Episode 123: Growing A Business Past $1M With Mike Simmons
Mike Simmons successfully grew his business to a million in revenue then got stuck. Profits suffered as employee churn increased. Then he and his partner had a breakthrough. They immediately pivoted and found the success they were seeking. He has now grown several successful businesses using some of the key lessons learned at that time.
Join Mike Simmons and Brett Gilliland on this interview to learn some of the secrets to growth past the million dollar ceiling.
For more insights from Mike Simmons visit https://www.mikesimmons.com/
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Welcome to this episode of the show. Every week, I have amazing guests, and I decided to share something on my own. That’s more of an or, not an and, but most of the time I have a guest. This is no exception. In this episode, I have with me, Mike Simmons. Mike Simmons is the Owner and Operator of a podcast called Just Start Real Estate. We’ll get into that. He’s also a multiple-time Founder. He started several businesses. He runs several businesses, so we’re excited to learn from him. Welcome to the show, Mike.
Thank you for having me. I appreciate it.
Tell us a bit about Just Start Real Estate. I want my audience to be able to learn about what you’re doing and your audience. If they can benefit from that, we want to make sure that they know where to go.
I speak to real estate investors, primarily 1 of 3 or all 3 fix-and-flip investors, wholesalers, and buy-and-hold investors landlord types. Those are the three main categories of folks that listen to me. We do talk a little about multifamily from time to time, some storage units, but it’s fix-and-flip, wholesale, and buy-and-hold stuff. That’s our focus. Similar to what you do here is we talk to people about how to start, scale, and grow it to where they want it to be.
Not everybody wants a $10 million business, but some people do, so we show them how to scale. The key here, and I’m sure that this is something you convey all the time, is scaling is fine, but scaling and being profitable is really what we want. We can’t just have big revenue and no net. That’s no good. We do that on our show too as well as trying to help them scale profitably.Scaling is fine, but scaling and being profitable is really what we want. Click To Tweet
Awesome. We’re glad you’re here to share some of the lessons you’ve learned as you have scaled your businesses profitably. One of the things that we often talk about on our show has less to do with the revenue drivers, and more to do with how you do the work of getting clear, setting a vision, or whatever words you put around that, in building a team, and how you do the business building work. You’ve done this multiple times with different businesses. While I want to completely honor it, we’re going to ignore the startup to a $1 million journey. There’s so much stuff in there.
Let’s get to the place where you had a viable thing and where you’re like, “I’ve got this seven-figure business now. How do I do the work of adding that team, letting go of responsibilities, and continuing to push myself up into higher value types of activities?” Think about one or any of your experiences doing that, and I would love to jump in on things that are coming to mind for you on that transition there as you go from million-dollar entrepreneur to now leader of others and CEO of a company.
You nailed it. There are a lot of things we could hit on. This could be a ten-hour discussion, but if we’re going to hit on a few things that come to mind, the biggest transition in what people either don’t realize or don’t have enough respect for is when you go from being an owner, operator, somebody who’s in the trenches, somebody who’s really out there doing the actual day-to-day work, when you get to that million-dollar mark or somewhere in that range, you have to switch gears.
You become more of a leader and someone who’s responsible for bringing people into the organization, setting a tone for the organization, and creating a culture for the organization. Things that you probably didn’t even think about in your first up to $1 million like company culture, leading, and inspiring, they’re a little intangible. They don’t come into place so much until you get to that point and then you realize, “People are how my business is going to get to where I want it to go. If it’s all reliant on me, I’m screwed. It’s never going to happen. I need to bring in great people who are better than me.”
Frankly, I found this. When it comes to people, there are some entrepreneurs or business owners who are intimidated by bringing in people who are significantly better than them in a given task, but that’s really the magic sauce, bringing people who are so much better than you, that they have a superpower in a certain lane in your business and let them be super in that lane. You sat over the whole organization the whole time. You were the sales. You were marketing. You were bookkeeping and what all the things you had to do to get to that point, then you bring people in.
