What’s a “Lifestyle Business”?
There is an argument that any business is a lifestyle business, certainly any small and medium sized enterprise tends to define your lifestyle given the number of hours and commitment it takes to start and build the business.
Wikipedia has the following definition – “A lifestyle business is a business that is 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.” This website focuses on the second part of that definition “…a foundation on which to enjoy a particular lifestyle”.
The term lifestyle entrepreneur was reportedly coined by William Wetzel, director emeritus of the Center for Venture Research at the University of New Hampshire in 1987. He used the term to describe ventures that were unlikely to generate economic returns robust enough to interest outside investors. Hence, the term is often used in a demeaning manner, often in comparison with an ‘equity business’ and particularly within the Venture Capital community.
A lifestyle entrepreneur needs to be aware of the distinctions between an Equity Business and a Lifestyle Business mainly from the standpoint of how he or she approaches the development of the business. An equity business is focused on growth, with a view to building equity in shares or other assets that can be liquidated through a strategic exit plan. The lifestyle business on the other hand is typically geared toward providing its owners and operators an adequate income, while supporting a desired way of life.
This is not to say that a lifestyle business cannot grow and build equity but it’s prudent to develop a business plan that defines the focus of the business so as not to lose sight of the primary objective; to support a lifestyle versus build a business with an exit plan.
Generally speaking, and supporting the emphasis of the PortableCareerNetwork, a lifestyle business or a portable career provides the required income and cash flow while pursuing what he or she wants to do, rather than what a company or boss says you have to do. This might simply be working in an endeavor that provides sufficient time to be with children, it might be a hobby to business transition, or a love of animals that leads to a pet care business. Success in each venture can only be defined and measured by the lifestyle entrepreneur – You.
Equity vs Lifestyle doesn’t need to be an either / or choice when starting your business, but it does need to be in the plan, particularly if your business involves another person. Make sure your lifestyle and equity visions are aligned and that you have a way of addressing the issue as the business grows.
Getting Started in a Lifestyle Business
Lifestyle businesses are often wrongly associated with ‘get-rich-quick’ schemes and ‘easy-money’ promises that are rampant on the internet and elsewhere, and usually accompanied by pictures of palm trees and fast cars. Running a business is hard work, starting a business is even harder. The outline below is intended to make you think about your business idea or prospective business. Keep in mind why you are doing it, what you want out of it and plan the business in those terms.
Elsewhere on this site we provide more focused content and ways of connecting with others than can assist. If there is information or resources you need, use the various contact mechanisms on the site to request information or network contacts.
1 – Define your Market Niche
What are you going to do – What is your Product or Service?
How much will you be selling this for and in what quantity?
Where will you be selling from and how? – Retail, wholesale, delivery, physical or online?
Who are your customers? Who are your competitors? – How will you promote your business?
Depending on your business and the level of up-front investment required, don’t dwell too long at this stage. It’s best to be agile and adjust to clients needs rather than sell nothing in search of the ‘perfect’ product.
2 – Resources
Human – If it’s just you the business will be constrained – Hire or outsource early for anything that you can’t do, or don’t want to do yourself.
Equipment – You don’t need the latest and greatest to start but make sure you can produce or serve without being constrained.
Financial – No business can be started with zero dollars. Make sure you have sufficient capital to procure the above two items and any materials an consumable for at least 6 months.
3 – Define and document your workflows
All businesses rely on doing things in a systemized manner – Write it down – follow your instructions and adjust as you proceed. This method ensures anyone with the right skills can step in and replace you as you grow.
Do this early, even as part of the planning stages of your business. Writing down all of your intended processes is a perfect way to think each element through. Don’t dwell on details too early, just get the basic steps down and build it as you grow.
Workflows should be supported by checklists and feedback. Being able to measure that something was done, who did it, how long it took etc. can be valuable as you start to scale your business. If you run a Bed and Breakfast for example, what are the steps you do to clean and reset the room (checklist), how long does it take? What problems are encountered? This information allows you to confidently hire someone to do this job.
Side Note – Have you developed procedures and workflows for your business? Interested in selling them to other would be lifestyle entrepreneurs? – Contact us.
4 – Measure and adjust
When you are small be agile. What works in your business?…what doesn’t? Be constantly self-assessing.
Are you customers happy? – How do you know?
Do you need more customers? – Don’t we all…what can be done about it?
Too many customers…high demand? – How can you increase output or service?
Go back to step 3 and build measures into each of your processes. Ideally, everything you do is measured in the normal course of business. If you have to separately go back and measure something, you need to adjust your process.
5 – Stay focused
Keep in mind why you started the business – The lifestyle. If you are spending too much time on other things that take you away from that, go back to step 3 and adjust your process.
