Last year I sat in on a speech by an entrepreneur friend who told the young people in the room, "Money can be the main motivation to start a business." I admired that he said this. Most entrepreneurial spiels obsess about the need to have "passion" about the mission of the business — they say money isn’t enough.
So: can making money be the prime motivator when starting a business?
My take is that in the short-term (0-2 years after founding): Yes. In the long term: it’s not enough and a genuine passion for what the business is doing and the customers it’s serving is a necessary additive.
If your business survives until the long-term, generating the passion shouldn’t be hard. If you start a trash pick-up service, maybe at first you see it as just a cash cow business. After all, who can get fired up about waste management? But eventually, as the business grows, and you start to serve tens of thousands of customers, you can get passionate about the idea of impact on a large scale.
Impact is the entrepreneur’s drug of choice and if a company gets to a point where it is impacting a significant number of people I would argue any founder / executive can find a way to become genuniely excited about the mission above and beyond simply making money (which is an acceptable if not ideal driver for the founders at the outset).
(thanks to Stan James for helping brainstorm this post)
Hey Ben,
Been reading your blog for several months now and commented once or twice before. This is a topic of keen personal interest and thought I would take a moment to add my 2C.
Money can and should be the prime motivator for any for profit business. After all as Stephen Covey would say “No margin, no mission”. The prime goal and motivator for any successful business is profit.
However, I think there is an important distinction between the entrepreneur and the business. If it was all about the money then there are faster and easier ways to make a comfortable living than starting a business. For the entrepreneur, imho, there are three characteristics that determine success; passion, persistence and patience. Passion encompasses the “faith” and “desire” that Napoleon Hill describes in “Think and Grow Rich”. Passion is a strong indicator that the entrepreneur is sold on their idea and will be able to successfully sell the concept to others (Customers, Partners, Suppliers, and Investors). Can you imagine a pitch from someone that was just in it for the money compared to someone that passionately believed in what they were doing?
In my opinion there is an important distinction between what motivates an entrepreneur and what drives a business. Passion is definitely a motivator for entrepreneurs, money is not too bad either but not in the same infectious way.
All money and no passion = sell the business at a premium (say 5 years revenues) before it zags.
All passion and no money = find a co-investor to share the risk before you go belly up.
Lots of passion and lots of money = buyout competition before it becomes a threat.
Thanks for the thoughts Ian.
Krishna – that is a very clever / smart way to break it down!