7 reasons to consider a lifestyle business rather than a start-up

Have you heard the story of the businessman who visited a small fishing village and saw huge potential for the local fisherman to grow his business?

He noted that the fisherman only fished for a couple of hours each day. He asked the fisherman why he did not stay out longer and catch more fish.

The fisherman explained that he catches as much as he needs – and that he sleeps until 9am each day, plays with his children, fishes for a couple of hours, has an afternoon siesta, has a relaxing dinner with his family, and then catches up with friends and plays guitar in the evening.

The businessman was full of suggestions for how the fisherman could grow his business by fishing more often, catching more fish, selling to markets, eventually buying a bigger boat, employing other people, perhaps even opening his own fish processing plant, and eventually moving to a big city.

At each suggestion, the fisherman would ask ‘and then what would I do?’ After answering each question with a description of how to grow his business, the businessman finally answers ‘then you could move to a small fishing village, sleep in until 9am, play with your grandchildren, have an afternoon siesta, have a relaxing dinner with your family, and catch up with friends in the evening.” 

This 'Good Life Parable' by Mark Albion illustrates how we might work so hard our whole lives for something that we could have now – and that our sacrifices in growing a business or having a high-flying career might not be worthwhile.

I was reminded of this story the other day when I was watching Shark Tank Australia. If you haven’t been watching, Shark Tank involves budding entrepreneurs pitching their big business ideas to five potential investors and seeking funding to grow their business. In response to a pitch, John McGrath and Janine Allis sometimes comment that a person has a ‘lovely little lifestyle business’.

So, what is the difference between a ‘start-up’ and a ‘lifestyle business’?

I like this explanation at fizzle.co. A start-up’s job is to grow big enough to provide a return to investors. A lifestyle business’s job is to provide a great quality of life to its owners.

Essentially, ‘entrepreneurs’ or ‘start-ups’ invest time and money (often other people's money) to build a business for a future return. It is common for people to build their business for three years and invest all income back into the business during that time. They seek to employ other people and rapidly grow their business. One of the goals may be to sell the business in the future.

In contrast, a lifestyle business requires minimal investment to start, generates enough money to live a comfortable life, and the goal is to provide a business that allows you to live a great life now, rather than at a later point in the future.

Here are seven key reasons to consider building a lifestyle business rather than a start-up.

1. You have flexibility.
You choose your hours. You choose your location. You choose when you work.
You can work as much or as little as you want. You can work from wherever you want. If you’re a start-up, you are building a business that requires your total commitment and accessibility at all times.

2. You can spend more time with your family, especially your children while they’re young.
Yes, you may decide to burn the midnight oil, or wake at 5am to get some work done—but that is likely because your children are in bed. A lifestyle business is hard work, that’s for sure, but you can choose when to work and work hours around your family’s needs or your hobbies.

3. You don’t have employees. You contract services as you need them. You don’t have to keep work coming in to pay wages. Which leads into the next point….

4. You can take holidays when you want. If you have full-time employees, holidays will be trickier and more stressful, at least for a few years. With a lifestyle business, you can temporarily shut your business down, or take your business on holidays with you (if you want!)

5. You can grow your business as slowly or as quickly as you like. On Shark Tank, you will often hear the investors explain that they require the pitcher to dedicate every ounce of their energy to their business, or they will not invest. A lifestyle business allows you to invest as much time as you want and to grow your business at a rate that suits you.

6. All returns come to you.
With a lifestyle business, there are no partners. No venture capitalists. No-one else’s money to lose. No interest on investments to pay out. If you make money, it is yours to keep.

7. More money will not necessarily make you happier. Research suggests that once people get beyond a certain level of income, their happiness does not continue to increase.

If you’ve dreamt of building a business, think carefully about your goals in starting your business. What will ‘success’ look like in your business?

Do you want a multi-million dollar company? Do you require a significant upfront investment from external sources? Do you dream of hundreds of employees? Do you want to be able to ‘cash out’ at a later stage? A start-up may be what you’re looking for.

Or do you want more flexibility in your life? Do you want to be able to work from different locations around the world? Do you want to be able to work less while your children are young? Do you want to continue to deliver value to clients? A lifestyle business may suit you.

A ‘lifestyle business’ and a ‘start-up’ are not the only options, but your goals in starting your business are important to have front-of-mind when you’re planning your business.

What are your goals in starting your own business?

Add Comment

Add comment