Everyone dreams of making a business that helps them break free and design a lifestyle of their choosing. But rarely do people actually explain the tangible steps taken, and account for the intangibles as well.
I sat down with someone who has done this, that has the scars to show for it, and was open to enough to share the raw truths about starting a service business, which is generally hard to scale, and taking it from earning $5,000 in revenue per month to over $500,000 in revenue per month.
Former tech founder Jonathan Maxim currently runs K&J Growth Hackers, a boutique marketing agency for eCommerce, B2B, and Tech Companies. Before K&J, he earned his bachelors degree in graphic design, and two masters degrees, with one MBA and one MsBA, both focused on marketing communication. His employment began at Xfinity as a marketing strategist, then he went to start his own companies.
I asked him the hard questions, and here’s what I found.
When K&J started, monthly service was $799/mo, which grew to $1,500/mo, then $2,395 and recently went as high as $100,000 per month for certain clients. As one might guess, the agency didn’t start out selling $100,000 per month service agreements.
Jonathan recalls, “there was one moment when my whole world unfolded before my eyes. I realized that tech is really what unlocks scalability, especially for a small service business. You need one component that can scale instantly, and beyond human capabilities. For us, that was media buying and performance marketing through better tech”
You need to be able to deliver $1M in value to earn $1M
Seems obvious, but it’s actually really important to consider this. It’s not as simple as just “closing a big deal”.
As a business owner you need to be able to do that, yes, but you also need to be able to offer seven figures of value to your customer, and then be able to deliver it.
Most small businesses aren’t built for that kind of scale early on. Jonathan explains, “if you charge 5K per month, and assign 5 employees to dice up and complete a project, that’s like 1K in billings for each resource. At that same scale, you would need 1,000 employees to deliver 1M per month in value. So that’s clearly not scalable”.
In some cases, yes, a company could take on a project that required 1,000 new employees, but it would be complex and risky.
When building K&J, founder Jonathan Maxim and his partner Kale Panoho took a few things into consideration for scale.
First, they put a big focus on systems, processes, training and technology. This helps reduce redundant tasks, automates any kind of paper pushing, and empowers new hires so you can scale the human component quickly.
Continually Draft Systems and Processes
For systems and processes, every time Jonathan assigns something to an employee via Slack, he takes down those notes as bullet points, puts them into a crude SOP (standard operating procedure) Google Document, and begins converting that task into a process.
SOPs are the old school, but they work. They may not be as sexy and glamourous as automating with tech side, but they are really the backbone of any business. And eventually, a good book of SOPs can be turned into an actual software.
“A lot of people overcomplicate this part” Jonathan explains. Creating SOPs is as simple as writing bullet lists explaining on how to do any task that is done regularly by your company. Whether that’s fulfilling an order, processing a return, or designing a website. In general, they will all have some repetitive components.
Many get lost in the cycle of servicing customers, and rarely take a step back to look at the bigger picture. Documenting, understanding and improving your operations will inherently smooth things out. As an added benefit, as the saying goes “we improve our own skills when we write them down”.
Scale the Human – Automate Training
As far off as it sounds, scaling your human power can actually be automated as well.
If it takes two weeks to onboard a new client, covering all the operational steps of getting projects setup, that same time frame could be used in parallel to get new team members trained. Those new team members, if they’re a proper fit from a capabilities and cultural perspective, should be able to be utilized on a new project after those two weeks of deep training.
But, that training must be automated, not done by valuable executives who are busy setting up and managing projects. To automate training, one needs to put all the verbal explanations that would normally be delivered as in person, and make them digital. Jonathan recommends even creating an internal course on a platform like Kajabi or Trainual.
For training, the K&J team records every task in action doing screen-records with a plugin called Loom, and organizes them into the proper training categories and folders on the cloud. That way, the next time someone needs to do a task, like installing a marketing pixel, there’s a step-by-step video showing it done in real-time.
This isn’t fancy, or highly-produced. It looks exactly like you asking your boss how to do it during a working session.
The important part is to make it not fancy, not overproduced. These two factors can be big hurdles to getting started when you have other pressing needs as a business owner or executive.
Tech Unlocks Human Potential
Whether you piggyback on other software platforms or create your own, it’s important to always be automating tasks and keeping up with trends that will streamline your operations more.
For technology, K&J has two in house eCommerce companies, and uses those as a testbed for new marketing innovations. When it came to signing contracts of $100,000/mo or more, K&J used a bulk direct messaging software it had created internally to gain app downloads for a tech client. This scaled in a large way because K&J charged for each app install, rather than a base service fee. The larger the client request, the larger the invoice.
“Of course, the team still runs into hurdles” Jonathan explains, “like with bulk DMs, we need someone to manage the inboxes and keep them clean, but we use low-cost help for that”
You should be continually reviewing your company’s operations and understanding your own processes and needs so that you can always be utilizing technology to remove unnecessary human tasks. This is a cultural thing though. Everyone needs to be down for constant growth and change. Otherwise, new tech could face resistance internally.
In general, you’ll get a big advantage by automating as much as possible if you can magnify human efforts with more tech.
