Downsizing A 7-Person Agency To Go Solo with Laurel Scherer

Over nine years, Laurel Scherer built her digital marketing agency to a highly engaged and talented team of seven employees. In 2023, she decided to go solo—she shares her experiences with shedding employees for the freedom and flexibility of a solo business.

We dive into:

The day-to-day realities of running a firm with employees.

How having employees impacted revenue and profit growth plus the owner’s personal bottom line.

The emotional, cognitive and time commitment of being responsible for employees, their career growth and the underlying business.

The pleasant surprises from shifting daily responsibilities for an agency of employees to a solo model.

LINKS

Laurel Scherer | Website | LinkedIn

Rochelle Moulton Email List | LinkedIn | Twitter | Instagram

GUEST BIO

Laurel started her professional life as an Air Force public affairs officer, working in internal communications and media relations, then managing the consolidation of several hundred base websites into a single news and information site for the AF. Ultimately, she decided to depart from her original career path, and moved to the Blue Ridge Mountains, where she began a far less predictable endeavor, starting a web development business.

Over the next several years, she grew her small operation into a 7-person digital marketing agency. Then, in 2022, she shifted gears again, and slowly scaled the agency back down. Now she's a soloist, focusing on why she started this journey in the first place.

BOOK A STRATEGY CALL WITH ROCHELLE

RESOURCES FOR SOLOISTS

10 Ways To Grow Revenue As A Soloist (Without Working More Hours): most of us have been conditioned to work more when we want to grow revenue—but what if we just worked differently?

The Soloist Women community: a place to connect with like-minded women (and join a channel dedicated to your revenue level).

The Authority Code: How to Position, Monetize and Sell Your Expertise: equal parts bible, blueprint and bushido. How to think like, become—and remain—an authority.

TRANSCRIPT

00:00 - 00:16

Rochelle Moulton: My new definition of wealth is money, revenue, money, time, and flexibility. So what you just picked up is a form of wealth that you didn't have before, which is the flexibility to make decisions you might not have been able to make before.

00:17 - 00:33

Laurel Scherer: Right, and that's the irony is you go into business to have that flexibility, and then you grow an agency and realize that you really don't have nearly as much of it as you do if you're working more independently and collaboratively without the responsibility of the employees.

00:38 - 01:03

Rochelle Moulton: Hello, hello. Welcome to Soloist  Women, where we're all about turning your expertise into wealth and impact. I'm Rochelle Moulton, and today I'm here with Laurel Shearer who built a seven-person digital marketing agency but decided to convert to a soloist model, a process that she literally just finished a few days before we're doing this recording. Laurel, welcome.

01:04 - 01:06

Laurel Scherer: Hi, thanks for shell. Thanks for having me.

01:06 - 01:39

Rochelle Moulton: Well, 1 of the many reasons I wanted to have you on the show, Laurel, is your experience of shedding employees to go solo. So, you know, I really appreciate your willing willingness to come talk about it as it's kind of almost unfolding in front of us. And plus, I'd really love for our listeners to hear how you've gotten to this place. Because I suspect that you're not alone amongst expertise business owners who built an employee model. I've heard this more than once, and I felt it myself when I did my first business with employees. So why

01:39 - 01:45

Rochelle Moulton: don't we start with what made you decide to start your own business in the first place? And when was that?

01:45 - 02:26

Laurel Scherer: The business that I've had, the agency that I've had, I started actually in 2014. I had been working as a freelancer, web developer for several years before that. And at that point, I was also running a different type of company, a photography and action photography business. But I realized that I was a great developer, but I really sucked at design. And I needed some design help. And I started partnering with a designer and decided that it was time to ask him to join forces with me. And so it just kind of started out that way as

02:26 - 02:30

Laurel Scherer: a two-person agency, 1 designer and 1 developer, and it grew from there.

02:30 - 02:35

Rochelle Moulton: Wow. Were they typically employees versus contractors?

02:36 - 02:51

Laurel Scherer: Yes. I've done a lot of collaboration over the years, but I did grow this as a payroll employee business, which sometimes I second guess and is a good part of the reason why I am now downsizing.

02:53 - 03:03

Rochelle Moulton: Well before we talk about that, let's talk about revenue. So how long did it take you to hit your first hundred thousand in your current business?

03:03 - 03:08

Laurel Scherer: We hit a hundred thousand in our second year with the 2 of us.

03:09 - 03:17

Rochelle Moulton: And from there did you plateau at all or was it more of a steady climb you know because you're bringing in new employees of course?

03:18 - 03:44

Laurel Scherer: Yeah it was a fairly I mean in my mind it was a slower than I might have liked climb, but it was fairly steady. So I guess it would have been year 3 that we brought on a second developer. And that was mostly because I was the only developer and was becoming a bit of a bottleneck for projects. My designer could design faster than I could develop and run the business.

