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The Ground Game Podcast
Welcome to The Ground Game Podcast, where land investing meets real talk! Join your hosts, Justin and Clay, both 7-figure land investors and seasoned entrepreneurs, as they dive deep into the world of land investing, team building, and personal growth.
The Ground Game Podcast
Episode 47: No Rainbows, No Butterflies: The Realities of Scaling a Land Business
🎙️ Welcome Back to The Ground Game Podcast! 🎙️
In this episode, hosts Clayton Hepler and Justin Piché engage in a candid conversation about the realities of running a land investing business. They share personal updates, insights on market challenges, and the importance of strategic decision-making in the ever-evolving real estate landscape.
Key Highlights
Personal Updates:
Clay and Justin kick off the episode with some light-hearted banter about their recent experiences. Justin shares his excitement about moving into a new home and his upcoming trip to the Pacific Northwest, while Clayton showcases his new camera setup, adding a fresh look to the podcast.
Scaling Challenges:
The hosts delve into the complexities of managing multiple projects and responsibilities in land investing. Justin discusses the challenges of negotiating with the Lower Colorado River Authority regarding property buffer zones, emphasizing how these regulatory hurdles can impact profitability and project timelines.
Market Insights:
Clayton and Justin reflect on the current market slowdown, sharing their observations on sales trends and the importance of adapting to changing conditions. They discuss the need for strategic planning and the significance of understanding local market dynamics to maintain business growth.
The Importance of Feedback Loops:
The episode highlights the critical role of feedback loops in entrepreneurship. Clayton and Justin emphasize the need for constant self-evaluation and data analysis to ensure their actions align with business goals, sharing their experiences with tracking key performance indicators (KPIs).
Navigating County Regulations:
Justin reveals a significant development project in Texas, discussing the unexpected challenges he faced with county regulations and the importance of partnerships in overcoming these obstacles. He shares insights on how to navigate complex regulatory environments effectively.
Data Management and Decision-Making:
The episode wraps up with a discussion on the significance of data in land investing. Clayton and Justin encourage listeners to leverage technology for informed decision-making, sharing their experiences with various systems and the importance of a cohesive tech stack.
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Clayton Hepler (00:12)
Hello and welcome to another episode of the Ground Game Podcast. If you are on YouTube, you will notice that I have an incredibly new, fancy, amazing camera. ⁓ So I just want to announce that. looks great. Justin.
Justin Piche (00:27)
This is your co-host Justin and we're here to show you how to win the ground game. I'm actually on a downgraded camera because I still have yet to set up my office. All my old mounts don't work on this desk because I can't clip anything to the desk. Everything has to be a drill through. ⁓ So I've got some things coming to order for the light in the camera. But for now I'm on my MacBook Pro. It looks fine on my end but it doesn't go to 4K like my other camera.
Clayton Hepler (00:55)
You look great, man, you look great.
Justin Piche (00:57)
I got some good natural lighting. have windows all around, you know. Yeah.
Clayton Hepler (00:59)
Yeah, you look good, man.
⁓ So I think that, you know, today you and I were talking about earlier. ⁓ I think today the benefits for the listeners is going to be really just candorous conversation about what's going on in our business, what's going on in our life, new things, what we've learned, takeaways from things that we've recently done or what we're experiencing in general. And then how we're
reacting to certain things in the market. ⁓ first, dude, what's new and exciting in your life in general in your business and your personal life? What like something interesting that
Justin Piche (01:43)
Yeah, I mean, I have a couple of good things maybe recently. we're moved in. Obviously, I talked about that on a previous podcast. So that's exciting. I'm leaving for Seattle tomorrow to go on a, be there for like 10, 11 days. Not necessarily Seattle proper, but the Pacific Northwest, or like the Seattle area maybe. We have friends and family up there, so we're gonna spend 10 days.
Clayton Hepler (01:43)
that you want to talk about.
