I’ve written about this in the far past, but I simply don’t get the bias against so-called Lifestyle Businesses.
A Lifestyle Business is one where usually one or two founders create a business based upon their talents and abilities, and never intend for it to be a mega-corporation; in fact, most are created by people who want to set their own terms and live their lives they want to live.
They’re not out to change the world – they’re out to make a little profit, hire some cool people, and take the afternoon off to see little Suzy’s dance recital.
You know what’s cool about a Lifestyle Business?
- All the equity belongs to you. Want more money? Work harder. Or simply work until you can pay all of your bills.
- Where you want to live is where you work. Don’t like your current city or state? Pack up the company and move wherever you like… hopefully a business tax friendly state.
- You don’t have to answer to a board of directors or stock holders. If you want to try something, you try it. You are accountable only to your customers and yourself.
- By definition, Lifestyle Businesses are or they aren’t, generally speaking. That is to say, they are usually bootstrap operations funded solely by the founders with no outside investment. If they’re not profitable, they cease to exist. There is no “next round of funding.”
What stinks about Lifestyle Businesses?
- The responsibility is yours and yours alone. You don’t make payroll, it’s on you. You don’t get paid, you don’t eat.
- Most Lifestyle Businesses depend heavily on the talents of one or two key people. They quit, you’re done. That makes buying Lifestyle Businesses a very risky proposition, because you’re not really buying a company but you’re buying one or two people, more or less.
- Lifestyle Businesses don’t have the capacity or capital to scale. Unless you invent the next hula hoop or slinky.
There are some Lifestyle Businesses that do sometimes scale, a bit, and do get purchased by bigger companies. Techcrunch, the tech blog created by Mike Arrington, is probably the most prominent example of a business started in someone’s house and was later bought by a big company (AOL). However, as it turns out, the sale was a risky one for AOL, since the value of the company was largely vested in Mike, and with his departure the brand quickly fell apart.
But I am writing this little piece not to bury Lifestyle Businesses, but to praise them.
I owned and ran a Lifestyle Business for fifteen years, from 1996 until this past year. I spent every February (at least until my kids started school) living in the Florida Keys. I took my vacations whenever I wanted to. If I wanted to work harder I did, and when I didn’t, I didn’t. And I pretty much ran things the way I wanted to, how I wanted to, and when I wanted to.
Ultimately, it became time to do something else. The kids got older… and college for the boys started looming large in the windshield. After weathering a few recessions, successfully, there were other challenges I found I wanted to tackle. Truth be told, I simply got older, and for a large part of what I did for the last decade and a half, it really was a young(er) man’s game.
For those out there chasing your dreams, not wanting to be the next Facebook but to simply create something of beauty and utility and personal satisfaction, I say “awesome.” You can be successful, send your kids to great schools, live where you want to live, pay the mortgage, and have an extremely satisfying life. You don’t have to create the next PayPal or Twitter or Facebook to do that.
And you don’t need venture capital to do that – you simply need an idea, drive, talent, and passion.
Don’t let someone who poo-poos your Lifestyle Business as something less than worthy bother you in the least. Chances are in five years you’ll still be in business doing what you love, and they will be onto their next Pivot.