The real truths behind building a lifestyle business
Over my career I've had the good fortune to work in and with almost every kind of business. Large corporates, struggling startups, a VC-backed turnaround, boutique consulting and lately a lifestyle business. I'm telling you this not because I want to impress you (we've all had varied experiences), but to show that I speak from experience. Those experiences have led me to the position where I am now - unashamedly building a lifestyle business because different things matter to me now. And a lifestyle business is the best place for me to be.
But mention the term "lifestyle business" to many entrepreneurs - especially venture capitalists - and you're regarded with pity and some disdain. Somehow it's not ambitious enough and therefore only for people who've given up.
But that couldn't be further from the truth.
Freelancers, solopreneurs and small business owners are all running a lifestyle business even when they don't call it that. In this article, I'm going to explain just what a lifestyle business is, why it's important to me, and share what I've learnt about building and growing a lifestyle business.
To decide if a lifestyle business is the right thing for you, you have to define what success looks like first.
The definition of success
We spend a large part of our lives chasing other people's definition of success. Cars, houses, clothes, the right restaurants and being seen at the right parties are part of what the world seems to tell us success is all about. And if this is how you define success that's fine - I just think of success in a different way.
Today, I define success as a healthy income from a business where I find professional fulfilment and a rich personal life where I have the time and the means to enjoy the things that are important to me personally.
I don't need - or want - to build a business where I have hundreds of employees; I don't need or want to build an empire - I need something that is meaningful to me. And meaningful to me means taking care of me and my family, and making a difference in other peoples' lives.
Of course I can find that success in other places as well; as an employee or as an entrepreneur building a startup. But experience in those environments has also taught me how I don't want to do it:
- I don't want to be subject to layoffs when the economy takes a downturn.
- I don't want to deal with corporate politics or a mediocre boss.
- I don't want to work 7 days a week, 14 hours a day and be so stressed out when I get home that I'm a jerk all the time.
So my definition of success is based on what I want as well as what I don't want; both are important to decide whether a lifestyle business is right for you.
So knowing this, I'd like to offer a better definition of a lifestyle business.
A better definition of a lifestyle business
Wikipedia defines a lifestyle business as:
a business set up and run by its founders primarily with the aim of sustaining a particular level of income and no more; or to provide a foundation from which to enjoy a particular lifestyle.
I only agree with part of this: that a lifestyle business is the foundation from which to enjoy a particular lifestyle - the things that are important to you. But I don't agree with the idea that you need to limit your income.
In her book The Million Dollar One Person Business, Elaine Pofeldt writes about the 23 million non-employer businesses (businesses with no employees) in the USA and how some of them have gone over the million-dollar revenue milestone. Granted, there are not many of them - but the numbers are significant:
- In 2015, there were over 35,000 non-employer businesses in the USA that brought in between $1 million and $2.5 million.
- Over 250,000 non-employer businesses brought in from $500,000 to $1 million.
- Close to 600,000 businesses brought in between $250,000 and $500,000 in revenue.
These businesses are all classified as "non-employer" businesses (they don't have employees on payroll) but they certainly don't bring in that kind of income on their own. All of them work with suppliers, outsourced service providers and virtual assistants to generate this kind of revenue.
The point is that you don't have to put a ceiling on what you think your revenue potential is. Which leads me to a better definition of a lifestyle business:
A lifestyle business is a business that serves as a foundation to support a particular lifestyle, and lifestyle considerations are one of the key elements that drive decisions about growth.
So, you can design a lifestyle business to create and support a particular lifestyle, and you don't need to put a limit on what you think you can earn. Your limitations will be determined by the the trade-offs between business growth and lifestyle.
This is very enticing, but like all marketing stories there are truths behind building a lifestyle business that are not that widely advertised.
The real truths behind building a lifestyle business
I recently came across a website that advertises something along the lines of "your online service business in a week". As tempting as this sounds, my experience tells me that a) you can't build a business in a week, and b) even if you get a business in a box, chances that you can run it successfully are pretty slim (that's my polite way of saying you don't have a chance in hell).
Here are some of the truths about building a lifestyle business:
The promise of a lifestyle business is worth pursuing. This part is true. There are many examples of successful lifestyle businesses out there, so you're not chasing something unproven. I'm building a lifestyle business because I want more control over what I do, when I do it and how I live my life. A successful lifestyle business delivers that - so the goal is worth pursuing.
