In this scalable episode, Nicco Leone, Founder of Nemean Pride, shares how he helps some founders scale from $5 to $50M and some avoid the headache altogether. Suppose you’re questioning whether or not to scale. In that case, if you are quietly frustrated at the constant expectation to grow like crazy (even if it comes from you) or wonder how big your organization should be and how to get it there, this is the episode for you!
You will discover:
– The most crucial role of middle management that almost every leadership team overlooks
– 3 great reasons to scale (and 1,000 bad reasons)
– The difference between a growth business and a lifestyle business that is growing
Episode Transcript
Scott Ritzheimer
Hello, hello and welcome. Welcome once again to the secrets of the high demand coach podcast. And here with us today is yet another high demand coach in the one and only Nicco Leone, who is the founder of nem pride, a dynamic consulting company specializing in providing finance operations and HR consulting to companies all across the US. He has a decade of experience uncovering operational efficiency opportunities for startups and middle market companies with up to 1 billion in annual revenue. Nico is not your guy. If you’re looking for a run of the mill CEO who goes into the office every day. He has run his company while living and traveling through Spain, Italy, Croatia, Cyprus, Amsterdam, Antigua Barbuda, I can’t even remember how to say that, with his wife and son, and now they are in Puerto Rico. Well, Nico, so excited to have you on the show. And I want to jump in, because there’s this idea that exists for virtually every founder that you know, if I can get to 510, you know, $15 million then, you know, 50 is just right around the corner. It’s just a hop, skip and a jump, and we’re there. But why is it that reaching 15 million is not proof that you can get to 50?
Nicco Leone
Oh, well, I mean, they’re a business as it grows, goes through many different stages, like if you’re if you’re a founder, or if you’ve got a team of founders, you can, I don’t want to say easily, but you can definitely get to, you know, two to 5 million without really having to build out any sort of internal systems or processes or hiring a big team or anything like that. Depends on the industry, of course, but it’s very much like rock star founders. You can get there. If you want to get to 10 million, 15 million, 20 million, it’s not about being rock stars anymore. You’ve got to have middle management. You’ve got to have a larger team. You’ve got to delegate. You need systems, processes, so every I’ve got a buddy who always says new level, new devil. And as you get to the next size there’s a whole host of additional problems you have to solve.
Scott Ritzheimer
The Mario and Luigi brothers couldn’t agree more. So much like that. So before we kind of unpack how to make this transition for a lot of folks, they have to decide whether or not it’s actually worth it. So what are some of the best reasons that you found for a company to actually do the dirty fingernails work that’s necessary to make that leap to go from two, five, ten million up into the 20, $50 million range?
Nicco Leone
Yeah, no, and that’s a really good question, because I think a lot of founders, you kind of hinted at this in your first question, just sort of think that that’s what you do, and it definitely doesn’t have to be what you do. But you know, if you’re looking for good reasons to do it, I’ve seen a couple good reasons, you know, one of them is, you’ve got somebody who’s nearing retirement, you know, you do the calculations, you know, you realize if they sell their business at its current valuation, they’re not going to get the retirement funds that they need to live their retirement life. So you can map out, okay, how big does the company have to be to get that nest egg and boom, you have to grow to that, right? So that’s one good reason. Another good reason I’ve seen is some companies just actually aren’t even profitable at all until they’re at scale. So this would be if you have some sort you know, think about like Amazon in the early days, they were just losing money every year because they were investing so heavily in building out their infrastructure. So those companies, you know, from the beginning, hey, I need to be $100 million company for this to even work. You know, I’d say a third reason would be competitive. So some industries, they maybe reach a point where it’s like, oh my god. You look around and you realize we’re in like, a winner take all situation right here, and we either have to fight really hard right now to survive, and that’s going to mean we’re going to grow to 50 million, or we’re going to die, or we’re going to get acquired, or something like that. And you have to make that, that decision.