Justin Piche (02:10)
escaping the Houston heat. So that's exciting. I leave tomorrow with the family business wise. You know, we have some good solid developments that are in the works right now. One, we're pretty close to being able to start building our road already purchased a property. We've been we've had some this is in Texas and it the watershed that it goes into is the at least the authority that's in charge of drainage off this property is the LCR.
a the lower Colorado River Authority. And so we're kind of negotiating back and forth with them on buffer areas of drainage. And the specific issue is that the that LCRA wants us to dedicate all of the areas of our property that are in a buffer zone, which is think like the sloped parts of the property that carry water down into like a watershed or like where water runoff would go. They want us to to basically get rid of that from the
properties themselves and like give it away essentially to the LCRA as like permanent buffer or conservation easement or whatever. But that's not the way things have been done since the regulations were passed in 2007. Our engineer has done 15 or 20 projects in this county with this specific organization and we're doing the exact same thing they've done on every single other property which is to put restrictions on those areas.
have the HOA put restrictions on those areas so that nobody can build in them, which they can't anyway, they're all really sloped, nobody would be building in them regardless. the issue is that if we give that property away, it's only about four total acres on 150 acre parcel, but if we give that property away, then our resulting lots are smaller and our resulting sales prices are lower.
So even though the property is not buildable because it's in a buffer zone, owning it as a property owner makes your property from one and a half acres to like three acres and the prevailing price in that area is 45 to 50,000 an acre. so you, you give away four acres and you're talking about about $200,000 of, of lost revenue from that acreage. we're a total total, not per lot in total. which is, mean, distributed cross whole project. It's not that substantial, but
Clayton Hepler (04:21)
lot.
Okay, okay, okay, okay.
Justin Piche (04:30)
passing regulations to prevent any building in that area accomplishes the exact same goal as dedicating the property to LCRA. So it's like, doesn't make much of it. It makes no difference. We're achieving the exact same goal with both the avenues. It's just one of the ways loses us money and the other way does doesn't. So we're obviously trying to go with the way that doesn't lose money. So, but we're, other than that, we had all our clearing work done. actually drove out.
there with my partner Ben and other partner Trey and we went rode around the property, saw the good views, know, trying to make some decisions on strategic clearing work. So that was interesting. That's one project I got Spokane, another kind of big project. We have the bank financing lined up, right? Got an appraisal ordered. We got 10 business days left before the appraisal is supposed to be delivered. And if the appraisal comes back good, we'll be able to close on that.
So that one's exciting to finally close because it's been a crazy ride. have I've I don't even know. I think I have one hundred and fifty thousand dollars in earnest right now. That's not refundable on that deal. I've had to keep extending it over and over again. So I'm excited that we're able to move forward on it. That would be a painful hit. But then, you know, there's obviously a couple of those kind of probably the good things. There's obviously some some.
Clayton Hepler (05:46)
Yeah, it would be a painful hit.
Justin Piche (05:56)
You know, nothing's it's not always good. Right. And that's part of one of the reasons why we I think we started this podcast is to share like the truth about what is going on in business and to share with people like, Hey, it's not all rainbows and butterflies and it's not all winds nonstop. You know, there's a front that I think people can put on when they're on a podcast or when they're, don't know, you know, know, Facebook live or whatever. I'm like, everything's fantastic. There are hard problems when, especially as your business scales. So.
Right now, I think the biggest issue we're dealing with is just kind of market slowdown. And I don't know if everybody's kind of feeling this or not. A few, maybe two months ago, we were firing on all cylinders, both acquisitions and sales, especially sales. And the kind the end of the summer has really slowed down on sales. We've had a lot of owner finance sales and very few cash with third party finance sales. And so, know, when you have big OPEX, like a big business like I do,
like I have, that's when you start to look and say, okay, well, what are my levers? Like where are my decision points for either cutting spend or where are my revenue generating activities? What can I do? What can I leverage or what can I sell that isn't property like notes or whatever? Where are those levers that I need to pull? So that's kind of what I'm doing right now. We're not in any kind of danger by any stretch of the imagination. We have ton of inventory. We've got money in the bank. We've got properties selling.
Just I can see if we keep this up for a few more months things off to make some decisions.
Clayton Hepler (07:32)
And what are the what is like causing you to say this? Like why? What is it? Your cash? Are you seeing your cash conversion cycle going up? Are you seeing?
Justin Piche (07:41)
Yeah, I think
it's been a couple of months of lackluster acquisitions contracts. ⁓ So buy side acquisition contracts. So that's our leading indicator of a slowdown in future revenue or maybe a stagnation of future revenue. And then on the sales side, over the course of the year, I'd say we've averaged
Clayton Hepler (07:52)
Bye son, bye son.
Yep.
Justin Piche (08:09)
15 to 20 properties under contract to sell at any one time bringing in 1.5 to 2 million. So like not like at any one time. That's kind of like the rolling average of sales total revenue like to 1.5 to 2 million dollars in total sales and 15 to 20 active contracts that are in closing at any one time and some will close and then some will get under contract but we're down to like 10 maybe under contract to sell.
