Ah, the lure of the lifestyle business - working when you want, on stuff you like, working from where you want… Those are the images from the marketing department. But in real life, things look a little different - particularly when you start out. Most lifestyle businesses start out small - usually just the founder of the business. To get your business off the ground you're going to have to work hard (you already know this). You have to get a ton of stuff in place, build a client list, a sales funnel, marketing material - the list goes on.
But the lure is not just a lure - many entrepreneurs realise this dream and live happily ever after. But most struggle because they don't have a solid foundation for their business - the fundamentals are not what they should be.
So what are these fundamentals, and what do you need to build that solid foundation?
Just before we do that, let's get clear on what a lifestyle business is.
What is a lifestyle business?
When we think of a startup we think of business designed to grow huge. There's rounds of investment from venture capital and private equity, the focus is on rapid growth and there's an exit strategy - either an IPO or an acquisition.
But not all of us want that kind of business. We're happy with a business that provides just enough for us, and perhaps a small team, to live a good life.
That's a lifestyle business.
There are some misconceptions out there that a lifestyle business somehow has to limit the amount of revenue it generates. That's not true:
A lifestyle business is simply a business where your decisions about growth take the impact on your lifestyle into account.
You can still grow it big. Elaine Pofeldt's Million Dollar One Person Business has numerous examples of single-person businesses exceeding a million dollars. I've seen many examples of lifestyle businesses with teams - usually small ones, but still designed to give the owner the lifestyle they want.
The successful ones have the fundamentals right.
The three fundamentals of a successful lifestyle business
Here's my formula for a successful lifestyle business:
Lifestyle Business = Life + Positioning + Revenue
Over the last two years or so I developed the Tornado Method - a comprehensive framework for designing, building and running a business. The Tornado Method consists of 11 elements in three layers - and those layers correspond to the fundamentals of a successful lifestyle business.
The top level of the Tornado Method looks like this:
The fundamentals of a successful lifestyle business work as follows:
- At the bottom of the Tornado Method is the Getting Stuff Done layer. This is where you get to have a life (or not);
- the Building Blocks layer determines your positioning; and
- the Revenue Engine is how your business makes money.
Let's look at each in turn.
Fundamental 1: Have a life (a.k.a. getting stuff done)
At the bottom of the tornado is the Getting Stuff Done layer. This is where you have things like team, culture and personal effectiveness - the key to determining whether you're going to have a life as well as a business.
We already know that building a business is hard, and you're going to take the brunt of the work on your shoulders. And this is where you need to make a decision:
Are you going to give up on having a life while you're building your business?
I've been there and done that - a failed marriage is testament to my stupidity. I decided that I'll never go there again, so my answer to this is a firm no - I won't give up on having a life while I'm building my business.
I know that it's going to take longer to build the business because I don't work weekends or evenings. I make up for that to some extent by starting really early and continuously learning how to be more effective.
But there's another reason you don't want to give up on having a life while you're building your business.
Your ability to focus, be effective and productive is dependent on how well you're doing physically, mentally and emotionally. If you're run down, your productivity is going to be low, your ability to focus suffers and the quality of the work you produce is going to be lower than you're capable of.
So to produce more, focus better and build a quality business it actually benefits you to take time off - to have a life. The "honour" badge of 80-hour weeks is a fallacy - you're not producing more or faster, and the quality of your work is lower.
So having a life while building a business actually results in a better business faster. And you enjoy the journey a lot more.
Fundamental 2: Positioning
I work with a lot of lifestyle businesses, especially in the early stages while they're still struggling to gain traction and reliable revenue. Almost without exception, my advice to them is to specialise.
Specialisation is the fastest and best way to become the go-to person for a specific problem. It makes it easier for you to find clients, for them to find you and for you to charge a premium.
In the Tornado Method, I call this positioning.
Positioning is the combination of your specialisation, a kick-ass brand and the products you offer to the market. There's an art and a skill in finding your ideal positioning, and a huge fear that you're going to miss out on other business because you've specialised.
But in practice, I've seen this play out time and time again: the right positioning makes all the difference between competing with the hordes and becoming the recognised expert in a specific field.
Specialisation is the start of positioning. Combine that with a great brand (your business personality) and offer clients a small but well-designed set of products to choose from, and you have great positioning.
That's the second fundamental of a successful lifestyle business.
Fundamental 3: Revenue
Of course, no business is a business without revenue. In the Tornado Method we define a Revenue Engine - the sequence of marketing, lead nurturing, sales, delivery and follow up that makes money for your business.
When I work with lifestyle entrepreneurs I always start with making sure their positioning is well designed. Without somewhat decent positioning your chances of building a reliable Revenue Engine are pretty slim.
But even decent positioning won't deliver the revenue you want if your Revenue Engine is not well-designed - and you don't operate it well. From my experience I've seen two main problems with Revenue Engines:
- one or more components of the Revenue Engine don't work very well; or
- the different stages of the Revenue Engine are not well connected to each other.
This simply means that (for example) your marketing is not generating enough leads for your business, or there is no clear, simple method for capturing lead details so you can start nurturing them.
A well-designed Revenue Engine has each component running smoothly, and each component helps leads and prospects move to the next stage as easily as possible. For a fun example of how to design a Revenue Engine check out this article.
A checklist: how is my lifestyle business doing?
In the Tornado Method I've defined one question for each of the 11 elements that will tell you how well that part of the engine is doing. Here's a quick checklist you can use:
A successful lifestyle business is based on three fundamentals:
- You have to have a well-designed and well-running Revenue Engine to have reliable, consistent revenue streams.
- Your positioning is critical to ensure you become the go-to person for a very specific problem, make it easy to find your ideal clients and charge a premium for your products or services.
- And finally, you have to have a life so you can enjoy the journey and be in top form when you're working on (or in) your business.
Get these three fundamentals right and you will have a great business - and a life as well.