There’s a better salesperson out there than you probably. They’re not great at everything else, but they’re great at sales. There are other people who are great at marketing. They’re better than you were, but they’re not great at everything. They can do marketing, and you start realizing your business can get a little siloed in a way, which is great as long as it’s not in a negative way. You start bringing in these superstars and then your job is to keep them motivated. In this day and age, in the world that we live in now, people don’t expect to hate their work or their job. They don’t expect to hate their company.
You have to figure out how to create an environment that makes people not only happy to come in but feel proud of where they work and that there’s something happening that they can be a part of that’s bigger than them. It’s different. When I was growing up and when I started in the workforce, everyone figured, “Give them a raise and they’ll be happy.” What we found as leaders of business is I always say money is like sugar. It revs you up and makes you feel great, but it doesn’t last. It goes away. Sometimes you even crash a little bit because money isn’t really what people want. It’s a vehicle to what they want, a lot of times, but giving someone a raise will only motivate them for a short time and then they’ll start feeling like whatever they’re making.
That’s what they’re owed, so it doesn’t feel like anything special after a while. That’s why the corporate world has got this yearly review or yearly raise because they know if they give you a raise it will maybe keep you happy for the rest of the year and then they know they have to do something the next year, which is crazy. Not everybody wants that. Some people want autonomy. We know that now after COVID. We realize that’s something people really desire and that we can do it. In my industry, we’ve known that, but in other industries, where they thought they had to have these physical offices, they’re realizing they don’t. Some people like autonomy. Some people like to have more freedom when they come and go, flex time, and things like that.
You have to figure out what people want and make them happy. If any of you reading this are older, maybe Gen X, or in that generation, you’ve probably had different jobs before you became an entrepreneur, not everyone, but some people have. There are jobs that you probably have had in the past where you wanted to stab your eyes out going in every day, and then there were other jobs you enjoyed going in. It was a fun environment. You like the people. You felt like you were heard. The second one is what you need to create because, in the first one, people will stay until they find a different job. This is a big one for entrepreneurs who are growing beyond that million.
The cost to hire, train, and bring someone into your company is so great that you can’t have a turnstile at the door. There can’t be people coming and going because you’re a horrible boss. I’ll tell a quick story. I know you didn’t want to talk to 0 to 100 but just for a minute to illustrate my point. When I was getting to the million dollars in my real estate investing company, we were on such a breakneck pace to get there. We were bringing people in who looked good on paper. We are plopping them in a seat. We were giving them some KPIs or some expectations and metrics of what they had to achieve. If they didn’t achieve them, they were gone, and the next person in. We were turning and burning people like crazy.The cost to hire, train, and bring someone into your company is so great that you can't have a turnstile at the door. Click To Tweet
After about 6 to 8 months of that, my partner and I looked at each other. The whole way along were like, “That person is lazy. That person doesn’t get it. That person whatever.” We then started to realize, “It might be us. It can’t be everybody else.” At one point, you have to start looking at yourself. We realize we had such a toxic environment. We had pitted team members against each other inadvertently, but we had done that. We had made people feel like they were a number and that they didn’t matter. We were a little bit aggressive with them because we had a mission. We knew what we were trying to do, and we were doing that work before they came in.
If we can do it, certainly they can do it. If you’re an owner of a company, trust me, your motivations and incentives are different than your team members, employees, or whatever you want to call them. We learned that building a company culture was super important. Honestly, the person who looks the best on paper like that rockstar salesperson that you bring in, if they’re not a good value fit for your company, it will not work. You’re better off bringing in an A-, B+ player who fits well with your culture and helps them become an A+ player. It is so much of a better idea to have those guys for the long haul because they have the same value as your team.
You were spot on when you said we could talk about this stuff for ten hours. I couldn’t agree with you more. I can just sit back and listen to you based on what you said. I’m like, “Mike gets it. He’s been there. He’s done that.” You certainly validated for me that you’ve learned these lessons. Let’s make it a little more practical if we can because you talk about the big ideas of you can’t just turn them and burn them.