So like right about half of where we've been all year spread out over the next like month or so. ⁓ And then you enter into a dry spell. So I see these kind of like two indicators of slowdown in sales contracts bringing revenue in on the heels of two months of very high owner finance sales. So not returning.
Profiting capital maybe like a little bit of capital, but now we have this new this note that we now need to sell and then also a couple months of lackluster acquisitions contracts with the exception of a few like larger developments that also won't bring revenue in for a while. So it's kind of all these factors are making me start to look much more deeply at our spend because we've been for a long time now focused very heavily on growth. And so we're we're bringing on new employees.
Clayton Hepler (09:32)
Right.
Justin Piche (09:35)
we're improving our systems, we're spending a lot on marketing, ⁓ and growth is great. And it's always been a razor's edge of walking the line between spending too much overspending for the size of your organization and ability to capitalize on leads and under spending to inhibit growth. It's always been a fine line and it continues to be a fine line. So I'm just, know, as the business owner, as a CEO, the ultimate responsibility of the solvency of your business and
the ability of you to continue conducting business rests on you. And it would be very unwise for me to just keep going with blinders on as if everything, you we were still selling a whatever 20 properties a month when I can see the numbers have slowed down recently. So I say all this to more to just be kind of open commando with people and let them understand that even when you get to a scale where I mean, we've already sold. Let's see. Last year we did.
I think the total volume of property we sold was right around 7 million. We've already blown past that this year. We sold a lot more property than we did last year. ⁓ We're doing well relative to probably many people in the space, but I still have to think about these things, right? Because especially with high OPEX, if you're doing it with a really small efficient team and you're able to hit high numbers, it's maybe not as much of a concern, but we've rolled out some new marketing channels that we haven't yet mastered.
that we're spending a lot of money on, or spending a lot of money on systems and process improvement, which is great, but doesn't drive revenue. It should drive future revenue through efficiencies and being able to handle more and grow, but it doesn't drive revenue. So it's kind of a balance.
Clayton Hepler (11:13)
When you say hi OpEx, can you elucidate what that means?
Justin Piche (11:17)
I mean, we've got a big team. have 28 people working for us. So obviously there's salaries and commissions that go with the team itself. And then, you know, we spend quite a bit on marketing. So marketing is quite high as well.
Clayton Hepler (11:30)
Could you give us some clear range? Like a range? Like a range? Okay.
Justin Piche (11:32)
We're probably, yeah, we're spending somewhere between 80 and $100,000 a month on
the team, systems, and marketing.
Clayton Hepler (11:40)
That's right, that's right, yeah. Right, it doesn't even exist,
Justin Piche (11:42)
So like you have $100,000 gross profit month, that's break even, right? You've got to, no, that, yeah, no, yeah.
So we have 100,000 gross profit month, like that's not a, that's a bad month. That's a, that's like a very bad month. Like, what are we doing? So, so when you see the sales contract slow down and you see a bunch of owner finance sales, you realize, oh no, okay, like this, this money is not, this revenue is not going to be realized this month or next month or next month maybe. So.
Clayton Hepler (11:54)
Right.
Hahaha
Yeah, but what I find is like a lot of times, and a lot of times you have these just crazy massive months. You might have a month that you're like 500k, the next month you're like 15. It's like crazy, it's like crazy.
Justin Piche (12:22)
I know. Yeah, you posted a
tweet months ago, but it was so relatable. So relatable. And we, I mean, we've had that. I had like a, what was it? 800K gross profit month. Like back in March. It was a great month. Just a single month. Huge, some just things lined up. It was fantastic. And then we have a week. Yeah.
Clayton Hepler (12:29)
Yeah, yeah, exactly. Yeah, yeah, yeah, yeah, yeah. ⁓
Yeah. And then all of a sudden three months you're
like negative and then the next month you're like way over.
Justin Piche (12:50)
And I mean, every month this
year, we've had solid months. So we've never been in the red, if you will. Every month we're making more money than we're spending. ⁓ But sometimes things line up and you can look a month or two ahead based on your contracts and you should be able to tell if you're doing financial planning properly where you may have shortfalls.
Clayton Hepler (13:12)
That's right, that's right. Dude, those are pretty interesting. I have some cool thoughts of recently things that have gone well with me. I can start on the actual tangible real estate side and then I can go into some other life lessons. So number one is we have, it's like 130 something, 132 in Texas.
