we lay some foundation for what we’re talking about in the series. You can skip the second in the series, because each of the last six, including this one, is for one level founders who are thinking about going to the next level and trying to figure out if that’s right for them.
So that’s the series today. Today we’re going after what could be one of the most expensive assumptions out there, and that is this whole idea that the only way up is to hire a team, and again, there’s some real big cultural undercurrents here that we’ve been in for so long we don’t really even recognize how big a role they play in our decision making, and in this case the, the, the condescension, if you will, is that somehow staying solo is playing small or settling for less, or in some way, shape, or form just bad, and that could be true, but it could also not be true, because there are plenty, and I mean plenty of solopreneurs out there, and I use solopreneur a little loosely, I’m talking about one person, maybe a couple helpers, less than a handful, so that’s our definition of solopreneur for this this episode, I can point to many who make seven figures. I mean, we can look to the sports world and find people who make eight and nine figures, and, and, and the sports world’s particularly helpful because it can show us the power of this level.
Fundamentally, you’re LeBrons of the world, or your Federers of the world, they make money in other areas and other enterprises, and probably function at other levels in their own founders’ journey, but the core to it all isn’t that they’re a great CEO, the core to it is that they’re fantastic at what it is that they do, the sport that they play, and the same can be true in just about every domain. And one of the lies that we believe is that by getting to later levels, in this case moving to level three by hiring a team, we think that we can make more money doing that, and while it might be true that higher revenue levels are possible when you look at what the later levels cost, both organizationally and individually. It’s a lot harder to argue that you’ll make any more in those levels. So, making more money is not a good reason to try and get to a later level.
I can again point to a whole lot of people who are making way more in level two because they’ve optimized for level two than other folks in levels 345, a lot more, and and so we just need to throw the smallness out. We need to throw the make more money out, and we need to really figure out what the what the real reason is for why you would choose a later level or why you would stay in this level. And if it’s not money, what is it? Well, what I’ve found is that the money actually follows this other thing, and so the real thing that will make you more money, and important to this conversation, the real thing that will help you find the right level that you need to be in is to understand what your vision is for your organization, to understand what your vision is for your life, because if your vision in starting this, I’ll use me as an example, because this is a this is a decision that I have to make right now, and it’s one that many of our scale architects, our most successful ones, have to make, is should I continue to scale up, should I add staff, should I add other coaches on my team.
Scott Ritzheimer
And and build a bigger team, bigger consultancy. There’s a lot of that that would be super fun, be very cool, but ultimately it’s not necessary for me to achieve what what I want to achieve for the vision that I have for this organization. I can do it in other higher leverage ways that don’t require more people, and I like the simplicity of that, and so because I can see a path to accomplishing my vision without getting to level three, I’m going for it. Now that might change. I might do an episode in the future where we talk about me getting to level three, but it’s not because I can’t get there. I’ve already done it. I’ve been through all the levels, up to six and maybe ish level seven, although I think that’s that’s probably not quite there yet for me. But I’ve been from level one to being an owner at level six.
I know how to do each of these. I coach folks through the transition points between each of the levels, so it’s not a question of whether I can get to level three, and it’s not a question for you, probably, of whether or not you can get to level three. It’s not this fatalistic wiring thing, it’s really about whether or not you should, whether or not it’s right for you is even better, even better, whether or not you choose to. And why would you choose to stay in level two? Why would you choose to stay to get to level three? You would choose to do that because it’s right for your vision. So, again, the principle we talked about in the opening episodes, you want to choose the lowest level that allows you to achieve your vision. So, in this case, if you can achieve your vision with you, a handful of helpers, and some of the incredible technologies that are out there today, not settling for less, but focusing on your vision, then level two might be fantastic for you.
We’ll talk about some specific reasons why that might be in a moment. If you can’t, if you need to have more people, you need to.. there’s just so much more that needs to get done to have the impact that you want in the area that you want, that might require more people than you can handle in level two, and so you might need to get to level three. So, those of you who are listening, you’re probably in level two, at least those who this episode is for. If you’re not in level two, might be a fun thing to listen to, but this episode fundamentally isn’t for you. Share it with a friend, because it’s for them. We’re in level two, we’re trying to figure out if we should get to level three. Let’s start with, and this is true across all these transition points. You want to start with the level you’re in, because it’s, it’s, it’s way easier to learn to thrive in your existing level most of the time than it is to get to the, to evolve to the next level.