You have to create a place where they want to work, maybe where they have some fulfillment or a sense of meaning. Maybe they’re connected to other people. Maybe it’s about growth and development for them. What did you do when you saw yourselves in the mirror and said, “Maybe we’re the problem?” What are some of the steps you took to go from where you had been to now a more enlightened seven-figure business owner?
One of the things was I alluded to it. When I say cross-trained, that sounds very positive, proactive, and smart. We weren’t necessarily cross-training. We were asking them to do a lot of different jobs. We weren’t keeping them in a singularly focused lane where they had this North Star that they always knew they were going toward. I can think of this one example. I had someone in our company. She was called the dispositions manager. She was essentially in charge of selling our property. I had her doing all kinds of cross-functional stuff. Her name was Alicia. She was great. As a matter of fact, I regret to this day that she doesn’t work for us. I ruined that by pushing it too hard.
She started missing things. I said, “Alicia, what’s happening? You’re starting to miss things. You didn’t miss things before. You’re dropping the ball on a lot of spots. What’s going on?” She said, “I wake up every day at 8:00 in the morning. I ate breakfast and I’m on my computer. I fall asleep every single night on my laptop head down on the keyboard because I am working all day, no breaks, no nothing.”
She said, “I’m just exhausted. I can’t keep up with what you’re asking me to do.” I realized I was having her do way too much. We scaled back her work focus and we had her doing one major task, one thing she was responsible for. She was great again. Unfortunately, she left because I think she was saying like, “These guys are crazy.” We put people in lanes. We never said, “This is your job and you don’t have to even think about it.” We don’t want to create a negative environment where people feel like they can’t look across the lane and say, “I see an opportunity for improvement here.” What we do want is for people to understand what their 1 or 2 things we expect them to get done every day. It’s that saying, “If everybody’s responsible for everything, nobody’s responsible for anything.” That’s what we had.
Nobody was responsible for anything because everybody was responsible. That’s one thing we did. Another thing that we got dialed into as we started growing our company and getting over that $1 million mark is KPIs. We weren’t great at tracking numbers. KPIs, we looked at them in two distinct ways. Some KPIs are trailing indicators. It’s like, “What did you do last month? How much money did you make? How many appointments did you go on?”
Other KPIs, we call them activity metrics. It’s because we know that activity leads to results. If you’re always managing to results, it doesn’t tell them how to improve. It just tells them they didn’t meet the mark. We have a series for each function in our company, a series of activities that we track. That’s how we know day-to-day and week-to-week if we’re going to hit our marks by the end of the month. It’s good to know but it’s too late to know that your company failed last month. It’s already failed.
In the first week of the month, if we can say, “Sales folks, you guys didn’t do enough cold calls” or, “You guys didn’t go on enough appointments. You only went on four appointments. You had to go on eight or whatever it is,” we can start managing to those activities. If the activities do not hit the goals that we intend, we know we have to modify the activities or we need a little more training in those activities, so they become better at them. Maybe they’re doing enough. They’re just not doing it well. There are so many nuances. I’ll give you this. You’re not asking for it, but it’s important.
I listened to a speaker speak one time, Jeb Blount. If you’ve ever heard of him, he’s a consultant salesperson. He gave me this concept where he said, “Every company should have a money ball number.” If you’ve ever watched the movie Moneyball with Brad Pitt playing Billy Beane, what it boils down to is Billy Beane reduced all of the stats in baseball of who they wanted to have on the roster based on one thing, and that was on base percentage. How often does a person get on base? He didn’t care if you got hit with the ball and you got walked.
I challenge everyone reading this to try to find your money ball number. I’ll tell you what it is in my company because we went round and round back and forth and tried to figure out what that tipping point is. What’s the point of our company? We know this is happening, and good things will follow. For us, that is new.