⁓ Actually pretty close to where you are That we're working on right now, and it's really it's been hard. We haven't under contract for about 19 someone brought this deal to me. I'm running a contract for 19. I think you and I briefly touched on it just Spitballing back and forth we think we can exit at 35 so we're buying it for Actually we haven't on contract for like 16
I think we're all in like 1.9 and we think we can exit at like three, two, three, four. ⁓ But the market's been super weird in this area. It's a very unusual market for different, like you have properties that are selling for 16 an acre and then properties that are selling for 40 an acre. ⁓ And so what we've decided to do is start to pre-market.
Justin Piche (14:25)
Yeah.
Clayton Hepler (14:31)
subdivision. So we're cutting this thing up into a bunch of 10 acres, and then running an easement down the center of it and making it a private maintenance agreement between all of the the 10 acre parcels. But we're not even going to put in the road. Like we're just going to pre market it we have about a month and a half until our contract expires and our option money is hard.
And so we're going to have a broker put these parcels on the market to see if we can drum up, see what the interest is at certain acreage levels. You know, I understand you did this with a parcel earlier this year that you sold like a portion of the property before you close and that funded your quote, right? So this is
Justin Piche (15:12)
Yeah, I'd be careful with
just one thought real quick, and you may have looked into this, so forgive me if you have. Because I've had this happen on multiple projects where I did not expect it. And it was just me not... You do deals in a lot of different counties and areas, and sometimes things are just slightly different and you don't expect them. And so one project I worked on...
was supposed to be a completely exempt subdivision. read through all the subdivision regulations, et cetera. Anyway, went to go divide it into 10 acre tracks with an easement. And the kind of specific clause that kicked me out of exemptions was it said essentially, if any part of the lot is laid out for public use at all.
then you have to go through a plot and and thus build the road. And so, and I read through that many times and I thought to myself, well, an easement is private. Like it's not public use. Like nobody else can use this except for the property owners. But after talking to county engineers in multiple counties, they all interpret it the same way. That an easement is a portion of the property that is laid out for something other than private, for public use or whatever, for renemy from being able to do that. So.
Clayton Hepler (16:08)
Okay.
That's interesting.
Justin Piche (16:37)
I don't want you to go too far down this route and find that out like I did the hard way. Lose 10K in earnest or whatever. Yeah.
Clayton Hepler (16:42)
Oh my gosh.
That's great, that's great feedback. So long story short, we're gonna do it and we will look into that, that's great. But you know, if our goal would be sell enough so that majority of the property is paid for essentially at closing. And then you know, we're in half a million bucks instead of 1.9. And then we have an, you know, 1.5 in equity.
Right or something like that. That would be the ideal scenario, right? And so that's what we're doing there that which is pretty interesting deal We're doing another thing is we have this deal that I talked to you another deal I talked to you about buy for like 725 sell for like 1.1 I'm raising capital from that. We're supposed to close in about a week and a half and I still need to raise the LP capital for it Which has been a ton of fun
It's been a while.
Justin Piche (17:40)
Yeah, that's totally
tongue in cheek. It can be fun, it's also sometimes not fun.
Clayton Hepler (17:46)
Yeah, it's not fun, it's
definitely not fun, it's definitely not fun. The problem is, we've been getting, it's a commercial lot, it's two commercial lots and we've been getting a bunch of different price per square foot from commercial brokers. The deal is with commercial, as you know, dude, it's beauty in the eyes of the beholder, right? You could have someone that's at $6 a square foot right next to you and you sell for four.
Justin Piche (18:07)
yeah, I know.
Clayton Hepler (18:15)
And it's because the use of this property was in this specific area. It's a little bit closer to the main road and a Buc-ee's came in, right? And so commercial is a totally different ballgame.
Justin Piche (18:24)
Yeah.
completely different.
Clayton Hepler (18:29)
So that's interesting, kind of raising for that right now in my network. then organizationally, one thing that I've been noticing, I've been getting more and more private clients, it's been so much fun. And I've been seeing my most successful private clients have been focusing on fewer states than more.
And I have a philosophy that's developing philosophy that the people that will win long term are the ones that have a very core understanding of a couple of markets. And they know everyone in the market, they have multiple exit strategies, they can list properties, they can sell them. I know a guy in Wisconsin that's gonna do 1.6 this year, and it's him and a partner.
and they have no team members and they're like 90 % margins. And so, you know, do you want that type of business 1.6 at 90 % margins and you...
