Mike Cowper grew his real estate wholesaling business so quickly he almost broke it.
After breaking 7 figures in revenue he took a step back to “right size it” and build it back the right way.
Watch as Mike talks about how to build a 7 figure real estate investing business.
Transcript:
Chris Bounds 00:00
In that mutual mastermind that we were in and both you and your business partner to talk about how you built this seven figure business but broke the machine in the process, which is good in a lot of ways. Also, comes with a lot of pain points as you’re busting through walls. Basically, anytime your business triples, most of your systems don’t work anymore. You have to rebuild them because they weren’t equipped for that type of volume, structure or process.
So going from six to seven, especially that quickly. You went through multiple phases and you just skipped all of that and you limped along and you made it. And then now, you’ve right sized it. How would you go back? And do you think it was, I guess the hindsight is always 2020. But if you could go back, would you build that differently even though knowing that it may take you a little bit longer to get to the seven figures? How did you eventually end up building it in the right sized way?
Mike Cowper 01:13
That’s a fantastic question. It’s funny, I was just talking with Don Costa, my partner at Flip Talk Education last weekend about that. It was one of the things we’re kind of talking about is would you change anything in the past? Now, it’s easy to say now that I wouldn’t have because I made it through and I’m on the other side.
But the other thing we were kind of talking about and it’s something I don’t know the answer to is what I’ve even listened. Right. And I think that’s where a lot of people that when they’re trying to look to start this and really build their businesses something truly big is we’re all looking at the rose colored lens that people portray out there in social media, on Facebook or whatever it is.
Because the only thing that people want to share is the positive sides for the most part. I mean, there’s people out there that are totally open and raw but you don’t hear about the downsides too often. And really, a lot of the mistakes we came down to was exactly what you said. We try growing too fast. We were chasing a number to be the biggest investor in the room. We want to be the biggest.
It’s the biggest that invest this or invest that. Well, there’s a difference between being the biggest and being the best. And what we found was- Yeah. We could generate big numbers. But to do that, we scaled so fast that we just like what you said that the systems and processes were broken. We were just throwing patches on things and trying to herky jerky, put a lot of systems in place and put people in place. We had this big team. We had this big revenue.
But at the end of the day, we weren’t super profitable. There were times we weren’t profitable at all. And that is an increasingly and incredibly stressful position that you can find yourself in. I’ve seen businesses scale themselves out of business because they try to grow too big too fast. And what I would tell myself then is, “You can’t rush through the process.” There is no get rich, quick. I mean, for every one person, I think that really does is that kind of like lightning in a bottle and find success really fast and it’s sustained. I think there’s probably 100 to 200 more people that you don’t hear about because of survivorship bias.
You only hear about the success. You don’t hear about everyone has failed. Yeah. If it was to go back again and still be the person I am today. I guess that’s what the caveat that we had is we don’t want to change who we are who we became from the lessons we learned. But I would say is be patient.
It’s a marathon, not a race. You end up doing way more work and having way more stress if you do kind of almost organically and controllably grow your business because it’s just too easy to get out of your control. And it’s too easy to try and all of a sudden you have fires on all these different fronts. And it’s really hard to fight a battle if you’re trying to cover seven different angles.
Chris Bounds 03:57
Yeah. And you pointed out to the fact that what really matters is the bottom line. Like, the top line seven, eight or more figures but at the end of the day, if you’re not profitable, what’s the point? That strategy is going to be different. If you’re running like the Silicon Valley, you’ve got the next greatest trendy thing that’s going to change the world like Facebook or something. But when you’re running a small, very localized business like real estate that’s got a lot of risks and you have your money on the line.
You’re maybe a small team or even a solopreneur, it’s a little different and the stakes are higher for you personally. It comes down to aren’t you making money? And maybe doing seven figures that way you did it before or busting past through it. Maybe that actually puts you in the red or you end up doing so much extra work for how much extra net in your pocket.
Like if you could scale back and maintain higher profitability, is that worth it for you? And for a lot of people, the answer is probably yes. The chasing the sexy. Hey, I’m out there doing 10 deals a month and look at me on my boat or whatever. It very attractive. But when you get behind the scenes, there’s a lot of headaches that come with that. Even for the ones that actually make it, there’s still a lot of headaches.
Mike Cowper 05:26
That’s an incredibly valid point that most people don’t see at all. Most people don’t show behind the curtains. When you’re running a big operation, that means you’re not even really doing much investing anymore. You’re managing people. You’re managing a business, you’re managing processes. And if you haven’t ever done that before, I’ll be the first to tell you it’s pretty different adjustment from running the numbers and working one on one with sellers or buyers.
When you’re trying to manage personalities, and you’ll get the most out of them. You don’t even know what to actually ask them to do sometimes at first. You don’t know how to properly communicate with them or set expectations or hold them accountable. It’s a pretty steep learning curve. And then if you’re trying to grow super fast and you’re adding 1, 2, 3, 4 or 5 people at the same time.
What I found is you end up not having enough time to dedicate to that person and dedicate to making sure it’s done right. So one of the things that I really have been focused on is talking with different new investors and people that are trying to stabilize or grow their businesses. You make sure you’re really good at the foundational stuff.
And I think that gets lost because everyone wants to find the newest shiny object that it’s the latest and greatest can make an overnight millionaire and not have to work, sit on a beach, lock my ties and all that. But really the people that are the most successful, the ones that have been around for the most time and are the most wealthy are most of the times, the ones who have no idea who they are. Because they’ve been doing it. They had their system set up.
They’re not flashy about it. They’ve built the machine that suits their lifestyle and that’s really been my focus. Especially, when we partner up with Don is how do we help people build a better business. And that just goes back to me realizing I was chasing a number and kind of other people’s goals to try and feed my ego more than I was paying attention what my goal was, which was more time and financial freedom stuff, my family, my friends and have cool experiences.
And you know went a year or two, where I forgot to buy a rental or passive income property because it’s so stressed out and so focused on trying to fix all the problems that crept up when we were building our machine. And the machine is running and you just had to keep finding what was breaking down.
Chris Bounds 07:24
Yeah. It’s a car running downhill so fast that one wheels falling off and you got to go and repair that. Meanwhile, the engine caught on fire and then you’ve got some employees hanging out the other half the car. It looks like all this stuff and you got to do and you still maintain direction which is challenging.