FHB Logo Facebook LinkedIn Email Pinterest Twitter X Instagram Tiktok YouTube Plus Icon Close Icon Navigation Search Icon Navigation Search Icon Arrow Down Icon Video Guide Icon Article Guide Icon Modal Close Icon Guide Search Icon Skip to content
Subscribe
Log In
  • How-To
  • Design
  • Tools & Materials
  • Restoration
  • Videos
  • Blogs
  • Forum
  • Magazine
  • Members
  • FHB House
  • Podcast
Log In
Building Business

Self-Taught MBA: Strategic Thinking

By Fernando Pagés Ruiz
  • X
  • facebook
  • linkedin
  • pinterest
  • email
  • add to favorites Log in or Sign up to save your favorite articles

I often receive emails from aspiring builders looking for guidance. Brett wrote a few weeks ago asking, “What are the various factors to get me from a hands-on residential builder to progress slowly into a more white-collar-businessman builder?”

This is a broad question that would require a book or more to answer, so I referred Brett to David Gerstel’s excellent title, Running a Successful Construction Company. The book was published by The Taunton Press in 2002, but it’s still a classic with valuable nuts-and-bolts business advice. Brett thanked me for the book recommendation, but insisted on knowing more, and we began an email exchange that I soon realized held important clues as to why it’s so difficult to move from tradesman to entrepreneur. To start, the tradesman focuses almost entirely on tactics—the means and methods of good craft and honest work—while the entrepreneur focuses on a strategy, an ambitious vision to fulfill in the future. One is looking down, carefully sawing across the line scribed on a board; the other is looking off into the horizon. One is self-sufficient and a DIYer, the other a leader and organizer. Which one are you?

Nearsighted and farsighted

I confess that although I have spent a lifetime in entrepreneurship, I actually prefer the tradesman’s mindset. I enjoy working alone, concentrating on the task under my nose. Whether it’s peeling off a sliver with a block plane for the perfect fit, or searching for a 3¢ error in my bank balance, I am happiest when tightly focused.  But this dig-in and DIY disposition has always been my Achilles heel as a businessman. I take on too many tasks I should delegate to others. From my exchange with Brett, I suspect he will not have the same problem. He seems naturally drawn to the horizon and actually repelled by the details—he’d like to skip the whole learning process if possible. And you know, the most successful people in business share this impatient, farsighted trait, sometimes to an exasperating degree.

Nonetheless, Brett was still asking an unanswerable question, and ultimately the wrong one. He wanted to know, “Exactly how you did it.” In other words, he wanted me to tell him the step-by-step, DIY path to entrepreneurial success. I told him I could not help him. Not because I didn’t know how to do it, but because the only path I know is my path, and this would not apply to his place, time, and temperament. The sharpest instrument in the entrepreneurial belt is strategic thinking: the intuitive ability, honed by experience, to make the right call at the right time. It’s not a choreographed plan to follow, but a way of thinking.

I advised Brett to obtain basic business skills by reading and taking classes, and then to survey the market landscape in his hometown until he knew it by heart. And then I gave him some parting advice, “Don’t confuse your business tactics with a strategy.”

From tradesman to businessman

The most common pitfall for the DIY tradesperson is the focus on tactics rather than strategy. Tactics represent the execution of a strategy, but they never replace it. Your strategy may be to build the highest-quality house in the market so you can command a respectable profit margin. Your tactics to achieve this are the materials and methods you use to build to that level of quality. But the moment you forget your goal (a respectable profit margin) and focus too much on your tactics (using the best materials and labor) is also the very moment you confuse the means with the ends, and you’re liable to get blindsided by a savvy competitor or a change in the economy.

It’s tough for a tradesperson to stay focused on the big picture because our innate pride in good workmanship, and the intense focus on details required to achieve it, leaves little time for strategic thinking. We think about the work and how to do it better; we read stories on framing, siding, and cabinetry; and we take pride in our skills and tools of the trade. We believe our work speaks for itself and will guarantee financial success. And then we see the builder around the corner, who never swung a hammer, and he’s the one doing much better, at least economically.