Justin Piche (19:35)
It's
a good business. ⁓
Clayton Hepler (19:38)
Any right, because the stress level. So the big thing that we're going to be doing is, and this is the developing thought, but ⁓ we're going to start to focus on a couple of core markets and just get really good and really deep in these core markets. Because we believe that that's going to be the alpha ⁓ over the long term. ⁓ It's just we found that if you go super wide,
you have an incredibly high amount of deals that drop out. We have so many deals that drop out. It's it's demoralizing to our team. We don't understand the area. It requires so much more organizational complexity. And we have, we have ⁓ lately been reducing our team size because of the pro, like I'm chasing profit and I tell my team, hey, I'm chasing profit. Like,
I don't need to have a massive team in order to be incredibly profitable. And that's what we care about. It's profit, not revenue for us. And so we have been selectively reducing team size and different for different team members. instead of two compers, can I have one? ⁓ That type of thing. ⁓ As we are getting clear on the markets that we want to hit in. And I believe that that's going to lead to a much more profitable business. ⁓
And in the future, think that what separates the people that are really good. So in the early 2020s, right, when you got involved and in 2018, 2019, gosh, I wish I was playing at that level at that point. It was just all like setting out mass marketing, right? And then I think three years ago, you had the people that were all about market selection. this is developing
Because I see so many high level investors with my private clients, I am really able to take the information that they're getting actual market feedback on and then use it and help other private clients. And also I learned as well, but the people that are really able to crush it are this guy that goes out in a truck with some guy in Wisconsin that gets to sell a financing deal and he's gonna make 400K on this one deal.
Justin Piche (21:59)
Hey guys, this is Justin interrupting your podcast to say thanks for listening. As you guys know, Clay and I put a lot of energy, effort and really share some personal things and things that are going on with our business to bring you guys the truth about what it takes to run a seven figure land investing business. So if you're getting value out of this, please leave a comment, rate, review, subscribe. We really appreciate it. Now back to your regularly scheduled programming.
Clayton Hepler (22:27)
I think that's the alpha, right? If I was in Texas, for example, I would only, I would probably only be in Texas, right? I would be a realtor in Texas. I'd have my broker's license. I would, you know, ⁓ list big ranches. I would develop big ranches and I would just be Texas, right? ⁓ I think that's a state that you can be just one state. It's hard. It would be hard to be just one state for a lot of other, ⁓ land, land flipping companies as the current.
You know, the deal is like high volume, high margin. And so it would be hard because you'd have to change your model. But I'm just seeing that's the evolution. And I hope our listeners don't hear that and then go to their team tomorrow and say, all right, guys, we're pivoting to like, you know, two states, right? don't. This is a developing philosophy, but, know, we obviously share with candor with our listeners on the ground game. But I think that pivoting and focusing on core markets and having that innate understanding is going to be.
the alpha in 2026 to 2028 to 2030. And that's how it always used to be, right? You have the local market knowledge and you know what, deal is good. Well, I actually got off a call with a guy that's gonna be potentially gonna be a private client, really, really smart guy, and he made like 650K in one county. One county, 650K in just land deals. And it's not a massive county, it's not like Harris County.
Right, which Harris County's in Houston. Right, it's a smaller county. So that's something that I've really been thinking about top of mind. This even goes with sending out blind offer, range offers. You just get better at sending out those offers. And if you don't, if you scale in proportionate to a more targeted market selection approach, then you scale profit.
better, you skill profit better. So that's something that I think is something that I'm just very aware of and we've been thinking about that heavily. And then I would say the last thing, dude, is I paid a pretty penny to spend a day with Tom Bilyeu this past Friday, ⁓ which went with my birthday this past Friday. yeah, man, yeah. So ⁓ I spent the whole day with Tom and
Justin Piche (24:48)
Happy belated birthday,
Clayton Hepler (24:56)
He has a $35 million mansion, it's probably $50 million at this point. He was on Selling Sunset. It's insane in the Hollywood Hills looking over LA. It's crazy, man. It was a crazy event. So we got there at 9.45, 9.30, and we left at about 5.30. mean, it was sham-packed. And there were a bunch of other incredibly accomplished real business owners. I was the only real estate guy in there.
There's a guy that owned a $12 million per year novelty painting business. They manufactured paint for like novelties and like painting like little mini statues and drawing and stuff like that. There was a $50 million like old person kind of like a geriatric business. There is one of the largest plastic surgery SaaS companies that the CEO of that.
who is this Argentinian guy that lived in Miami. There is a guy that owned a boutique medical clinic in Mexico, was making $20 million. There is another guy that had the biggest trading education company in Europe, specifically Germany, but in Europe as a whole. I mean, there is a guy with a bunch of sober living homes, I guess he's real estate, and...