We’re going out, talking to homeowners, and trying to buy their house, just so you know what our activities are. What we found is the money ball number for us is new appointments attended by our salesperson. We went all the way back to marketing statistics. Maybe there’s something in there, people who answer our phones, the salespeople, the dispositions people of transactions, and all the people in our company, but it all boiled down to if we know our salespeople are going on new appointments each week at a certain rate, good things will follow. I challenge you, everyone reading. Find out where those super keystone metrics in your company are and pay real close attention.Find your money ball number. find out where those super keystone metrics in your company are and pay close attention. Click To Tweet
Thank you, Mike. I got to circle back to something you said about people being in their lanes and then having clear KPIs or your expectations about what they need to do in those lanes. It’s not clarity for you. It’s clarity for our readers. I didn’t hear you saying lanes are meant to be restrictive. Lanes are meant to provide clarity, so people know exactly what’s expected, how it’s going to be measured, and how to lens the company goals. With those types of lanes, you could set them loose to do all sorts of magic. They can still go into other places and have flexibility and be innovative, but they know with clarity what’s expected. That would have saved Alicia early on.
It’s a great distinction. I’ve never made that distinction, but it’s important. We don’t want to create a that’s-not-my-job atmosphere. What we want to create is, “This is what I’m responsible for. This falls on me and no one else.” It doesn’t mean you can’t look across lanes and say, “Can I help you with that” or, “I see a better way,” but when it comes to the end of the day, you are the only person responsible for this thing, and that’s your lane.
I love that. You went on to talk about not only looking at the rearview mirror and all these lagging metrics. Those things have their place. We got to record how we did, needs in revenue, and all the rest, but those activity measures can be more leading indicators to the results that we are trying to drive. You’ve figured out that we don’t want to just look in the rear-view mirror. We want to look at an instrument panel that tells us how healthy we are going down the road.
That’s awesome. Clarity allows you to give ownership to somebody. It allows them to take ownership. Maybe you’ve experienced this, but I’ve talked to a lot of business owners who wish somehow they could hold their people more accountable. Every time I hear that, you haven’t learned how to give clear ownership yet. When you give clear ownership, accountability goes with that.
There’s a book called Extreme Ownership by Jocko Willink. It should be required reading in school. If people ran their businesses this way, then I would suggest running their relationships that way. It is such a better world where everyone realizes anything that happens in or around them is they need to take responsibility for it. What was their part? How could they have changed the outcome? It starts at the top.
I do a Q&A every Wednesday on my Facebook page. Somebody said in the Q&A, “I have a bunch of Millennials that I can’t get them off their butt and make them work.” It’s real fun for older people to make fun of Millennials and say, “You don’t know how work is.” The fact of the matter is there’s a good chance you’ve done something wrong as a leader. They don’t have clear expectations. They don’t know what the objectives and goals are. They don’t know how they’re measured. You’re not managing them right.
Maybe they don’t feel inspired to be there.
If you’re blaming a bunch of people, it’s probably not the bunch. It’s probably you. I understand that sometimes they’re just people who need to be let go, but if everyone is not wrong, usually it’s you. If it’s you against everyone, it’s probably you’re wrong.
I love that. You have one bad apple, but as soon as everybody looks like a bad apple, that’s you.
You’re the trees and the roots. It’s you.
I love that ownership. Mike, this is so fun. I’m having a great time. You said you and your partner had this realization one day. It’s like, “It’s not all of them. There’s a turnstile at the front door. They’re coming out. We’re turning and burning.” That’s expensive. You had progress and you said, “This is really us.” That’s a huge moment of awareness for a business owner. It’s nice when you have a partner that you can have that moment with. Sometimes they’re on their own. How would you recommend how would they invite themselves to have a moment of awareness? Once they are aware, do you have any tips for how to move forward and make something different out of that?
I’m a huge fan of masterminds. In my world and my life, I have seen a big difference in myself professionally and personally. I’m not even necessarily suggesting paid masterminds. You’re right. Entrepreneurship tends to be a lonely path. For a lot of people, they partner because they’re lonely. It’s a horrible reason to partner. I could talk for half an hour about partnerships. The bottom line is you need someone or some people who are in your shoes, they’re in your industry, or they’re of the same mindset where you can talk to them and say, “This is what’s happening.” Sometimes you just need someone to spank on the head and say, “Listen, it’s you.”