It’s the language we use for it here at Scale Architects, is thriving in a current level, evolving to the next level, if for no other reason, then you have to thrive before you can stand a chance at successfully evolving, and so you’re going to have to learn to thrive anyway. So, let’s talk about those who can thrive in level two, and some reasons why it might actually be the exact right level for you, we’ll talk about the different circumstances that fit, and a little bit of whether or not you have what it takes. We’ll kind of roll all that together. So, first point here is, like I mentioned in this opening, if you can achieve your vision solo or with a little support, and you don’t need to hire a full team, you know, 510, 15 people, then then just stay in level two and crush it if you can command premium pricing for your expertise, so if you’re not in an overly commoditized space, or if you can figure out how to decommoditize your work in a commoditized space, like one of the ultra commoditized space.
Scott Ritzheimer
I had a client who was in landscaping, and they did corporate landscaping, and they were working with a bunch of people who like, they just didn’t want their property to look bad, that was the standard, and I remember him telling me up one side and down the other, this is a commodity, all we do is trade hours for dollars, and there’s nothing special about what we do, there’s nothing special about what anybody does, we’re just trying to get people there on time and squeeze out a bit of a profit. Well, I had another client who was in the landscaping space, but they did custom design, build, and maintenance projects for these phenomenal facilities, many of which you would know the name of the. Place or the person, and they, they took a commoditized thing, landscaping, and they, they commanded premium pricing for it.
I mean, premium pricing. So, if you’re in an industry that allows for you to elevate your pricing, or if you can find a way, which you almost always can, to command premium pricing for your expertise. Then what happens is you can continue to increase your income, not just your revenue, but your income without increasing the complexity of the organization. Fantastic. So that’s a great reason to stay in level two, is you can just keep charging more for what you do. Now that takes work, it takes effort, it takes energy to thrive in a stage. Sorry, in a level, but you can do it all right. Next reason why level two might be a fit. In level two, you can, you can control your schedule to the point where your interruptions are such that it allows you to do the deep focused work that you want to do. Now, with different types of work, that that matters more and less.
For work with your hands, you know, mental distractions aren’t quite as costly as like deep thinking work, but, but physical distractions are more costly, and so, depending on the type of work you do, the way that you create value, if you can do that in a way that allows you to focus without being overly interrupted, then then that’s great, and usually that’s more achievable when you have less people, because there’s less folks to interrupt you. If you have or can get to a sustainable client base that renews a lot or recurs even better, then the next can be a strong reason to stay in level two, because you don’t need to continue to scale up this business development arm and continue to scale up this operational arm, you can find an equilibrium in there that allows you to kind of, you know, sell what you have to, but then enjoy doing the work that you probably started the enterprise to do. I’ll slip in and out of sales and business speak, but I just want you to know that’s a language thing structurally.
All of this is almost exactly the same in the nonprofit world as it is in the for-profit world. In the nonprofit world, this would be donors, right, instead of clients. It would be, you know, consistent funding sources, as opposed to consistent revenue. You don’t need to have a bespoke sales team, and this is a big one, because if the nature of what it takes to sell something and what it takes to do something are so very different that different people need to do them, either by virtue of the skill set, the time, the wiring, then if you can do both of those easily on your own, it’s probably going to be a lot easier if you yourself are self-disciplined enough to show up without a boss or without somebody else who’s watching, interestingly enough, adding a team oftentimes adds a natural accountability because someone else is watching, like right now I’m recording this from my studio, which is a fancy way of saying my basement, and there’s nobody else here. My dog walked through an episode ago, and so if I didn’t want to record this episode, no one would have asked for it, because there’s no team watching.
Scott Ritzheimer
Now, if I had a boss who told me I needed to have this done, that would be one thing you’re not going to have that level two because you started your own business, however, level three you might have a team that’s dependent on you, and I can also tell you that even though I’m not level three yet, my VA has been hounding me for this episode for about three weeks now, so he, he gets all the credit in the world for making this happen, you can thank him, but there’s an accountability that comes from being part of a team, that’s what I’m trying to say, and if you have enough internal accountability that you can do what needs to get done for you to thrive without a whole bunch of folks around you or just one or two people helping you, that’s where a VA or an EA for an entrepreneur can be magical because you’re not hiring a whole team doesn’t really increase the complexity that much, but you can get some of that accountability and discipline through them, you can set boundaries, there’s a to thrive in love. Two, you have to be better at saying no to bad clients. You have to be better at saying no to scope creep.