03:45 - 04:16

Rochelle Moulton: So when I think about having employees, I always think the revenue line is interesting, because there's the revenue line and the profit line. And when we're soloists, those 2 lines are usually pretty close together, but not so much when we have employees. So how did your profit change as you added employees? I mean, when you thought about your own income, were you kind of steady? Or did you have more of a personal up and down depending on, you know, revenue and your employee volume?

04:17 - 04:46

Laurel Scherer: Oh, it was definitely very up and down for me personally. I was able to maintain a fairly steady salary with small incremental increases, but there were certainly times when I had to not take a salary for a short period of time as we grew. But I always managed to make it up by the end of the year. But I would say as I added employees, revenue grew quite steadily, but profits did not.

04:47 - 04:49

Rochelle Moulton: Yeah, that's the rub, isn't

04:50 - 05:15

Laurel Scherer: it? Yeah, definitely. We were profitable in most years, but we added a second designer in year 4, an SEO strategist in year 5, a junior developer and sales guy in year 6. And you know, it's just every time you have more mouths to feed the profit margins certainly don't tend to grow quickly, I guess, at least not in my case.

05:15 - 05:35

Rochelle Moulton: Yeah. So did you ever find yourself frustrated with your bottom line even when your top line's looking pretty amazing? Like if you're growing year over year, that feels good. But the bottom line, so when you paid yourself a salary, did you have profits left over most years or was it more just you know 0 sum?

05:35 - 05:49

Laurel Scherer: Honestly it was it was enough profit left over to over the years to build a rainy day fund but it wasn't enough to really take a lot out of it as a business owner until the downsizing began.

05:50 - 05:53

Rochelle Moulton: And when did the downsizing begin actually?

05:54 - 06:27

Laurel Scherer: 2019 was an interesting year because my sixth hire really didn't even last a full year. That just turned out to not be a great fit, the junior developer. And then of course in, yeah, so I guess I got down to 6 people in that year. And then in 2020, of course the pandemic hit and I had to let our sales guy go. So that put us down to 5. And at that point I determined that I was gonna stay at 5. I didn't have a desire to try to grow the agency anymore. I was feeling very,

06:27 - 06:52

Laurel Scherer: as most agency owners are, I think very overworked and stressed out because that comes with the territory when you have employees to be responsible for. Part of that profit equation is that I really had a strong desire to try to increase salaries for my employees as much as I could year over year. And so some of our increased revenue went to that.

06:53 - 06:57

Rochelle Moulton: Yeah. Well, I mean, you share the wealth, right, on some level.

06:58 - 07:19

Laurel Scherer: Yeah, absolutely. And I just had such a 1 really rewarding thing for me is just what a wonderful team I had. The 5 of us really enjoyed working together and I always wanted to do my best to make sure that I was using the revenues as well as I could to increase their pay. And so that's where I put my priority.

07:20 - 07:56

Rochelle Moulton: Yeah. And frankly, I'm really happy to hear that, right? Because, you know, we're focusing on soloists here, but when we take on employees, I've always felt like we have a duty, you know, beyond the legal duties, but we have like a moral and ethical responsibility and duty when we take people on. And that's the thing that nobody really talks about, but that can really weigh on you. Like during a pandemic, how do you take care of your people when something bad happens in 1 of their lives, how do you replace them at the office with and

07:56 - 08:18

Rochelle Moulton: still keep them part of the firm going forward. It's, you know, I think this is the thing people just don't really talk about. And was that part of your decision-making process? You just get to the point where you said, I don't want to worry about this anymore? Or how did you decide to skinny down your business more once you got to the 5?

08:19 - 09:04

Laurel Scherer: To be perfectly honest, 1 key event really happened at the end of 2021. And I will say at that point, I was kind of been doing this long enough. I was tired, but really working hard to continue to increase that revenue. And at the end of 2021, my lead developer found another job doing something strictly in a technology that he had started to take our agency in the direction of using. And I was pretty devastated by that news having such a small tight-knit team at the time. But I very quickly came to the realization after that,

09:04 - 09:36

Laurel Scherer: kind of getting through the emotional part of that with the team and also thinking about the impact of him leaving. I pretty quickly got through that phase and It was a no-brainer for me to say I'm not hiring another. I'm not hiring replacement for him I'm going to use contract developer help from this point forward and I am a developer And I've always known how to get the right person for the right job so that's the direction that I decided to go in at that point. And then the rest of it was pretty organic, fortunately for

09:36 - 10:14

Laurel Scherer: me, because I didn't want to just close down the agency or try to sell it or anything at that point. But I talked to the team, the 4 of us that were left and we decided we would go through the rest of the year with having contract support and me not replacing this lead developer. And then everybody was okay with that, although it was a tight-knit team, like I said, so it was tough for them because they really enjoyed working together. Then a few months later, my creative director, who's the first hire that I made, also