Sometimes it’s better not to know the details of a business. When you don’t, you’re forced to build a team that knows the work well and can get it done while you survey the opportunities ahead and develop strategies to exploit them.

So where does all this leave Brett? His goal is to become a businessman builder. His strategy, which is what he was trying to get from me, will depend on the opportunities present in his local marketplace. I could not provide him a strategy, but I did suggest some tactics to help him develop as a strategic thinker, and eventually answer his own question based on the opportunities life will present. I recommended a course of study.

But most of all, Brett’s success will come from his innate ability to develop relationships and think creatively. This is why business plans alone do not guarantee success. Strategic thinking encompasses long-range planning, but it’s mostly the skill to spot an opportunity and react quickly in a novel way. Strategic thinking represents the brilliant last-minute maneuver. It embodies the quarterback at the moment before the snap.

Strategy versus tactics

When I left Los Angeles in the midst of the terrible recession of 1989, I moved to the Midwest to start over again. The only business I knew was home building, so naturally my business plan was to establish myself as a home builder. In order to achieve this goal in a new environment, I relied on the most basic strategy used by almost any industry to enter almost any market, which is to offer the lowest price. I would become the most price-competitive home builder in Lincoln, Neb.

Here my goal—or business plan—was to establish a home-building business. My strategy was to achieve this goal through price competition. My tactics would include research, observation, and prediction. I had to research the market to determine the best price point for the most salable floor plan, and I had to learn the relative strengths and weaknesses of my potential competition. I spent about two years building very standard houses at the going rate while I observed the market, developing my sensitivity to local preferences and what appealed to Midwesterners—it’s very different than what appeals to people in Southern California. My Los Angelino strategies would not work in Lincoln, Neb. Over time I developed my tactics, I had to do a lot of technical research to find the best local methods to build inexpensively. I studied and practiced my tactics until I become an expert in low-cost Midwestern construction.

In about two years I achieved my goal and began to build and sell the least expensive four-bedroom, 1600-sq.-ft. home in the state. I rose in both economic and social profile quickly. Builders stole my plans and tried to reproduce the process, but failed because the tactics I used—the building and purchasing methods I developed—were not just the result of a floor plan, they were the product of a carefully designed process. I felt very smug. But suddenly my competitors began to disparage my homes as substandard: “He frames with 24-in. centers”; “He digs shallow foundations that don’t go below the frost line”; “He installs a 1-ton heat pump instead of a huge furnace and a 5-ton air-conditioning unit.” They knocked my product. I needed a defensive strategy to counter this attack.

I didn’t know it at the time, but I was actually pioneering many of today’s established green-building methods. An energy rater who had been trying to get me to work with him pointed this out, and I saw my new defensive strategy immediately. I became the local green-building expert and defended my position in the market on the grounds of efficiency and resource conservation, which was a much better branding strategy than “cheapest home-builder in town.”

But others were soon building green, and better than me—my strategy had to evolve again. So I did more research, found an underserved niche, and became a “culturally sensitive” builder with a loyal immigrant community. Strategic thinking does not end with a business plan, it begins with a business plan.

Strategic thinking vs. the business plan

The difference between a business plan and a business strategy can be difficult to understand at first, but it’s important to know how these two fundamental aspects of business development complement each other. And which one—planning or strategizing—is more important. The answer is, of course, strategic thinking.

Since we have discussed business planning in earlier installments, I will recap the definition very briefly. The business plan is a presentation document that outlines your service (such as remodeling), a description of the market (your town and its real-estate dynamics), and how you plan to raise the money needed to launch and run your business until it turns a profit. In a sense, the business plan represents the opening moves in a chess game. But soon after you move your first piece on the board, your opponent moves theirs, and suddenly the playing field shifts—new dynamics develop, and your careful projections may prove totally wrong.

