It’s been a few weeks since my last post. Not much has been happening and I am checking off the boxes for closing on my business (1/15). I am thinking through and adjusting the business strategy and one question keeps coming up: Am I building a lifestyle business?
I have to admit that the first time I told someone about what I am doing and they said “oh, you want a lifestyle business”, I was pretty taken back. Honestly, I felt like the person was saying that I was checking out from achieving and just wanted to make ends meet. Now I knew that is not what he was saying but it’s how I felt. As I thought about it, I started to ask myself why. Why do I and many others have a negative connotation about lifestyle businesses?
What is a lifestyle business? According to Wikipedia:
A lifestyle business is a business set up and run by its founders primarily with the aim of sustaining a particular level of income and no more; or to provide a foundation from which to enjoy a particular lifestyle.
When the all knowing Wikipedia gives a definition like this, it’s no wonder “lifestyle business” is a dirty word. The more I think about it the more I realize people have bought into scam. This would include myself.
The business press would have you believe that a lifestyle business is not a real business. It’s less worthy and only people who are washed up do one. In “real business” everyone who does a tech startup becomes a millionaire by the age of 27. If you don’t you are a failure. What a bunch of BS.
Here is the question I want to ask you. Would you have your job if you didn’t need money? Probably not. You would do a lot of things besides grab a paycheck where you are.
Most people who work at an early stage company take a large pay cut with the hope of a large payout. This more likely than not doesn’t happen and if it does happen it is far less than you think (Dilution!). Of course there are people who hit it big or jump from one startup payday to another….and good for them (I know a few people like this). Unfortunately this is the exception and not the rule. There are others that work at large companies, grab a decent paycheck and over time their options grow slow and steady….or they don’t. There is no rule that says stock prices can’t go down or stay relatively the same.
The cold hard truth is that most people work for a paycheck with the large carrot slightly out of reach. They get a bite of the carrot now and then but mostly work for a paycheck. Their jobs may be interesting, exciting, and intellectually rewarding but financially speaking, it’s still a paycheck. You may top out at 150k -200k, which is a very large sum of money where you can live very comfortably, but when you factor in taxes, children, cost of living, etc… the discretionary portion is much smaller and you aren’t saving a tremendous amount for your future.
Why do we actually work? For some people its a paycheck, for others for purpose, but for entrepreneurs it’s to own your own destiny. This is true if you are working for a tech startup or own a dry cleaners. The tech startup person wants to solve interesting problems and hit it big and the small businessman wants to go it out on their own. Both are equally valid visions.
To me, a lifestyle business is one where it enables me to achieve my dreams, achieve financial security, and live a life of freedom. I want to be able to :
- Be location independent: Spend a month or two up in Lake Tahoe and still work? No problem. Spend a few weeks in Mexico for some sun and fun and continue to generate income? Sounds like a plan.
- Be financially secure: It’s not about having hundreds of millions of dollars. It’s about making more money than you need and earning while you sleep.
- Control my own destiny: I want to work for myself and no one else. Realistically I work for my customers and work to support my employees, but besides them, no one else.
- Own my schedule: Take a 10am class at the gym? Check. Snowboard for a few hours in the am to get some fresh powder. Even better.
All of the above is possible and within my (and everyone else’s) reach. Re-reading what I wrote, I believe that most people I know want the same thing. The challenge is really knowing where to start and having the dedication to execute. For me it is buying and building; for you it may be starting from scratch. It will simply take some dedication and patience; skills we all have. No matter what you choose to do, you can start today and build the life you want or not.
The choice is yours.