You have to be better at saying no to the things that aren’t giving you the high return that you want in the move to level three. Sometimes you can, sometimes even need to be a little bit looser with those boundaries, because you’re looking for volume, not just value, you’re looking for quantity as much or more than quality to get you over the hurdle into level three. So, in level two, to stay there, you’re gonna have to say no to things, and you’re gonna have to increasingly get better at that, but if you can say no, and you can enjoy the benefits of having said no by just working with really great, great clients, or working on really great projects, then level two might be for you. I got to move a little faster here. The ceiling to this, the limiting factor is you can’t really, at least healthily, stay in level two, past hiring a handful of people, that’s somewhere between five and 10 for most folks. It might be three for you, might be 13 for you.
There’s not a fixed number, but when you get to the point where you find yourself having to spend as much energy managing a team as doing your own job, that’s a sign that you’ve actually moved to level three, which that brings us to the big question, How does it, you know, when does it make sense to move to level three? And that is when you have either hit it really, if we’re talking about when it’s when you’ve hit a ceiling that you can’t break through without help, like you have to have other people, there’s not enough time in the day, and there is more opportunity than you can get to in a day. That’s when you know you’ve got to hire, and again, it’s not going to happen instantly, but you have to hire and hire and hire until you’re extracting all of the value from that opportunity. Another reason why you might want to get to level three, and this isn’t the best one. It needs to be paired with, with one of these others, but, like, especially for an extrovert, if you’re in a type of work that requires you to work by yourself a whole lot, having a team around you can, can be hugely fulfilling, and so it might be worth growing, just so you can have a team to work shoulder to shoulder with. Again, that’s not the best reason by itself, but it is a reason that you want to pay attention to. More importantly than anything else, is that your vision requires a team, no matter how hard you work, and that might be because they have a skill set that you don’t have, but more often it’s because you’re doing it at a quantity, at a volume, at a rate that no one person can do. You have to achieve a scale that you can’t hit in your own time frame.
Scott Ritzheimer
That’s what that’s what really drives the, the, the, the proper move to level three is that your vision demands it, and for some this isn’t necessarily true for most, but for some, building and leading a team energizes you more than the work itself. If you like the idea of managing people who mow lawns more than mowing the lawns yourself, then level three could be great for you, so you want to move to level three, if you have to. You want to stay in level two, if you can. And so, if we decide to stay in level two, let’s, let’s figure out a little bit more about the level, just so you can have an idea of what you’re signing up for before you make your final decision, and, and that is that you don’t have to do it alone. You can have a few helpers, you can have some contractors that work with you, or an employee or two, to smooth things over, to take some of the stuff that you really don’t like off of your plate. You can, you can build a steady rhythm if you make sure that you’re generating enough revenue, if you’re getting your work done, and you’re keeping the kind of admin stuff in order, you’ll find there’s a rhythm to that, and, and it’s all three, you have your it, so you’ve got to generate revenue, you got to get the work done, you’ve got to keep your admin stuff sorted, but especially if you have a couple of admins that are helping with that, you can find a rhythm, it’s pretty cool.
The one of the big costs of, of, you know, level two versus level three is that you really, you know, the definition of an entrepreneur, I forget who said this was someone who leaves a job working 4050 hours for someone else to going and working 80 hours for themselves and getting paid less to do it like that, that’s that’s startup entrepreneur, that’s the low side of this level, but the reality of it is a lot of folks who choose level two for a while they’ve got to work more the. In than they normally would, now you can whittle that down over time, especially as you command premium pricing. You can get more control of your schedule when you’ve got a full book of business. You can, you can really start to exert a lot of control over how much time you work. But level two’s a lot. Now you might think, well, if I, if I bring in more people, then that’s going to help that, right? If I go to level three, then I won’t have to work as much.
No, that’s not true at all. The, the, the challenging parts of level two and level three are both like 60 to 80 plus hours a week. In either case, level two or level three, you can optimize for the level, and you can start to work that back down, but what you find when you hire a bunch of people is that they need to be managed, and that takes as much time, if not more, especially as you’re bringing them in, especially as you still have your own job to do, so you know in both cases you, you could spend a lot of time, but in both cases you can use that lot of time to work yourself to a smaller amount of working time, if that’s what you choose, but, but that’s again up to you. I want to finish with some pros and cons here for just level two. If you’re thinking, hey, I might be able to stay in this, why would you do it? Because the ball’s in your hands, like you have more control at this level than in any other level, because you’re the one who’s actually doing it. So, if the ball is moving, it’s because you’re moving it, and that’s pretty cool for those of us who struggle with wanting to be in control a little more than others, present company included. Level two might be an opportunity for you to do that, you, you get to decide, and now you have to do it as well. There’s a downside to that. We’ll talk about a second, but that control, that hands-on approach is a real benefit for level two.