Scott Ritzheimer
Yeah, I found that one to be particularly present in the market tonight, today, with all the roll ups that are happening so many industries, there’s so many roll ups taking place, and there’s this kind of no man’s land, you know, from two it depends on the industry. But like 2 million to 7 million, you’re not quite big enough to compete, you’re not quite small enough to hide, you know, and you’re just kind of stuck in between. And I’ve seen a number of folks, you know, realize, particularly CEO, hey, we can’t stay here, right? We’ve got to go up or down, and down is not an option. So here we go. So one of the things I’ve heard you talk about before is this kind of distinction between lifestyle businesses and growth businesses. My question for you just roughly or quickly to find this for us and then help us figure out. How do we know which one we have? Because in my experience, there’s a lot of folks who have lifestyle businesses who think that they have growth businesses. What’s the difference?
Nicco Leone
Yeah, I. Would even add a third type of business there, which is like a stagnant business. I guess we could call it, because, to me, a growth business and a lifestyle business. Those are two great types of businesses that you can have, all right. So let me define a lifestyle business. And I don’t even know if this is the real definition. This is just my definition. I have a lifestyle business, and what that means is I have intertwined my business into my life. And so that means, like you mentioned it before in the intro, I travel all the time with my family. I’m also extremely active, swimming, running, sports, like hours each day I spend on those sorts of things. That means I’m not working for 12 hours every day on my business. So it’s like I’ve designed my lifestyle the way that I want it, and then the business is sort of like intertwined into that and helps to fund my lifestyle. To me, that’s a lifestyle business. There’s a lot of people who have businesses where they don’t have a great lifestyle. They feel like they’re working hard every day, they they feel like they’re putting out fires every day. But they’re also not a growth business, because they’re not growing. And so that’s what I would put in that third category of like, stagnant business and and then growth, of course, you’re you’re not designing it for your lifestyle. You’re focusing a lot of your time on growing your business, a lot of time on your business. And you’re reaching new, you know, growth stages every every month, every year,
Scott Ritzheimer
And how do you, how do you determine the difference? Because there’s a lot of folks that are in that that, again, that two to ten million range, and they’re starting to feel a little bit of that stagnation, but it hasn’t quite hit yet. Oftentimes you’ll see revenue still going up, a profit has actually stagnated. And they think this is a growth business we’ve been growing for all these years, but when you unpack it, it’s really around them and their personality. Do you see that a lot in lifestyle businesses where they may be doing it full time, but it’s still designed around the founder and what they want to do at any given point in time?
Nicco Leone
Yeah. I mean, when we meet with a new company and we start working with them, like many consultants, we always start off diving into like, what are your actual long term goals you as the founder, and a lot of times the founder doesn’t have the goal of scaling the business like crazy. And sometimes they do, and then we press on it and we realize, Oh, you’re just like pressured to buy society, to think that you have to scale up. That’s not actually what you want, right? So we try to, we try to delineate that at the onset, like, Is your goal? Do you have one of those really good reasons to grow like we mentioned earlier, or is it actually a lot better for you to have a lifestyle business? And if we deem it makes a lot more sense to have a lifestyle business, then we look at their day to day, week to week, you know, what does their work life look like? And a lot of times they’re like, I said, running around, putting out fires all the time. So it’s like, okay, you don’t yet have the lifestyle business, but you have the makings of it. Now let’s tweak some levers here and there to turn it into a true lifestyle business for you.
Scott Ritzheimer
Right, right, I love that. So let’s say we’ve got folks. They’re listening. They want to they want to scale. It’s kind of new territory for them. One of the things that you have to tackle is that you can’t run it all by yourself. Really, your senior executive team can’t run it all by itself. It’s just, it’s too complicated for those too many different things going on. And so you start to see layers in the organization kind of distinguish themselves. And again, I’ve heard you talk about these layers as the executive layer, the kind of middle management and associate level. What are the roles of those three layers, or levels in a business that’s trying to scale?