Orange County. So I was by far the smallest fish in the room, the youngest guy, and it was an incredible experience. And you know, go to these events, you go to masterminds, a lot of times the benefit of a mastermind is the connections that you make. ⁓ It's the like mindedness, like not everyone gets to spend an hour a week or two hours a week talking on a podcast. ⁓ You know, with you, Justin, or in general, there's just a lot of
Learning through osmosis right learning through what's working with you? What's not working with you? And I think that the benefit of a mastermind or an event like this is really that that collective genius the collective Conversations and the network and in the peer group, right? But ⁓ there was also the component of you're sitting down with Tom you're one-on-one with Tom for a guy that sold quest nutrition for a billion dollars in his 35 million dollar mansion I mean he's he's built some serious businesses and
You know, I came to him with a lot of how questions, right? And this is what I hear my clients do with me a lot and I do with other people, right? How do I do this? How do I accomplish this? And we are, when we ask someone how, it is a passive conversation, right? Because if I ask you, hey Justin, how do I subdivide this land in Fort Bend County or Harris County or wherever, right?
It's very passive because you are actively telling me what to do. Now, in a lot of ways when there's a lack of knowledge, I think that that's a really good approach to it. ⁓ But this actually really taught me a lot for working with my clients and my team members and in general. what he really emphasized and want to gather from, so I came with all these calls, how do I scale this? Here's my current team members set up. I talked a lot about my mastermind in the future.
and we kind of built that plan out. But really what I learned from him was how to think better, right? Because ⁓ once you go beyond the, this is how I send out a mailer, or this is how I test A-B test, or how I become more consistent, that's a really important middle ground, But what's the difference between someone who has a
30 million dollar a year land development company in us is Is really like how they think right like how they actually process information. There's a time component, but he went through this very clear process of Enhancing your ability to think and it was interesting I had this time with him that I spent a lot of money on and I ended 10 minutes short Because I got I got what he he was communicating which was
You have to know what you're doing. You have to know your goal. KYG, know your goal. Be very clear about what you are trying to do. Because if you're gonna scale a lifestyle business, a lifestyle land flipping business is very different than listening to the Ground Game podcast and listening to Justin and I's trying to scale a multiple seven figure profit business, right? That's what we're trying to do. And beyond, right? You gotta know where you wanna be and then from there, it's about building this kind of physics of business.
this scientific method of approaching your goal. So you say, I want to make $3 million of gross profit with 60 % margin by this time. Then you run a series of tests based on extracting information from ⁓ guys like Justin and I, other people in your group, or online, or chat GPT, or you just kind of your own experience. You put together a hypothesis of
how you actually can achieve your goal. And you run a series of thought experiments, right? So if we were to think, hey, how do I get to $3 million? We would say, well, there's a bunch of different ones. I could text to that, I could call to that, could focus on just one county, Harris County, Houston, Texas, and I'll go and knock on every door of every landowner in the county, right? It could be ridiculous or it could be very targeted, as you and I have talked about. This is how you build a sales team, this is how you...
send marketing, right? And so, you put together these hypotheses, and then you say, if I think that these are maybe, I have 15, 20 different things that I need to do, the three to five top things that I run through what is called ICE procedure impact confidence ease. So, what's the impact that this is gonna make on helping me achieve my goals? What's my confidence level that this is actually gonna do that?
and how easy is it to do, and so you can rank these and rank order of what I believe as a business owner will be the best way for me to actually ⁓ build out my process of getting the $3 million of gross profit with 60 % margins. And then you keep kind of working through that, then you come up with your three to five, and then you understand what individual KPIs, levers, things that you need to do, and this is all very simple, right? But this is the process of achieving your goals. What do you need to do?
How do you hold yourself accountable to do that? What's your feedback loop to doing that? And then the most important part, which is the part that most people don't do, is when you get data, you look at the data and say, am I on track? Was I right when I originally hypothesized that this would be the best way to get to my goals? And so was just talking a lot, but.
That was something, was kind of a light bulb moment. It might seem super simple on the surface. I used to think it was too, but when I was in that room I said, that's it. ⁓ It's a lot simpler than what people make it out to be.
Justin Piche (32:15)
That's an awesome story. How did you get plugged into that mastermind? what just kind of the origin of it?
