It seems that most of you entrepreneurs I meet in my role as business advisor are convinced that starting a new business requires equity investors, exponential growth, and a plan to go public via IPO. I often recommend a less painful alternative, called the lifestyle entrepreneur approach, where your focus is on making a living and a work-life balance, rather than changing the world.
According to recent statistics from the Small Business Administration (SBA), this approach still accounts for 99 percent the businesses out there today. Of course, every lifestyle entrepreneur wants their business to be “successful,” but I find that the definition of success and the expectations along the way differs from that usually associated with what I call “growth startups.”
Here are some of the key indications that you might be a good match for a lifestyle business, for you to compare and consider against your own objectives and strengths:
Enjoy interacting with customers and products every day. Growth entrepreneurs quickly find themselves removed from day-to-day operations, and become more and more occupied by transactions with lawyers, investors, and potential acquisition partners. If your passion is customers, you definitely will be happier as a lifestyle entrepreneur.
In one stage of my own career, as an executive with a large corporation, I found myself almost totally occupied with managing personnel and organizational issues, including hiring and firing, which kept me away from the products and customers that I loved.
You want to be your own boss, and do things your way. Once you accept equity investor money, or go public with stockholders, you won’t believe the things they demand, and the legal rules you have follow. As the total owner of your own small business, you have maximum control of where and how to spend your time and money.
Take pride in your leadership role in the local environment. Most lifestyle business owners are proud to be recognized as leaders in the local business, education, and civic organizations. They enjoy not being on the road most of time, and able to balance their activities and leadership roles between work and family, sports, or recreation.
With a focus oriented toward your local community, you might even take an active leadership position in a key environmental or political issue, without fear of how it could hurt your business in another geography or culture. Use flexibility to match your lifestyle.
Personal income is related to operations versus equity. With major investors, your equity and return is diluted and delayed. With most small businesses set up as sole proprietorships or LLCs (Limited Liability Corporations), net income flows more directly into your personal income. You get to enjoy directly the results of your efforts.
In addition, your income and how you spend it won’t be part of the published record associated with public corporations. For those of you who value your privacy, and want flexibility to live your own lifestyle without continuous scrutiny, this is a major advantage.
Freedom to maintain creative “hands-on” control. A lifestyle business assumes that you will be able to put your ideas and skills to use in implementation as the business evolves, while working directly with customers as well as your own team. This can be a key source of personal satisfaction, as well as the ultimate success factor and legacy.
Lifestyle businesses offer personal tax advantages. Tax laws in most countries are more flexible for small businesses, giving the owner more choices. Thus, owners can often benefit personally from tax-related business deductions, such as vehicle expenses, facilities alternatives, entertainment events, and gains and losses from real estate.
Ability to keep the business in the family until retirement. With a lifestyle business, you plan your exit rather than have the Board of Directors do it for you. You make the decision, if you like, to keep it in the family, sell it, or simply close it down when you retire. Lifestyle businesses can change to match their owner’s interests and long-term desires.
In my experience, the costs and risks of a lifestyle business continue to come down, as websites, social media, smartphone apps, open source tools, and customers via the Internet become more and more the norm. Also more women have been jumping into business ownership, and they have long fought to have more integration of their work with family lives.
Certainly, choosing the path of a lifestyle entrepreneur should be a point of pride, in doing what you really want, instead of just chasing the almighty dollar. Let business success be your definition of satisfaction and happiness, rather than some arbitrary monetary statistic.
*** First published on Inc.com on 10/23/2020 ***
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