Lifestyle Business

Personal identification

A lifestyle business is one where the owner has a strong personal identification with the product or activity and is seeking more to enable them to live a lifestyle that suits their temperament, rather than to create something that has an asset value beyond the activity itself.

Examples might include a jewelry maker, sport-based activities, or a bed-and-breakfast. Such businesses tend to operate during hours that suit the owners, and generally provide them with a comfortable living and a workstyle that suits their temperament. Lifestyle businesses are generally ones that will cease to exist when the entrepreneur ceases to exist or decides to stop the activity.

A lifestyle business is one where the stress is potentially less from external factors, like a long commute, city living, difficult colleagues, high-pressure targets, long hours away from the family, or large amounts of long-distance travel. They are not necessarily an escape from internally generated stress and may well produce worries of their own.

Lifestyle business can nonetheless be organized just like a a formal business with a separate identity. There is no reason why they should be any the less professional or well organized. There are lifestyle businesses that can attain significant incomes and reputation, though they may have to set up a formal organization in support—to handle inquiries, support, or publishing, for instance.

Technology levels the playing field with bigger fish

Today, lifestyle businesses are able to compete on level playing fields with capital entrepreneurs because of information technology: inexpensive or web-based software, the World Wide Web, VOIP telephony, outsourcing all key business functions, virtual assistants, cloud computing, peer-to-peer lending, social networking, video conferencing, webinars, CAD/CAM and many more developments. The pace is quickening as the communication infrastructure improves and expands with fibre-optic cable, satellite, wifi, wimax and the like.

Chances are also high that a lifestyle business will not be scalable, or in other words achieving huge growth from a small beginning. Since many are in the creative industries, the term 'lifestyle business' should not be seen as pejorative. Many lifestyle businesses are home-based and frequently rural, rather than urban. many of such business people do not even think of themselves as entrepreneurs at all—they rather classify themselves by what they do, not what they are.

Then there are those businesses which while they may have some scale, are 'distributed' or networked. In many business sectors it has become possible to conduct a formal business via mobile devices. A cell phone, laptop or notebook can provide the main infrastructure, supported by internet cafés or hotspots.

A different attitude to money

Lifestyle businesses are unlikely to be seeking external equity investors. In the US, only 3% of the nearly 6 million startups each year seek even angel money, let alone going after venture capitalists. Lifestylers may raise money, but it will be most likely to be debt finance of one sort or another (lines of credit, bank or home equity loans, mortgages, leasing...).

Lifestylers are most likely to be seeking a particular level of self-sustaining income and no more. They are highly likely not to be aiming at retirement, since they are highly motivated by their business and get rewards far beyond money. Payoffs may include living where the founders want, being with people like themselves, or learning new skills way outside their experience. A recent study suggests that more than 90% of 20 million US business owners are motivated more by lifestyle than money.

Deciding if you seek to be a lifestyle entrepreneur

Reaching a conclusion about whether you want to be a lifestyle entrepreneur rather than a capital entrepreneur, take a look at this:

These criteria are not exclusive or exhaustive, but intended to show some determining factors to help individuals or groups to decide on entrepreneurship style and consequences.

Not Just a Living: The Complete Guide to Creating a Business That Gives You a Life by Mark Henricks is a very good and simple guide to lifestyle business startup.