The 7 Levels of Scale: Doubling Your Take-Home Pay
Over the next few podcast episodes, we’ll walk through the 7 Levels of Scale—everything you need to know to grow and scale your business. Today is about MONEY—doubling your take-home pay.
Co-hosts Roland Frasier and Ryan Deiss have developed a powerful and proven framework for scaling your business. It’s been a long labor of love. They had all the pieces, but they needed to tie it together in a simplified way that was transferable and repeatable. And they made it happen.
Here are the 7 Levels of Scale:
- Level #1: Sell and serve 10 customers.
- Level #2: Build a growth flywheel.
- Level #3: Build an upgraded scalable operating system.
- Level #4: Double your take-home pay.
- Level #5: Build your board.
- Level #6: Complete an acquisition for expansion.
- Level #7: Hit your number.
They covered Levels 1 and 2 in Part 1 and Level 3 in part 2. Today is all about Level 4. Listen in for some actionable strategies to double your take-home pay (AFTER you’ve hit levels 1-3).
Scared Money Doesn’t Scale
People hear “double your take-home pay” and think, “If I do that, I’ll go broke and not have enough money to grow. Shouldn’t I be putting that money back into my company?”
Ryan says there are two things at play here. One is nerd finance stuff (which Roland loves and Ryan is learning to like). There’s a big mindset shift that needs to happen for many people at this point. It’s time for you to be feeling more abundant, feeling some of the gains of owning a business. Ryan’s first mentor back in the day once told him, “You’re doing well, but you’re not taking enough money. You need to pay yourself well, because scared money doesn’t scale.”
This step is so important. Roland and Ryan want you to have a plan to personally bring twice as much money home. If you haven’t brought home anything up to this point, you need to do more than twice, more than enough to pay for your basic expenses.
“But I could lose everything,” you think. “I need to make another sale or I could go out of business.” That fear is really good in the early days. The intensity of the lion chasing you is great for launching a business, but not great for scaling a business. That fear will hold you back, keep you stuck in short-term thinking. You need to make more money so you can start thinking longer-term.
One of the obstacles you face in business is feeling guilty taking money out of the company. You do have a tight situation when you’re boot-strapping, so you’ve got to think about your people you need to take care of, and the growth you need to get, and the resources, media, inventory, people you need. You’re spinning plates, and the plate that gets ignored is you. You actually deserve this. You need to take care of yourself. If you don’t build in some profitability for yourself, any ding in the company could end it.
Don’t Over-Parent Your Company; Let It Soar
Your company won’t scale if you don’t let it grow up. You’ve got to let it go out on its own and live and survive and perform at a level it needs to perform at for you. At level 3, we separated the founder/entrepreneur from being the brain of the business. We upgraded from you being the operating system to having an actual operating system. You’re no longer the brain; now you have to stop being the beating heart of the company as well.
There’s always another expense. If you don’t pause and say, “I’ve got to pay me,” you’ll never do it. Roland taught Ryan this lesson. Back in the day, he told Ryan to just double his salary, and Ryan freaked out. “I can’t,” he said. He set his first salary at $10k/month and thought to himself, “This is all I could ever need or want.” He has since changed his mind. Four kids and all the other stuff later, that money goes pretty quick.
He doubled his salary, and wouldn’t you know it, there was enough money. That felt good, so he doubled it again. The business didn’t miss it. The business grew. Because the person running the company was no longer terrified about paying his bills. He could think out into the future more strategically, less scarcity-minded.
If you don’t set that money aside, then the business is a gaping void that will suck up any extra money you’ve got. Your salary has to be like rent. The business can’t go on if it can’t afford to pay you to be there. You’ve got to take care of yourself. It’s not optional.
Seriously. Take the Money.
People always fight this. The guilt can be strong. “I need to put the money back in the company.” Ryan says that, when people are struggling, he asks them why they started their business. “To make money,” they say. “To make a difference. I’m passionate about this. I wanted freedom and to be my own boss.” All of that is great, and it requires money.
“We can’t afford it,” they argue. You need to structure the business in such a way that you can afford it. Look at your finances. Look at your expense ratios. Where is your money going? What changes can you make? Do you want to scale or not? You can’t go to level 5 until you’ve doubled your salary.
Also, go back and look at levels 2 and 3. What does your growth engine look like? Is it the right growth engine? Did you follow it correctly? Should you tweak it? Is your OS operating correctly? That’s the cool thing about the 7 levels. Each level supports the rest, so you can always go back to do simple tweaks and add in some things.
You really can have a lot of fun at Level 4. Roland and Ryan say that helping their clients solve the “problem” of doubling take home pay is a blast. If you’re early in this journey, you want to sprint to Level 4. It’s not just where you start to get paid more. It’s where your company starts to professionalize and become more profitable and grow. It’s where we can share the good stuff, because you’re scalable.
When you make the decision to double your take-home pay, you become a better leader, and your company becomes better.
- The Richest Man in Babylon (book by George S. Clason)
- Profit First (book by Michael Michalowicz)