Clayton Hepler (32:23)
Well, I've always...
like follow this guy on social media. thought he was amazing, really smart, very accomplished entrepreneur. I just kind of like his matter of fact way of approaching business. And I saw that he was doing a mastermind. It's very recently he did it. And I scheduled a call with the sales guy and they're like, hey, what's your revenue level? What's your gross profit level? Cause they don't want smucks in there, right?
And so I shared the kind of where I was at and they're like, Hey, you're, you you, qualify, but like you're at the bottom end. ⁓ and, and then I took out my credit card and paid.
Justin Piche (33:09)
of action.
Clayton Hepler (33:12)
Yeah, got some points, got some points. Some credit card points from that. But yeah, man, was incredible. Obviously, I'm a big proponent of shrinking timelines through getting insights from other people and the fact that this guy sold a company for a billion dollars, a billion dollars, and I was able to get in the room with him and spend a whole day with him is pretty insane. So I was...
Incredibly incredibly happy that I had that time and I learned a lot, you know, and we're really just solidified like How do I how do I teach? How do I learn better? How do I teach other people how to think better and learn faster because that's the alpha you know discernment and creativity and the ability to think better is alpha in the age of AI because
What happens like I see man is like people like say, okay, I'll just use AI to solve the problem right at this point. And they'll just like vomit something in chat GPT and chat GPT will give them an answer that's like insanely detailed. And then people get paralyzed because they don't have the context to approach the how. So they say, Hey, help me like, I don't know.
recipe is not the right thing. Help me scale this business and it'll give you all these things help you scale the business but you don't know the context from which it came from was just created so you become reliant on this AI ⁓ versus like having your own foundation of thinking to think through the problem and then enhancing it with AI. yeah, until we're replaced by machines. ⁓ That's the
the key unlock in the 21st century, believe taste not the ability to discern what, what is the best path, how to set priorities, and then how to think freely about objectives and goals and, and projects and tasks and things like that.
Justin Piche (35:14)
Yeah, I mean, think those are all obviously incredibly important pieces of alpha. think the other another thing that is a piece of alpha is when to recognize how to recognize when you've been wrong or how to quickly adapt when you when you've gone in the wrong direction because a huge part of learning and growing both as a person and as a business owner is the mistakes that you make and how you react to them and how you respond to them. So.
Clayton Hepler (35:43)
Do you have a clear way of doing that? Do you have like a ritual of how you do that? Or is it more like...
Justin Piche (35:49)
I think I run the business at least like the health, the overall health of the business. Obviously there's a lot of KPIs that indicate those things, but I feel a lot of it is kind of intuition and feel. ⁓ And so I've learned to trust my instincts over the last several years. And whenever I have an instinct of something is a miss, even if the numbers in the bank account look good or you know, it's more of your sense of adding up
all of the inputs that you're able to see and processing them and understanding what, when there's something that just may not be right or you're off your trajectory. ⁓ So whenever I have that feeling, that's when I really, I start digging in deeper and looking for places where there's too much inefficiency, where we're not getting the results we need from something. ⁓ It's tough to admit you're wrong sometimes.
natural to not want to do that, but you owe it to yourself, to your team, to your business, to, to be able to understand and recognize when you've made the wrong decision or when something has changed fundamentally and you haven't cut it or whatever it might be.
Clayton Hepler (37:05)
And that's hard, right? Because, you know, if you have success or even some types of success, you tend to say this is the right way.
And that is a very dangerous approach. ⁓
I think one thing that's really interesting is was onboarding one of my team members today and she is lives in Dubai and I'm not entirely certain of the culture of Dubai, but I do know that there's a very clear hierarchy and I was, the first thing I said is I want you to speak truth.
We don't hit our goals if you don't speak truth. If you hold your mouth and you do not say, this is confusing, this is wrong, I don't really get it, then it becomes problematic very quickly because we can't learn fast.
How have you established the type of culture in your team that is able to dissent against the CEO? I'm not foolish enough to think that I can possibly do that to the best ability because there's always a hierarchical relationship. We're not in a family with our team members.
Justin Piche (38:28)
Yeah,
it's important that everybody owns their portion of the business and also their role in the success of it.
