Michael Wood has owned Providence Homes for over 30 years now, building countless one-of-a-kind homes along the way.
How has this Texas-based homebuilder balanced his love for creativity with his commitment to managing a successful small business?
“Keeping it in the family,” Michael sat down with his daughter Meredith—Fundera’s own Editor-in-Chief—and answered a few of her questions on what it’s like to own (and retire from) a thriving small business for over three decades.
1. You started Providence Homes in 1982—34 years ago. What prompted you to start your own business?
I’ve been interested in construction since childhood. I grew up on a farm and was always attracted to building things and home design. In fact, I wanted to be an architect in high school but I didn’t have the grades in math to cut it in the architecture world—who knew my math skills would end up dictating my future!
So instead, I started working for a construction supply company where I was always working with homebuilders all the time. I realized that I wanted to be a homebuilder myself, and after that it was just a matter of finding a way to get my own business going.
2. Did you always think you were going to start your own business?
Well, I don’t think you ever think about starting your own business—you just come up with an idea and make it happen.
For me, it was never about being a business owner. It was about my idea and having the freedom to act on that idea.
3. What’s been the most rewarding part of owning your own business?
What’s great about being a business owner is that I have the freedom to make my own decisions and determine my own schedule.
I’m a really creative person and a problem-solver. So if you’re like me, the best part of owning your own business is the ability to execute on any idea that you have. I find it so satisfying to try to improve things all the time—and owning my own business feeds my appetite for that.
4. What’s the biggest challenge you’ve faced along the way?
The main thing about being a business owner is that it’s hard to differentiate between owning the business and doing your business’s work.
Most people—including myself—never really have a true business that runs on its own. If you don’t organize it right and take a step back from the actual operations of the business, then all you pretty much have is a glorified job. And if the business can’t survive without you being there, you end up building it around yourself. The hardest thing for me has always been committing to run Providence Homes as a business, not just my job.
I think a challenge every business owner faces is transitioning from the creative guy with all the ideas to the person who actually manages the business. It’s hard to let go of the “big ideas” phase of starting your own business.
As a homebuilder, I get to work with a lot of successful clients who run their own businesses. And when I ask them how they’ve been so successful, they’ll say without exception that it’s because they’ve surrounded themselves with good people. So what I’ve learned is that it’s not always the idea that makes a business successful—it’s more often a person’s ability to start a business, hire the right people, and manage it.
5. Providence Homes has been around for a while now. How has it changed over the years?
Well, first things first, we’ve become much better money managers, and that’s been huge for Providence Homes. We watch our costs a little more—and we’re not exemplary by any means—but I’ve learned how to manage our expenses as the business gets more established.
And you learn a lot by not only experience, but also by associating yourself with others in your industry. For the last 18 years I’ve tried to surround myself with other businesses like my own to learn the skills I need for my business to be successful. I collaborate with 20 other builders across the country, sharing our experiences and skills. That’s probably been the biggest thing that’s helped my business improve throughout the years.
When you’re a business owner, sometimes it feels like you’re on an island. You don’t really know if you’re good or bad, because you don’t have any other metrics to compare yours with. It’s hard to evaluate how good you are and what you’re missing out on until you get around people who are involved in almost the same activity.
When I first got involved with those other builders, I thought I was a better builder than I really was. Once I saw how other people ran their business, I realized I had a lot of room for improvement.
6. So now you’re easing into retirement. What’s that process been like for you?
Honestly? The process has been pretty vague. That’s another thing about being a business owner as opposed to having a job—if you’re in a job, the structure’s already there for you.
As a business owner, everything that I do is for the business. I’m constantly using every bit of effort and capital I have for the business in one way or the other, so it’s easy to neglect retirement planning. I’m always putting it off for the sake of my company.
What’s hard about retiring from my line of work is that some of the jobs I take on are 2 or 3 year commitments. So I have been trying to take on fewer long-term jobs to fit with my retirement schedule.
Looking back on things, there isn’t too much I would have done differently. But now that I’m retiring, I do think that I could’ve had a business partner or someone who grew up with the business. That way I could pass my business on to a successor. When you’re a true small business owner—and it’s just you running the business—it’s hard to develop your company so that it has value to someone else. If I had a business partner of some sort, it would definitely be easier to hand over the reigns.
7. Now that you’re retiring from owning a business for many years, what advice would you give other business owners?
I’d say that the best business owners learn how to run their business as a business. Everything is much easier when you keep yourself from being the center of attention. That really comes down to hiring good people.
And hire an accountant from the very beginning! Seriously—that’s my biggest piece of financial advice. I can’t tell you how many times I’ve seen businesses fail because their owners couldn’t stay on top of their cash reserves.
What you need to remember as a business owner is that your business’s money isn’t your money. Your business might have a big bank balance, but if you’re not tracking your spending and business suddenly slows down—it’ll hit you like a tidal wave from behind.
I really saw that mistake over and over again. In my industry, you don’t hear about the little guy out on his own that failed because he didn’t have any business. It’s always the guy that has all the work, but doesn’t know how to manage his finances.
8. Looking back on things, what would you say you’re most proud of from your time spent with Providence Homes?
As I’ve said, I really enjoyed the creative aspect of owning Providence Homes. So I’m very proud of all the houses I’ve built.
But I’m also proud of the relationships I’ve built with my customers. Before I owned Providence Homes, I worked with one builder in particular who had a really wonderful reputation. I noticed what a difference it made in his business, so when I started my own, that was one of my main goals.
And I feel like I got there. New clients are always commenting on how good my reputation is around the community, so it’s nice to know that I have the respect from the people I work with.
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from Fundera Ledger https://www.fundera.com/blog/2016/08/31/providence-homes/