Strategic thinking remains ambitious, farsighted, and goal-oriented, just like your business plan, but also focused on emerging trends and uncertainty so that you can make the dynamic adjustments needed to adapt in a changing environment. The intellectual tools of strategic thinking, which include research, observation, and prediction, represent a resource every bit as tangible as money, time, and labor. Strategic thinking does not end with crafting a business plan. Strategy begins after you make your best plan, and then entails a constant interaction with the business environment to execute swift decisions and decisive tactics.

In short, strategic-thinking skills are the ability to respond to changes in circumstance. Another way to describe strategic thinking is the ability to think on your feet. Strategic thinking is something you do all the time, just as a quarterback calls a play, but remains entirely flexible to respond to changes in field position and the counterstrategy of the opposing team.

In the next few posts, we will explore strategic thinking. I would love to hear your experience as a brilliant strategist in your market.

Fine Homebuilding Recommended Products

Fine Homebuilding receives a commission for items purchased through links on this site, including Amazon Associates and other affiliate advertising programs.

Handy Heat Gun

This heat gun is great for drying joint compound, primer and paint when patching drywall and plaster walls. Plus it can soften adhesive, get a very cold small engine to start, and shrink heat-shrink tubing.
Buy at Amazon

8067 All-Weather Flashing Tape

Available in 2- to 12-in. widths, this is a good general-purpose flashing tape that sticks well to most things. It features a two-piece release paper, water-shedding layers, and good UV resistance.
Buy at Amazon

Affordable IR Camera

This camera is super useful for tracking down air leaks in buildings. The one-hand pistol grip arrangement frees your other hand for steadying yourself while maneuvering tricky job sites.
Buy at Amazon

Sign up for eletters today and get the latest how-to from Fine Homebuilding, plus special offers.

Signing you up...

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
See all newsletters
See all newsletters

×

Get home building tips, offers, and expert advice in your inbox

Signing you up...

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
See all newsletters
See all newsletters

New Feature

Fine Homebuilding Forums

Ask questions, offer advice, and share your work

  • X
  • facebook
  • linkedin
  • pinterest
  • email
  • add to favorites Log in or Sign up to save your favorite articles

View Comments

  1. DancingDan | Mar 07, 2014 10:06pm | #1

    Great post, Fernando - something we all need to spend more time thinking about.

  2. AndyEngel | Mar 11, 2014 07:34am | #2

    Great topic, Fernando. The need to be an entrepreneur before being a craftsman is largely why I'm an editor. I would focus my first 40 hours per week on building things, and the second 40 hours per week on estimates, billing, and so forth. 80 hours a week simply wasn't sustainable, and I resented every hour I spent on the business end.

    So, here's my question. Is it possible for a hands-on, craft-oriented tradesman to make a reasonable living working a reasonable number of hours?

  3. FPR | Mar 12, 2014 08:08pm | #3

    Yes, Andy, it is possible to work reasonable hours as a tradesman and make a good living if you work for someone else, and they put in the 40 hours on the business end of the operation. Of course, some people are in constant demand in a market that lacks skilled labor and they can be pretty sloppy with business and customers still put up with it. You see this most often with good, honest plumbers and auto mechanics. They put you off, never finish on time, but if the price is right and they always tell you the truth, you keep taking your business to them. Some people have an artistic bent and they can get work at high prices for their special craft. I know a very artistic brick layer like that. So while there exist many exceptions, most of us prove the rule that you cannot run a business effectively unless actually you run the business.

  4. cabsbydesign | May 20, 2014 06:18am | #4

    Thanks Fernando, interesting reminder but a little obvious, this is what business is all about..? In answer to AndyEngel...NO ! a craft-orientated tradesman can't make a reasonable living working reasonable hours. You'll get by and even feel proud and flattered but not wealthy..!! A friend once told me..."you'll never make money whilst you're doing the work yourself.." Get a good job, earn the salary, then craft in your shed during the off time...!!

Log in or create an account to post a comment.

