Lifestyle Businesses - Good, Bad or Non-existent?
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Lots of people, whether business owners or employed, aspire to running a “lifestyle business”. It’s seen as something of a panacea for the working person.
Only this week (and prompting this piece) someone commented on a challenging aspect of my current work by saying “I bet you wish you could go back to running a lifestyle business.”. Eh? Do you mean running that ski business where I hadn’t skied for three years, regularly worked 60+ hour weeks, managed a staff of 120 and yet managed to multiply the turnover by a factor of eight? Yeah, a breeze that was ... even before Brexit came along.
The problem with discussing the concept of a lifestyle businesses is that it can mean very different things to different people. This is largely because my dream lifestyle may look very different to yours. I might want to spend my free time pottering in the garden, going on country bike rides to a cosy pub and learning to bake (it’s been a hard week!). The life you’re aspiring to may involve fast cars, designer labels and summers spent in St Tropez. The business and work patterns needed to support those two goals are likely to look very different.
I first started thinking about the concept of a lifestyle business around fifteen years ago. At the time I was running a business I had bought into about eighteen months earlier. We had a board meeting where I was trying to launch a particular project. I have no memory of what it was, but it was going to involve some hard graft. One of my other Director/Shareholders was pushing back on the idea. The reason was, to paraphrase, “This is a lifestyle business, that’s not how I want to work.”.
This was a bit of a revelation; I thought I was working in a business where we primed to push as hard as possible to maximise growth and value ... but one of my closest collaborators had an entirely different vision. For her the business needed to support a particular way of life whilst minimising stress and maximising flexibility. A very reasonable and worthy aim, but we clearly had mismatched expectations around how we would work and what the rewards looked like.
Not long after, I started trying to get my head around how I wanted my work to support my own long term aspirations. I had a friend who exited his business and, whilst still needing to work, was in a financial position to be a little more choosy around what he worked on, when and how. He was setting himself up as a business mentor and was also doing some angel investing. This sounded a pretty good path.
The problem was, with his newfound laid back approach to life and work, he developed a natural affinity with other people who were running lifestyle type businesses. What he ended up doing through his investing and consulting was giving significant time and money away in support of what were, fundamentally, other people’s hobbies. There was a very low return on investment and the result for him was ultimately a return to more revenue generative work with less flexibility around his working patterns. Not a long term lifestyle business then.
The travel industry, my home for much of my career, is populated by a huge number of businesses that are, or were, labeled as lifestyle businesses. Numerous travel companies have grown out of a founder’s love of a particular activity or destination; they form a ski company so that they can maximise their time in the mountains or they start managing villa rentals on their favourite Mediterranean island.
When you look at the travel firms that grow and make money you’ll see a common thread though; the people at the top are working bloody hard and are incredibly strategic and focussed. They might have a better than average tan, but the lifestyle might not be quite what external observers expect it to be. I refer back to the amount of skiing I managed as a ski operator.
Staying small isn’t an issue per se, but the flip side of that business/lifestyle choice can often be a fairly precarious hand to mouth existence. I saw that a lot in travel and leisure. Some people seem to thrive living in the moment, but I suspect it's a resilient minority. A subsistence way of life is certainly not my cup of tea, at least not with young children and selfish aspirations to enjoy a nice glass of Rioja now and then.
So, is there really such a thing as a lifestyle business? I reckon there is, but it is unquestionably not a “one size fits all” thing. A select few will be running a business they love working in, that provides for them financially and also allows them the time to do all of the things they want to do outside work. I’m not sure it’s a common state of affairs though.
On balance, I'm not even sure that aspiring to run a lifestyle business is a helpful thing. If you follow your gut, do work you enjoy and make time for your other passions (whatever they may be) you might get lucky and end up running your own show that rolls all of this up into one neat package. If you don’t, that shouldn’t stop you from having a good life and rewarding job. It’s all about understanding your short, medium and long term goals.
As a final suggestion, figure out the long term goals and work back from there.