Scott Ritzheimer
You don’t have to deal with the needs of other stakeholders, you’re not dealing with partners, you’re not dealing with a whole lot with salaries. Level three, you get there and you’re having to sell four times as much just to cover payroll, like that’s not a pleasant experience for most founders. And it might be entirely avoidable by just staying in level two, and you get to pick, you get to pick the projects that you want to work, you get to pick the pace. Now you have to earn the ability to do that by thriving in the level, but ultimately you get to, and it’s a whole lot of fun, whole lot of fun. All right, cons, if you sneeze, the business or nonprofit catches a cold, like there is no safety net. If you’re on vacation, then you know nothing’s happening. You might have a really great Claude agent, but, like, let’s be honest, it – the business rises and falls on you, and pretty much without fail, to some extent, you are trading hours for dollars in level two, because your time is almost always the limiting factor, and there’s a, there’s a hard ceiling on what any one person can, can deliver, and so you, you, you have to be okay with that game. Now, this has nothing to do with pricing.
I’m not saying that you sell your hours for dollars, in fact, that’s generally a bad idea, but you’re still limited in your dollars by your hours, you’ll find that’s almost always true. So, there’s a hard ceiling on how much you can actually deliver by yourself, and it’s a long game when, when it’s just you, it’s kind of literally a race that never ends, like you just have to pick up the baton each morning and carry it as far forward as you can, and if you love that process and the baton fits well, then great. If, if not, you might need to, you might need to work through the tensions of getting to level three. So, again, we talked about this in the previous episode, but in case you’re just jumping in here, reason why I want to lay these out is that there are there are two categories of challenge. There are tensions to be managed, and that’s true of every level. Every level has trade-offs. Every level, level two, you’ve got to do it, otherwise it doesn’t get done. Level three, you’ve got to deal with developing the skill to manage other people. Those are tensions to be managed. People need things from you in level three.
Your business needs things from you in level two, and, and so we’ve got to recognize when we’re picking a level that those tensions just come with it. However, we also need to recognize that there are problems that can be solved in each of the levels. For example, we talked about this a minute ago, but one of the best examples is income. If you’re not making as much money as you want, more people probably won’t solve that in the near term. Firm, you might actually just need to optimize better for what you’re doing right now. You might need to market better, you might need to charge higher rates, you might need to find higher paying clients, and so making the income that you want is a problem to be solved. And once you have the commitment and the conviction, knowing, hey, this is the right level for me. Well, I’ll tell you one thing, founders figure it out, and you will find a way to thrive in that level, whether it be level two or level three. So, should you hire more people? Really boils down to, does your vision requirement require it? If not, you can make buckets of money in level two, if so, you can make buckets of money and have an amazing impact and do exactly what your vision wants in level three, and I’ll be cheering for you either way. With that one little bit of a teaser, in the next episode we’re going to be talking about whether or not you should hire managers to help you grow your staff, or you’ll have to see what the alternative is in just a bit with that. Thank you. Deeply, deeply appreciate you and your time and attention. You know it means the world to us.I hope you got even just a little bit more clarity out of this episode, and I cannot wait to see you next time. Take care.
Scott Ritzheimer
Hey everyone, Scott Ritzheimer here. Thank you so much for listening to the Start Scale and Succeed podcast. I hope this episode gave you exactly what you need for the level you’re in right now. If you want to discover what level you’re in. Take our 10 question founders evolution quiz for free at foundersquiz.com That’s foundersquiz.com It’ll pinpoint exactly where you are and give you tailored tips to move forward and reach that next level in your journey as a founder. If you got something out of today’s episode, don’t forget to subscribe, rate, or review. It helps us reach more founders like you. And let’s be honest, it means a ton to me, my team, and all our incredible guests. So, keep starting, scaling, and succeeding, and I’ll see you in the next episode.
Contact Scott Ritzheimer
Scott Ritzheimer helped start nearly 20,000 new businesses and nonprofits and with his business partner started led their multimillion-dollar business through an exceptional and extended growth phase (over 10 years of double-digit growth) all before he turned 35. He founded Scale Architects to help founders and CEOs identify and implement the one essential strategy they need right now to get them on the fast track to Predictable Success.
Want to learn more about Scott Ritzheimer’s work at Scale Architects? Check out his website at https://www.scalearchitects.com/
Connect with Scott through his LinkedIn at https://www.linkedin.com/in/scottritzheimer/