Sign up Log in

Become a member and get full access to FineHomebuilding.com

More Building Business

View All
  • Pros of Apprenticeship Programs
  • Hiring Entry-Level Employees
  • From Craft to Company: Starting Your Own Business
  • Best Practices for Home-Building Project Communication
View All

Up Next

Video Shorts

Featured Story

Picture-Perfect Pergola

Built from locally sawn hemlock, this functional outdoor feature uses structural screws and metal connectors for fast, sturdy construction.

Featured Video

Video: Build a Fireplace, Brick by Brick

Watch mason Mike Mehaffey construct a traditional-style fireplace that burns well and meets current building codes.

Related Stories

  • Podcast Episode 692: Introduction to Trade Work, Embodied Carbon, and Envelope Improvements
  • Old Boots Learn New Tricks
  • Podcast Episode 691: Replacing Vinyl Siding, Sloping Concrete, and Flat vs. Pitched Roofs
  • Podcast Episode 690: Sharpening, Wires Behind Baseboard, and Fixing Shingle Panels

Discussion Forum

Recent Posts and Replies

  • |
  • |
  • |
  • |
  • |
  • |
View More Create Post

Highlights

Fine Homebuilding All Access
Fine Homebuilding Podcast
Tool Tech
Plus, get an extra 20% off with code GIFT20

"I have learned so much thanks to the searchable articles on the FHB website. I can confidently say that I expect to be a life-long subscriber." - M.K.

Get home building tips, offers, and expert advice in your inbox

Signing you up...

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
See all newsletters
See all newsletters

Video

View All Videos
  • A Closer Look at Smart Water-Leak Detection Systems
  • Podcast Episode 678: Live from the Builders' Show-Part 2
  • Podcast Episode 677: Live from the Builders' Show-Part 1
  • FHB Podcast Segment: The Best of the Fine Homebuilding Podcast, Volume 8
View All

Fine Homebuilding Magazine

  • Issue 332 - July 2025
    • Custom Built-ins With Job-Site Tools
    • Fight House Fires Through Design
    • Making the Move to Multifamily
  • Issue 331 - June 2025
    • A More Resilient Roof
    • Tool Test: You Need a Drywall Sander
    • Ducted vs. Ductless Heat Pumps
  • Issue 330 - April/May 2025
    • Deck Details for Durability
    • FAQs on HPWHs
    • 10 Tips for a Long-Lasting Paint Job
  • Issue 329 - Feb/Mar 2025
    • Smart Foundation for a Small Addition
    • A Kominka Comes West
    • Making Small Kitchens Work
  • Issue 328 - Dec/Jan 2025
    • How a Pro Replaces Columns
    • Passive House 3.0
    • Tool Test: Compact Line Lasers

Fine Home Building

Newsletter Sign-up

  • Fine Homebuilding

    Home building tips, offers, and expert advice in your inbox.

  • Green Building Advisor

    Building science and energy efficiency advice, plus special offers, in your inbox.

  • Old House Journal

    Repair, renovation, and restoration tips, plus special offers, in your inbox.

Signing you up...

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
See all newsletters

Follow

  • Fine Homebuilding

    Dig into cutting-edge approaches and decades of proven solutions with total access to our experts and tradespeople.

    Start Free Trial Now
    • Facebook
    • Instagram
    • X
    • LinkedIn
  • GBA Prime

    Get instant access to the latest developments in green building, research, and reports from the field.

    Start Free Trial Now
    • Facebook
    • YouTube
  • Old House Journal

    Learn how to restore, repair, update, and decorate your home.

    Subscribe Now
    • Facebook
    • Instagram
    • X
  • Fine Homebuilding

    Dig into cutting-edge approaches and decades of proven solutions with total access to our experts and tradespeople.

    Start Free Trial Now
    • Facebook
    • Instagram
    • X
    • LinkedIn
  • GBA Prime

    Get instant access to the latest developments in green building, research, and reports from the field.

    Start Free Trial Now
    • Facebook
    • YouTube
  • Old House Journal

    Learn how to restore, repair, update, and decorate your home.