Nicco Leone
Yeah. So I think in the you know, let’s say you’re at 5 million or 3 million even, a lot of times you don’t have the middle management layer at all. At that point, you’ve got your executives and you’ve got your associates, and sometimes it’s one executive and then several Associates, and at that point, all of the associates report up to the executives. The executives are supposed to be setting the strategy, making sure quarterly goals are clear. You know, all the associates know what they need to do in order to hit those quarterly goals. And it’s, it’s sort of this executive sort of double as, hey, we’re setting the strategy and the goals, but we’re also managing, we’re also middle management. We’re managing you associates. As the company grows as you scale. Let’s say you get to 10 million now you have a larger team. You have the same number of executives, likely, maybe you added one, and now it’s impossible for your executive team to manage the associates. So now you start to add those middle management layers. And the role of middle management, in my opinion, what works best is middle management is focused on, really two things. One is being the conduit for information flow from the executives to the associates and from the associates to the executives. So they’re making sure those quarterly goals, the strategy, all the stuff the executive set, they’re making sure they translate that into, hey, here’s what it means for your daily job. Ms. Or associate. So they communicate down. And then when the associates have issues, problems, major obstacles, middle management, if they can solve it, they solve it. If they can’t, they have to flow that upwards and say, hey, look, I’m getting a lot of feedback. I think we actually need additional resources over in this side of the company. It could be capital, it could be labor, whatever. And so they’re, they’re in charge of that flow. The second thing I think middle managers have to really do is focus on process improvement. So, like, as the associates flow up whatever issues they’re having, it’s really on the middle managers to try to change the process or implement a new tool or whatever, to, like, create a long term solution for that issue, and a lot of middle managers don’t do that piece. And if you don’t do that piece, then you sort of end up in this larger company as you grow with just layers and layers of middle management, and you haven’t, like, made it more efficient, and so you’ve just added more and more people, and then it’s just like, information flowing from one layer to the next, and that’s when you see a, you know, a new CEO come in, or a private equity firm come in, or whatever, they buy the company, and they fire a ton of people, because there’s too many layers of middle management.
Scott Ritzheimer
Right, so, I want to jump on to that, because there’s, there’s a lot of people who, particularly in the entrepreneurial world, really like the idea of a flat organization, right? For a few different reasons. One, they’re kind of closer to the action that way. Two, it’s all you really need early on. To an extent, it’s all you know. And they can look at this idea of layers as inherently bad. So is having layers, having levels are, is middle management just a bunch of middlemen, or is there there an appropriateness to having different levels inside an organization?
Nicco Leone
I have never seen a flat organization scale and stay flat as it scale. Maybe that’s happened. I don’t know. I’ve just never seen it in the early days. I totally agree. I love the idea of a flat organization. It just, it makes things more fun. You know, on a daily basis, nobody’s telling you what to do. Everybody’s kind of working together. I’ve seen, probably the largest companies I’ve seen that are still flat are companies that basically just do one thing. It’s like they they’re all sales people. It’s like a company that just sells a thing, and that’s all they have to do. They don’t really have to fulfill on it, right? They don’t really have to, like, manage finances internally, very difficult in a very difficult way. But as soon as you start to scale and you have, like, an HR department and a finance department, you have all these different teams, it’s very, very hard to stay flat. I mean, that’s, that’s, I think the middle management layers are crucial. But the way that I described them earlier, where, you know, it’s all about information flow and then process improvement, like when you create your middle management hires, when you create those layers, it’s people in those roles. And as long as you’re hiring people who are extremely organized and extremely good communicators. Your middle management layer is going to be awesome, but a lot, a lot of companies end up just, hey, this associate’s doing a very good job. Let’s make them a middle manager. They’re just good at being an associate. They’re not really highly organized. They’re not very good communicators. And so that’s where it causes problems, actually.