You will work harder than ever before to get it off the ground. This is ironic, of course. The promise of the lifestyle business is a better work-life balance, but the truth is that building any kind of business from scratch is a lot of work.
In this respect, a lifestyle business is no different than starting any other kind of business; you're the founder and the owner, and the buck stops (and starts) with you. If you're alone you will have to do everything that needs to be done in a business, and even when you have people do stuff for you, you're ultimately responsible for the outcomes. And that means you're going to work really hard.
You will have to learn to sell. And market. And other stuff too. The most common problem I see with starting a lifestyle business is that people don't like to sell, they don't know how and they're afraid of it too.
You're going to have to get over it - but the good news is that you can get really good at it by doing less selling and more problem-solving. And of course to sell you need leads, and to get leads you need to market. And to market you need a brand. It all adds up to quite a bit of learning.
It takes longer than you think. While some programs may claim that you can build a business in a week or even in three months, in reality that's rarely the case. If you've never done this before, you will be doing well if you start seeing decent income in six months. Budget on taking 12 months to get a decent business off the ground.
You need runway. If you're considering starting your own business - however big you want to build it and whatever kind of lifestyle you want from it - you're going to need runway. Runway is the amount of time that you can support yourself and your family financially before you have to hit the brakes and find another source of income.
Most lifestyle businesses are started by solopreneurs. While you're building the business you need to survive - which means you need another source of income or savings. As I mentioned above, budget at least 6 months (if you have decent business experience); you're safer if you have 12 months of runway.
But it's not all gloom and doom.
The good news
The dot-com era taught us a lot about building businesses. More recently visual tools like the Business Model Canvas or the Lean Canvas have made it a lot easier to design a business, and experts like Steve Blank have shown us how to do customer development while startup veterans like Eric Ries have turned their experiences into books, courses and guides.
None of these resources cover everything you need to do to build a business and some are geared towards building high-growth, investor-ready startups. But we have way more tools and experience to draw on when building a business.
Here are some of the things that can help you along the way.
You can build it part-time. Many entrepreneurs start building their businesses on the side, while working at a full-time job or multiple other jobs. It's no different for a lifestyle business - but you still have to do all the work. Your biggest challenge is going to be to maintain momentum - because you already have an income the urgency to get it off the ground could get lost.
You don't need a huge investment. Some businesses just need money - if you're selling a product or developing an app you're going to need money to get your first stock or to have the app developed. But many businesses - service businesses in particular - don't need a huge up-front investment. You can start with almost nothing (you're going to have to pay for website hosting, for example), but there's enough competition out there to make these kinds of things really affordable.
It really helps if you can invest some money - but you can get away with less than you think.
You can learn to sell. As I mentioned above this is one of the barriers I see many entrepreneurs struggle with. The good news is that you can learn to sell, and it's not as obnoxious as you may think. A large part of it is mindset - your own self-limiting beliefs about what you can and can't do; the idea that you need to "sell" and the customer is the enemy - all things that can be "un-learnt" and replaced with a better way.
My friend Keith Hanna taught me the most valuable sales lesson out of his coaching business:
Selling the is coaching I do before I get paid for it.
So he just coaches, and if there's a connection he will invite the coachee to become a coaching client. Similarly, I've learnt not to sell - the selling I do is helping business owners solve problems before I get paid for it.
And finally, the reward is worth the effort. If you succeed at building a lifestyle business that is all you want and need it to be, the rewards are overwhelming. Not just financially - but personally as well.
What you can do now
If you're thinking about starting a lifestyle business, the first thing you need to do is define what success looks like. But you need to define success both in terms of what the good bits are, and the stuff that you don't want to do.
If you already have a business, it's worth doing the success exercise anyway. You may find that you need to tweak your business or how you're working; you may need to slow down or speed up. This kind of retrospective is highly insightful.
I would also recommend that you check out the intro video for the Tornado Method, and download the free beginner's guide. I created this framework because I couldn't find anything out there that covered all the aspects of building and running a business.
I'm developing a program to help entrepreneurs design, build and run their ultimate lifestyle business. If you're interested, you'll have to drop me a note; this thing is still pretty much in stealth mode.
Good luck with building your business.