What does success look like as an entrepreneur? I am sure that we all have differentiating personal answers but most often with entrepreneurs there are some desires to control our own destiny, work on our own terms, and have some control on what our incomes are. I for one want to be profitable with my business venture, I also want any success to be contributed to my hard work and talents. I believe that I have planned most aspects of entering the custom home construction business, however I am not naive enough to think I have thought through all issues that potentially can and/or will rise. However, I do have a plan that will allow me to enter the business that I believe will give me a successful beginning…but what after that? As I take a deeper look and focus more specifically on the details of my strategy, I can identify many long-term aspects that are murky and may not be well thought through. However, a high level of personal control, influence, and profitability is consistent throughout my vision at every step of the life of my company. Concerning to me, as Noam Wasserman states in “The Founder’s Dilemmas, “although the desires for wealth and control seem complementary, as entrepreneurial motivations they turn out to exist in perpetual tension with one another.” So…wait, there is more to it? In reading the section of the book entitled “Wealth Versus Control: A Closer Look” it is enlightening to me the importance of a longer range “owner strategy” that clearly articulates my goals and rationale.
As Wasserman states concerning founders of businesses, “An individual’s motivations are almost always complex and rarely transparent to anyone— including the individual himself or herself.” And that, “The best way for them to know what to do is to know their own motivations—why are they there in the 1st place.” In the construction home process, many times the trade-off is cost versus the quality and style that are hoping to achieve. The motivation may be to always create the highest quality home. We may want to utilize the highest quality materials that will also achieve the most up to date design appeal but there is always a budget that brings some reality and influences that motivation. In educating ourselves to the pros and cons of all materials so we can provide the most desired project within the budget. This example showing that motivations can change with the current situation and other influences. Our motivation may become to produce the highest quality house per the budget or to increase the quality of materials and sacrifice some design and style but there are trade-offs. John Baron and Vlad Barbieri (Harvard Business Review – Every Business Owner Should Define What Success Looks Like) point out that “the key is for the owners of a company to be aligned on what goals they want to pursue, recognizing that there are trade-offs among them” and to “revisit these trade-offs as things change.”
Most all custom home construction businesses are privately held by individuals, partnerships, or families which can often create struggles between control and maximizing wealth. There are also opportunities to include investors on projects where extra capital may be needed. All stakeholders will have personal ties in the business and will most often influence both control and wealth. Investors will most often look to invest in projects that match their own vision and motivations. As the business grows and others become more included it is even more imperative to have a very clear “owner strategy” that will aid in aligning all stakeholders to keep the business on course. As stated by Baron and Barbieri, “if owners are clear about how they want to keep score, board members and management teams will know how to win. That clarity also allows companies to define success on their own terms, rather than someone else’s”
Income and profitability will always be important, and I don’t believe that any of us would ever create a company just to hand over 100% of control to someone else. So, we must conclude the answer will always include a mix of wealth strategies as well as effort to maintain certain levels of control. Baron and Barbieri recommend homing in on four-six financial metrics that can be used to define the company’s profitability success. We must also keep in mind the correlation remains fluid so clear metrics help define how we will keep score as well as what the guard rails are. To conclude, we must make every effort to define our motivations, understand what level of profitability and control is important, and understand that it is fluid and ever changing. Success may be hard to clearly define at each step so we must also look to define what success is not.
Wasserman, N. (2012). The Founders Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton Univ Pr.
Baron, Josh and Barbieri, Vlad. (2019). Every Business Owner Should Define What Success Looks Like. Harvard Business Review. https://hbr.org/2019/08/before-you-start-a-business-decide-what-success-looks-like