10:14 - 10:44

Laurel Scherer: departed. The rest of the team was pretty frustrated by that after he had, you know, kind of agreed to stay on for the year. But at the end of the day, that put us down to 3. And it was 3 women, which was fantastic. And we worked really great together. And there was just a lot of transparency and open conversation between us from that point forward. And I told them that I thought we should go through the rest of the year with the 3 of us and make a decision at the end of the year. I

10:44 - 11:19

Laurel Scherer: wasn't gonna make that decision on my own. So I kind of let it go through the rest of the year. We agreed we'd meet in the fall of 2022, which we did. And I kind of knew what was going to happen. I knew that 1 of them was going to want to go and 1 of them was going to want to stay. And that's exactly how it played out. So, we began 2023 with just 2 of us with me knowing, and with my last employee, pretty much having an understanding that, that we probably needed to part

11:19 - 11:38

Laurel Scherer: ways unless we could really make some sales that really fit her skill set and So we just continued the conversation and just as of last week she is now in a new position and I am happily down to a one-person team with some contract help.

11:38 - 12:11

Rochelle Moulton: Well, I feel like I should say congratulations. But what a ride though. This is the other part that when you don't have employees you don't necessarily appreciate is every time 1 person leaves or 1 person joins it changes the nature of the group. It can change it for the better, it can change it for the worse. It's kind of a crap shoot. And the other thing that's really interesting is it sounds like each of these people had what I would call an employee mindset. In other words, they were looking for another job. It's not like they

12:11 - 12:24

Rochelle Moulton: were going out and looking for some contract assignments. They wanted what I call a job job, a salary, a place to go. Actually, did you have a physical office space or was this all virtual?

12:24 - 12:49

Laurel Scherer: We did. We had a physical office space, 2 different ones over the course of the years, all the way up until about a year and a half ago. It's kind of during the pandemic, we decided to go all virtual. But and I will say that, you know, that's another expense too, you know, you're, you've got the, you've got this office space that you're dealing with. And it's just, you know, that's, that's always been a little bit of an added stressor in a way.

12:49 - 13:22

Rochelle Moulton: Oh, that's where I was going next is, you know, having that it's kind of like a noose around your neck because, you know, you usually have to sign a lease for some specified period of time. And the other thing you said earlier was that you wanted to bring in some assignments that suited 1 of your employees skill sets so as the owner you've got these responsibilities for the expense side that may not be changeable very much like the rent and then it's not that you just go out and look for work that with the kinds of

13:22 - 13:46

Rochelle Moulton: clients that you'd love or the kinds of projects you'd love or the areas of expertise you'd love but you have to keep your people busy Which means yes, and I'm not saying you did this, but sometimes people take on assignments that they really didn't want to in order to keep the lights on and keep their people busy or keep them engaged because employees are usually happier when they're busy versus when they don't have enough to do.

13:47 - 14:10

Laurel Scherer: Yeah, absolutely. And I think that there is a lot of freedom in not having to do that. And I'm at a point now where I'm really looking forward to being able to, like, I've learned how to say no to potential clients over the years that are not going to be a good fit. But now I have so much more freedom and flexibility in how often I can say no.

14:11 - 14:31

Rochelle Moulton: Yeah, you just hit on, I don't know if you've heard me say this, but my new definition of wealth is money, revenue, money, time, and flexibility. So what you just picked up is a form of wealth that you didn't have before, which is the flexibility to make decisions you might not have been able to make before.

14:32 - 14:50

Laurel Scherer: Right, and that's the irony is you go into business to have that flexibility, and then you grow an agency and realize that you really don't have nearly as much of it as you do if you're working more independently and collaboratively without the responsibility of the employees?

14:50 - 15:18

Rochelle Moulton: Oh yeah, I mean when I had my firm, I was looking at the, I had employees and contractors, and I was looking at them going, I want their life. They're having fun, they're going out, and we only had them do projects they were excited about. And we could do that because most of them were on contract. And they would have fun and we had a no fault, no policy. So if they didn't want to do a project, they could just say no and we still love them. But I was there, right? I was there all the

15:18 - 15:49

Rochelle Moulton: time fixing the technology when it broke, making sure we had sales, if we had conflicts come up, you know, that was all in my lap. So yeah, there is a whole piece to that. And I think at least in America, we think that when we start businesses, other people judge us by, oh, how many employees do you have? How big are you? And I think a lot of us just kind of buy into that. Well, of course, we're going to grow a firm. Why wouldn't we? And, you know, we, a lot of us like to have

15:49 - 16:06

Rochelle Moulton: colleagues. We like to have people to bounce ideas off of. But yeah, this is why I just I'm loving hearing this because it's allowing people who might be thinking about having employees to really think about whether this is a responsibility they're prepared to take on.

16:07 - 16:48

Laurel Scherer: Yeah, definitely. I always wanted to make sure that they had opportunities for professional development, and...