Each of you had clear reasons for launching a remodeling business. For many, it was a drive for financial success and everything that comes with it. But new research from Cox Business helps shine a light on the underlying motivations for entrepreneurship—it’s about freedom and passion, not money.
The shocking result of the research was the very low percentage of entrepreneurs who said money was the primary motivation. While two-thirds of business owners cited either freedom or passion, only 8 percent said they got in business primarily to make money. Forty-three percent of respondents said they have never considered closing their business. They are dedicated to building their business, and that’s it.
Michael E. Gerber, author of “The E-Myth Contractor,” had it right when he characterized most contractors’ decision to strike out on their own as an “entrepreneurial seizure.”
Every issue of this magazine since its founding in March 1975 has been primarily devoted to sharing business advice with the goal of advancing professionalism in the remodeling industry. Remodeling and home improvement have low barriers to entry. Very few states have tough licensing requirements, and the capital requirements are tools, a vehicle and perhaps a credit card.
The first half of 2022 has been an eye-opener for many business owners. While demand for services remains strong, the twin terrors of supply-chain shortages and a lack of skilled labor have become even more pronounced. Then came the cosmos paying back the Western world for its profligate spending during the pandemic. Inflation hit with a bang, and the world’s central banks began aggressively raising rates.
I hate to say it, but at some point, freedom and a passion for design and construction are not enough to pay the bills. A bottom-line focus is required in order to succeed in business today. Shawn McCadden, CR, has been a columnist for this magazine going on 10 years primarily for that reason.
His column this month illustrates the dangers of wandering into business without clarity of purpose and a bottom-line focus. In a discussion about the importance of team members having a common vocabulary with precise meaning, he points out that a large number of remodelers use the words margin and markup interchangeably. For the health of a business, this is a deadly sort of confusion.
Chris Landis, AIA, another of our columnists, also brings home key points about profitability in his very generous sharing of the estimating methods that have helped his 70-person design-build remodeling business thrive over the past 32 years. You’ve got to get the money right in all your deals with clients. It’s always been that way, but in an inflationary environment with other endemic challenges, estimating for profit and protecting that profit until the last job cost is paid takes business acumen.
Artists and craftsmen are particularly prone to making financial mistakes that cost them their businesses. This makes sense. Being creative and delivering high-quality and beautiful completed projects can be all-consuming, but you’ve got to make time to make every project profitable. Even if you are in it for freedom and passion, you must find a strong motive for profit and nurture it. QR