    Subscribe Now
    • Facebook
    • Instagram
    • X

Membership & Magazine

  • Online Archive
  • Start Free Trial
  • Magazine Subscription
  • Magazine Renewal
  • Gift a Subscription
  • Customer Support
  • Privacy Preferences
  • About
  • Contact
  • Advertise
  • Careers
  • Terms of Use
  • Site Map
  • Do not sell or share my information
  • Privacy Policy
  • Accessibility
  • California Privacy Rights

© 2025 Active Interest Media. All rights reserved.

Fine Homebuilding receives a commission for items purchased through links on this site, including Amazon Associates and other affiliate advertising programs.

  • Home Group
  • Antique Trader
  • Arts & Crafts Homes
  • Bank Note Reporter
  • Cabin Life
  • Cuisine at Home
  • Fine Gardening
  • Fine Woodworking
  • Green Building Advisor
  • Garden Gate
  • Horticulture
  • Keep Craft Alive
  • Log Home Living
  • Military Trader/Vehicles
  • Numismatic News
  • Numismaster
  • Old Cars Weekly
  • Old House Journal
  • Period Homes
  • Popular Woodworking
  • Script
  • ShopNotes
  • Sports Collectors Digest
  • Threads
  • Timber Home Living
  • Traditional Building
  • Woodsmith
  • World Coin News
  • Writer's Digest
Active Interest Media logo
X
X
This is a dialog window which overlays the main content of the page. The modal window is a 'site map' of the most critical areas of the site. Pressing the Escape (ESC) button will close the modal and bring you back to where you were on the page.

Main Menu

  • How-To
  • Design
  • Tools & Materials
  • Video
  • Blogs
  • Forum
  • Project Guides
  • Reader Projects
  • Magazine
  • Members
  • FHB House

Podcasts

  • FHB Podcast
  • ProTalk

Webinars

  • Upcoming and On-Demand

Podcasts

  • FHB Podcast
  • ProTalk

Webinars

  • Upcoming and On-Demand

Popular Topics

  • Kitchens
  • Business
  • Bedrooms
  • Roofs
  • Architecture and Design
  • Green Building
  • Decks
  • Framing
  • Safety
  • Remodeling
  • Bathrooms
  • Windows
  • Tilework
  • Ceilings
  • HVAC

Magazine

  • Current Issue
  • Past Issues
  • Magazine Index
  • Subscribe
  • Online Archive
  • Author Guidelines

All Access

  • Member Home
  • Start Free Trial
  • Gift Membership

Online Learning

  • Courses
  • Project Guides
  • Reader Projects
  • Podcast

More

  • FHB Ambassadors
  • FHB House
  • Customer Support

Account

  • Log In
  • Join

Newsletter

Get home building tips, offers, and expert advice in your inbox

Signing you up...

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
See all newsletters
See all newsletters

Follow

  • X
  • YouTube
  • instagram
  • facebook
  • pinterest
  • Tiktok

Join All Access

Become a member and get instant access to thousands of videos, how-tos, tool reviews, and design features.

Start Your Free Trial

Subscribe

FHB Magazine

Start your subscription today and save up to 70%

Subscribe

This is your last free article.

Don't miss another expert tip or technique from building pros. Start your free trial today.

Start your FREE trial

Already a member? Log in

We hope you’ve enjoyed your free articles. To keep reading, become a member today.

Get complete site access to expert advice, how-to videos, Code Check, and more, plus the print magazine.

Start your FREE trial

Already a member? Log in

Privacy Policy Update

We use cookies, pixels, script and other tracking technologies to analyze and improve our service, to improve and personalize content, and for advertising to you. We also share information about your use of our site with third-party social media, advertising and analytics partners. You can view our Privacy Policy here and our Terms of Use here.

Cookies

Analytics

These cookies help us track site metrics to improve our sites and provide a better user experience.

Advertising/Social Media

These cookies are used to serve advertisements aligned with your interests.

Essential

These cookies are required to provide basic functions like page navigation and access to secure areas of the website.

Delete My Data

Delete all cookies and associated data