That culture, the only way to really foster that culture is to talk about it and to set expectations and to show by example. Right. ⁓ Like if I make some cuts, which I think I am, think I've, you know, there I've said this so many times, but you go through seasons of quantity and then quality. And if you add, if you add too many things, especially expenses, op ex for scaling, there comes a time if you're not seeing the results of that scaling and you're costing yourself.
profit at the expense of more revenue. Sure, more revenue is great, but if you're not actually making more profit, then that's bad. You don't want to make more revenue without making more profit unless you're a SaaS company or something or somebody that's going to sell. But as like a business owner of a company that is not saleable, it's it's you know, I'm doing deals. ⁓ You really need to focus heavily more on profit than than revenue. There's a need to subtract sometimes, right? And sometimes that's hard when you have to cut people and you have to
⁓ really analyze the output you're getting from your team, the revenue that they're producing, the profit they're producing, and if they're meeting, in the back if you will, if they're actually producing profit and revenue for you, or if they're not. And also the systems and software that it takes to get there. You have to really take a look at marketing channels, take a look at software, take a look at spend, and sometimes just cut where you're not getting results.
So, and for those of you and especially you Clay, I you do a good job of this, track your KPI, track your ROAS, track your spend on everything. That's why it's so important to do this because when you don't have those numbers and you don't understand where the biggest impacts ⁓ can be made in your business, you don't know where to go and you feel uncertain, right? And you worry about making the wrong decision. And what if I cut the wrong thing and I cut the lifeblood of my business? What if I cut the marketing channel?
You should have a good feel for it even if you're not tracking KPIs. I mean, that's the intuition part about taking all the inputs from your business and being able to digest them and understand generally what is going wrong or more specifically what area of the business is going wrong. But it is one of the reasons why KPIs are just so important to track and understand and action, right? And make decisions on.
Clayton Hepler (40:48)
Yeah, I... Yeah.
Yeah, I agree with you. I would say that I don't trust my intuition because I know that I'm a fallible human being and I, know, I trust it to a certain extent, but like data trumps all. so, right. So, ⁓ but that, but that's kind of my approach, right? That's that I think that you'll be surprised sometimes you get the insights from the data that you would never see like, ⁓
Justin Piche (41:06)
agreed. Yeah. Don't misconstrue anything I said to not say that data data Trump said.
Clayton Hepler (41:22)
You know, everyone's talking about demographics and you look at your data and the dem, the, demographics is very different on your successful sellers versus what everyone on a podcast is talking about in a vacuum. And so I think that, you know, after you get a pretty, a pretty clear understanding of what, how to actually run this business, then it becomes like the best, the best coach is your KPIs. Cause they tell you what you need to focus on. Right.
Now the execution of the, to focus on and the ability to prioritize what to focus on, even given the KPIs might require ⁓ you searching outside of yourself or ⁓ you spending more time looking at them, but ⁓ make no mistake. think that the data is the driver of decisions. I mean, it is period. And I say that in a very black and white way, because I think that it deserves that sort of.
Justin Piche (42:23)
wish I was able to talk about the rainbows and butterflies today. It's always more fun to talk about all the wins, but I just got off the back of a development call that had a lot of pushback on some density I was looking for. So I've got to go back to the drawing board on a big project a little bit, try to figure out if it's still economically feasible. And then had another project with an engineer's call after getting in.
OPCC, which is a basically an opinion of probable construction cost. It had a few items offsite, mainly offsite water improvements in there that that were far more than what I was expecting. So I get kind of kicked a couple of times. You get some hopeful projects. They look great. You invest money, invest time, invest energy. And yeah, I mean, it's tough. The development world is tough. So no, no rainbows and butterflies today. Just a few kicks, but.
We'll keep rolling, man. There's always another deal.
Clayton Hepler (43:21)
Yeah, yeah, I think
that and on this note it reminded me of one of the last things that Tom said on Friday, which was Entrepreneurs fail for two reasons number one. They lie to themselves number two They get emotionally overwhelmed
And I think that that is a good thing to end on. That you might be lying to yourself. Actually, you probably are lying to yourself. I lie to myself as well. And when I feel emotionally overwhelmed, we all do, right? It's a way of self-soothing that's required. But this is not easy, man. This ain't easy. But the reality is the fact that we can make 10 times, 15 times, 100 times what
you were making as a W2 means that it's going to be a little bit bumpier sometimes.
Justin Piche (44:18)
No, agreed.
Clayton Hepler (44:20)
So on that note, ⁓ guys, appreciate you listening to this podcast. As always, we ask you if you can rate, review, and subscribe down below. Thank you for being loyal ground game listeners. We really pour into this every week. We come in here, we speak with Gander, and we'd really appreciate if you could rate, review, and give us a ⁓ thumbs up down below ⁓ for listening to podcasts and some feedback as well. Justin, anything else here?
Justin Piche (44:47)
That's it. We'll see you next week.
Clayton Hepler (44:49)
My man.