The bottom line is, as a leader or a business owner, if you can’t humble yourself and admit you’re wrong, you’re going to have a real tough time of it. The best leaders are the ones who will easily and readily accept blame when their company is struggling. That’s step number one. At some point, you have to be honest with yourself and say, “Can I look at the situation and see my part of it?” You see kids that are bad kids running around like little monsters. I always think those parents screwed up. It is not the kid. They don’t know to be bad necessarily. It’s similar to that when you have a company and people that work for you. They act the way with the environment that you’ve created.The best leaders are the ones that will easily and readily accept blame when their company is struggling. Click To Tweet
If you’ve created a bad environment, you’re going to have bad workers. You have to be able to look at yourself, take ownership, take blame for that, and decide that you’re going to fix it. For us, we are on a dime. My partner and I both have done personality assessments and all this. We know that we’re very driven type A. We know that we drive hard. We have spouses who tell us, “Sometimes you can be jerky when you’re in the zone.” We get it.
On a dime, we had to turn, slow ourselves down, and realize people need human interaction. They need to feel like you care about them beyond the numbers that they can produce for your company. One thing you talked about is tangible or practical things. It’s important. This has been a game changer for me and my company. Everybody in that company who works for you should get a half-hour time block in your week. It’s not an open-door policy. That’s an old thing. Everyone knows no one feels great about going into the boss’ office and saying, “We have to talk.”
It’s intimidating. It’s half an hour. It’s predetermined. It’s in the schedule. It’s every week, and there is absolutely no expectation that you’re going to talk about work necessarily. You can, but it can be personal. It can be anything. What you’ll find is the people who work for you, in the beginning, will probably be skeptical.
There will be a little bit of thinking, “Maybe you’re trying to do something here. Maybe you’re trying to trick me.” It will be weird that they’ll be apprehensive, but you do that long enough and they’ll start to realize, “This is just literally a half an hour for us to talk and to get to know each other better.” Once you get to know your employees a little bit better personally, you know much better how to incentivize them and what’s important to them. You know that they’ve missed every one of their daughters’ recitals and it just breaks their heart.
If you can figure out a way to make that happen for them, that’s better than a raise. You said, “I know your daughter has a recital once a month on Thursdays at 2:00 PM. You can leave. You can leave at 1:00 and call it quits for the day. We’ll make up the time somewhere else or not,” however you want to handle it. You acknowledge that thing that’s eating it and tearing at their heart and you fix it for them as a boss, that person is going to run through walls for you.
You hit something so beautiful, trust and loyalty. You create time in your calendar once a week for 30 minutes for each of your direct reports to connect with them. It sounds like you don’t push work on it. I connect with them, and they know I’m going to ask them about their responsibilities. We do check in that way, but I love the trust-building and the loyalty that you said. One simple example is to go to your daughter’s recital, and they will bust through walls for you. I love that, Mike.
If you constantly reschedule it and bump it around, that is a clearer signal you can make to someone that they’re not a priority to you. They’re not that important. You’ve got to stick to it no matter what.
This time around, we’ll wrap it up. Maybe I’ll get you to come back and we’ll share the next set of learnings. Mike, people are going to be interested in learning more about your podcast and connecting with you. What is the best way for them to do that?
Thank you for that. They can connect to my podcast. They can reach and find me at Just Start Real Estate wherever you listen to your podcasts, iTunes, Stitchers, or whatever. Also, you can go to www.MikeSimmons.com and you can check me out there. I’ve written a book. You can get all that and find out more about me at that location.
It sounds like you do some Facebook stuff too because you mentioned a Q&A on Facebook. They can find you at www.MikeSimmons.com. Thank you so much for sharing some of your hard-earned lessons. Our readers will get something if they do something with it. Don’t just read what Mike is saying. Go and start doing some of the practical things that he gave as things that you could start to do to improve yourself and your business. Thanks again for being here, Mike.
Thank you for having me.
Everybody, please rate, review, and share. Do those things so we can help as many seven-figure business owners as possible with interviews like this with Mike. We’ll see you in the next episode.
- Just Start Real Estate
- Extreme Ownership
- iTunes – Just Start Real Estate
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