Why Agency Owners Get Stuck Between $1M and $10M (And Never Get Out)
The Vault Unlocked
This episode of The Vault Unlocked explores why many agency owners stall between $1M and $10M in revenue, a phase Nick Avaria calls 'the swamp.'
Key takeaways
- The transition from founder to CEO requires attracting top talent smarter than yourself, not just managing tasks.
- Middle management is critical but often mismanaged; promoting internal employees without proper systems can cost more than help.
Main topics
- The 'swamp' phase in agency growth (between $1M and $10M revenue)
- Founder vs. CEO vs. Owner roles
Notable quotes
"If you look around your leadership or executive team and everybody there is not as smart as you, you're still a founder."
Conclusion
Agency owners stuck in the $1M–$10M range must shift from being hands-on founders to strategic owners
Transcript preview
Speaker 1 (0:00) There's a place between 1 million and 10 million where most agency owners get stuck. Nick Ivaria calls it the swamp. He's bought and sold seven agencies and he says the swamp isn't a talent problem or a marketing problem. It's a missing middle problem. The systems, the data, the management layer, nobody signs up to build. Today he breaks down why up to 65 % of middle managers add negative value to a small business, why the manager you promoted from inside is quietly costing you money, and why lifetime value, not customer acquisition cost, is the number that actually gets you out. If you're an agency owner stuck in the swamp, this episode is your way out. This is The Vault. Let's unlock it. Speaker 1 (0:58) Nick, welcome to the show. Thanks for having me, Kayvon. Listen, for anybody that's listening right now, we are going to be deep diving into the pitfalls of how businesses struggle and they stay between that one to 10 million and agency owners. And if you have agencies, how you can get out of the day to day so you can actually be able to enjoy your life, get your time back and still have the business in front of you. Nick, I know you're an absolute expert in this. Talking to you before, you've talked about, I think, selling multiple businesses, all profitable. But yeah, tell us a little bit more. Speaker 2 (1:37) Yeah. So I mean, look, I bought and sold 7 agencies by this point. Some of them were roll-up M &A plays. And I've started or bought other businesses as well, like pubs, things in the wedding industry. I used to hold a portfolio of real estate before I sold it recently. And like, in all of this, I think that it really comes down to the story that my uncle told me, which was like, he's a serial entrepreneur, like he owns more businesses than even his wife knows about, because he just has that many. And he told me, Nick, you got to be independent. And what you need to realize is that if you're the boss in a business, you're actually not independent, because you're beholden ethically to your employees and you owe them something so the only way out is to actually be the owner not the boss and so in all of these businesses my goal is to work myself out of a job and install somebody that actually runs a business so i can be an owner rather than an entrepreneur Speaker 1 (2:38) Yeah, I love what you just said there. And I think it's so important. There's such a nuance there is you just said, work yourself out of a job. And I love how you said beholden to your employees. Like so important that as a business owner, and I think you agree with this is it is our job is our duty to make sure that we keep the lights open. I mean, this is what. being an owner sometimes sucks, right? Being an entrepreneur is hard because it's not just about you and your own personal family. It's everyone that works underneath you and you have the responsibility there. Yeah, I mean, you're putting Speaker 2 (3:11) food on the table for other people, right? Like it's like their salaries are what pays for their house, their kids, et cetera. Like, and you can't, you cannot take that lightly. Speaker 1 (3:19) I couldn't agree more. And I love what you just said is, and if you're the one who's being the boss, you're not being the owner, you're being the boss. You might as well go work in corporation if you're doing that. I think there's three different roles Speaker 2 (3:35) that entrepreneurs take on that they blend seamlessly. And like, this is the actual mistaken thinking. They look at entrepreneurship as being the CEO and being the owner. And I'm like, look, no, no, no. Like that's not what this is. There's a difference between being a founder versus a CEO. Like you graduate from founder to CEO. Then once you get to CEO, then you can get out of being CEO because you can then actually define what being the CEO at the company is and then you can replace yourself. But I want to be very specific about the difference between the founder and the CEO. The founder is a person that figures out product market fit. You're super scrappy. You get your business to like a million bucks a year at minimum. Maybe two. The graduation from founder to CEO is can you attract and keep top talent that will actually build the business better than you can because they're smarter than you. If you look around your leadership or executive team and everybody there is not as smart as you, you're still a founder. If everybody is absolutely smarter than you, you're like, look, I