Scott Ritzheimer
Yeah, it’s so true, because the common pattern is the middle management is formed of the best associates, right? Like the ones who can get all the stuff done and get the most done they have. Oftentimes, there’s some sweat equity there. They’re just sharp people. They aren’t inherently great communicators, though, right? Oftentimes, the person who’s getting the most done as an associate in particular, is doing so at the expense of over communicating and taking the time to do that. What do we have to change beyond our mindset? But how can we start to shift who we’re promoting into or hiring into those roles so that we can get the type of communication you’re talking about?
Nicco Leone
Yeah, I think, I think it’s probably about compensation, would be the area I would focus in on where, you know, you mentioned, you know, giving those associates a promotion, the best associates, you promote them to manager. The reason you do that is, hey, you’re doing a great job. We want to pay you more. But in order to pay you more, you got to take on this new role. But then it’s a completely different role, where it’s all about communication, right? So if there were better pathways, like a business owners thought of better career trajectories for their associates, who are really, really strong, but not the best communicators, not the most organized managers, as long as they have a path to make more money and take on more responsibility in some sort of associate role, that would probably solve the problem managers you’ve if you’ve got associates that could be great managers awesome, promote them into that role, if not bring outside managers in, because they’re just going to do a much better job.
Scott Ritzheimer
Yeah, yeah. It’s so true. And I love that you’ve dialed in on information flow. One of the very last things people think about when they’re going through the process. Scaling. They think about, you know, especially with outside help, they’ll think about, you know, different positions and what they have to get done and how they’re going to do it. Very, very rarely have I come across a team in this window that’s thinking about information flow, right, let alone hiring to it and managing to it. So, such an important factor, I really couldn’t agree more. Nico, there’s a question that I like to ask all my guests. I want to see what you have to say about it. What would you say is the biggest secret you wish wasn’t a secret at all? What’s that one thing you wish every founder or CEO listening today knew?
Nicco Leone
You know, I’ll probably go back to the lifestyle versus growth business thing that we mentioned, and I would say I wish more founders knew that you don’t have to wait until you are successful or until your business reaches a certain size for you to finally start like living the daily, weekly life that you actually want to live like it there. There are many, many ways to look at your business that you have currently, and look at your life that you have currently, and redesign the lifestyle so that you can start living exactly how you want right now and start to enjoy some of that stuff you’re putting off till retirement.
Scott Ritzheimer
Yeah. So true. So true. Nico folks are listening that they want help doing that. They want help redesigning, re engineering their business. Where can they find more out about you and the work that you do?
Nicco Leone
Well, come find me on LinkedIn, for sure. We’re not on any other social media other than that. And then nemeanpride.com you can always go to our website and learn a little bit more about us. But honestly, LinkedIn, we post a lot on LinkedIn. We host a podcast as well. So we post certain videos and things like that on there. That’s probably the best way to find me.
Scott Ritzheimer
Fantastic. Well, we’ll get that LinkedIn profile in the show notes for everyone, and then nemian pride, M N, E, M E, A N, P, R, i, d, e.com, and those will both be in the show notes for you. Highly recommend it. Some fantastic resources out there. Podcast is excellent as well. Nico, thanks so much for being on today. Just a privilege and honor having you here with us for the show. For those of you watching and listening, you know your time and attention mean the world to us. I hope you get as much out of this conversation as I know I did, and I cannot wait to see you next time. Take care.
Contact Nicco Leone
Nicco Leone is the founder of Nemean Pride, a dynamic consulting company specializing in providing finance, operations, and HR consulting to companies all across the US. He has a decade of experience uncovering operational efficiency opportunities for startups and middle-market companies with up to $1 billion in annual revenue. Nicco is not your guy if you’re looking for your run-of-the-mill CEO who goes into an office every day. He has run his company while living and traveling through Spain, Italy, Croatia, Cyprus, Amsterdam, Antigua, and Barbuda with his wife and son.
Want to learn more about Nicco Leone’s work at Nemean Pride? Check out his website at https://www.nemeanpride.com/ or connect with him on LinkedIn at https://www.linkedin.com/in/niccolo-c-leone/
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