I recently had a blog entry written about a comment I left in a New York Times blog called You’re the Boss. In my comment I wrote about the author having a “lifestyle” business. I think many of the readers didn’t understand what I meant so I thought I would clarify the term.
There is nothing wrong with a “lifestyle” business. In fact, I would submit that of the 6 million or so privately held businesses in the United States all but about 500 or 600,000 are “lifestyle” businesses. This means that about 90% of the businesses that exist are built around the lifestyle and for the benefit of the owner of the company.
And, there is absolutely nothing wrong with that. In fact, I have a “lifestyle” business myself. In case you’re curious here are 6 things that can tell you if you have a lifestyle business:
- The owner is intimately involved in every aspect of the business.
- Without the owner’s active participation, the business would cease to exist in a short amount of time.
- The business makes enough money to support the lifestyle of the business owner but there is little excess capital to provide a monetary reward for investors or shareholders of the business.
- The business would be difficult to sell to an outside party. If saleable, the amount of money the business would bring would be very modest.
- Many times the business is not based on a recurring revenue model. Sales have to be created on an annual basis.
- Customers want to deal with the owner of the company. The owner is involved in most sales and brings in the vast majority of the business.
As you read this list, you might say to yourself that who would want to run that type of business. My answer to this is that there are tons of people who would like to and do run a successful “lifestyle” business.
Having a business that provides the freedom to be your own boss, one that allows you to control your own destiny and one that allows you to pursue your passion is a great thing. It’s a choice I made fifteen years ago and am very glad I did.
If you would like to find out more about your own business and see how you rate on a Stage 2 scale, click on the button below to bring you to our landing page that will allow you to get a special report on the salability of your business. As always, I’m interested in your comments.