could take a vacation for six months. And would we grow? Maybe, maybe not. Would we be slightly misaligned? Maybe. But it would be fine. And we would still like organically grow. Just maybe not fast. Speaker 2 (4:56) then you have the makings of like, okay, yeah, like I'm a CEO now, because here's the reality. If you want to attract this top leadership talent, like the strong follow the strong. And if you're not strong as a leader, like strong leaders follow a CEO, they don't follow a founder. Right? Because founders are chaotic. They lack emotional control. They hunt the shiny penny and they don't know how to say no. And therefore, they just swing their companies around from end to end, making huge pivots where you can't actually make forward traction because you're too busy just taking three steps forward and then three steps back. Speaker 1 (5:38) I couldn't agree with you more. So then the question is, how do you go from founder to business owner and or on board? And yeah, Speaker 2 (5:48) I think like the first step is really like, look, like the problem is, is when we sign up for entrepreneurship or we start this business right as a founder, we usually start these businesses because we're like, look, there's a gap in the market. I can do this better than other people. Like, I think this thing sucks. I'm going to just do it better. And so you're very like mission and vision driven. Like, look, I'm going to make the world better through my service. Well, I don't care if that's like construction or an agency or whatever. You saw a way to make it better. And that works really well because like from a leadership perspective, you're very charismatic. You're very passionate about the thing and you don't need to be charismatic in general. You're just charismatic about like this topic that is your business. And so people are going to ultimately follow you. Like this is not the hard part. Okay. The problem is, is that you're probably really good at delivering that thing, that product, that service. The thing that you didn't sign up for as being an entrepreneur founder is figuring out like what I kind of call the missing middle. Okay. So the missing middle is really like that gap between strategy and planning at the top where you're like, this is the mission, vision, values, like your strategy, like how are you going to go to market? Like all that stuff. Right. And then day-to-day delivery. And you're amazing at both, by the way. Because day-to-day delivery means the product and service is awesome and you're passionate about it. And so that works. And you train people up to do this stuff. And it works really well. The problem is that because of your success, that success is going to lead to failure. And this is the failure that's going to happen. You're going to grow because you're really good. at the delivery and the planning and the strategy, but you're directly connected to the front line. At some point, you're going to need middle management. And this happens when you're like anywhere between like five employees to 10 employees, you're going to get your first middle manager. And chances are, you're probably going to hire somebody in that position that currently works for you. And this is where the problems actually begin. And to understand what the missing middle actually is, it's actually like behavior change systems that you can deploy for a middle management layer. And the problem is, is that as you disconnect from the front line, you're getting a whole bunch of like qualitative data because like, you know how the thing should work. Now you don't have direct line of sight. So now you need like dashboards and data systems to take that front line stuff. and funnel it back up to the top so you can actually understand what's going on. And then you need the behavior change systems and systems in general to give to those middle managers so that they can actually implement the behavior change to the front line without you being present. See, because all entrepreneurs are the same way and founders are the same way. It's like, if I talk to the front line... I can fix it. And it's like, yes, you can. But that's not the point. Right. If you walk around being the superhero wearing the cape on your back every single day, you are going to need to bail absolutely everything out. And this is why founders end up working like 60, 80 hour weeks. Right. Because it's like, you're the hero. It's like, oh, they did this poorly. Let me fix this. Oh, they did this this other way. Let me fix it. And like, you basically let me fix it your way. into working insane hours. And then guess what happens when you're fixing things? You're not moving your business forward anymore. And now you're dead in the water. And this is why people get stuck. Speaker 1 (9:14) And that's why you're kind of stuck in that. I was reading a book. I forget what it was, but they called it like between like that, what you're kind of saying, like that two to like six million, like you just can't get out of it. And it's the worst part to be in business. You don't have enough finances and room to get the big shots in. You're still stuck in the day to day. And you just can't see a way out. And it's like, it's painful. And you're shaking your head for those that are just listening. So I want, and you're saying, and you're shaking a head with a smile. So