All businesses start with an idea: a problem that you want to solve for a group of people.
Once you have an idea, you start researching to see if there is demand for your idea.
After confirming that there is demand for your idea, you then want to create a business plan.
Once you have a business plan, you’d think that you are ready to go right? Not quite.
Before diving into all the details of starting a business, the first thing to ask yourself is:
“What type of business do I want to start: a Growth or a Lifestyle Business?”
Making this decision before you get into all the intricacies of business planning will help you determine your business’ structure, vision, and even the support options available to you.
To help determine which business is right for you, we’ll examine both: Growth and Lifestyle.
By the end of the blog, the goal is to be able to determine which business type is right for you.
Difference between a Growth and Lifestyle Business
As the name implies, growth businesses are focused on growth; the faster the better.
These tend to be high tech companies that have a high potential for quick scalability.
These founders are looking to scale their businesses to unicorn status as quickly as possible.
This process involves taking huge investments and growing a team quickly over a short period.
The goal of these founders is usually to sell them for a couple of million in just a few years.
As for lifestyle businesses, their intentions are much less aggressive.
Lifestyle founders have a much simpler goal: to have a business that supports their lifestyle.
Think of the digital nomads that you see over social media, those are perfect examples.
Their priorities are much different: focusing on monthly income as opposed to a big pay day.
Lifestyle businesses are happy with slow, organic growth compared to fast, aggressive growth.
Financing Options for a Growth vs Lifestyle Business
Growth businesses tend to require a lot of money, depending on their high tech nature.
As such, they will need to source financing during their early stages, as well as beyond.
Investors and venture capitalists love to invest in growth businesses in return for some equity.
Although these businesses are considered risky, they know that they have a lot of potential.
They also know they can expect a huge return on investment in a few years after a big sale.
Lifestyle businesses on the other hand don’t tend to require a lot of money to start.
You’re also find that investors and grants aren’t really that interested in lifestyle businesses.
That isn’t to say there isn’t any financial support for lifestyle businesses, just not as much.
Therefore lifestyle founders should expect to bootstrap/self-fund their business at the start.
This can be a good thing in the sense that the business will be entirely yours in terms of equity.
Growth Business Goals vs Lifestyle Business Goals
It’s important to distinguish your priorities, both in a professional and personal sense.
If you’re looking at maximum profit in a short amount of time, then growth is the way to go.
But you should expect a lot of work, long hours, and possibly a lot of stress to make it work.
However, if you’re happy with a slow and organic growth, then lifestyle is the way forward.
The income won’t be as much, but the lifestyle output would certainly be significantly better.
That’s not to say a growth business will always be stressful and lifestyle business will be easy.
There is no such thing as an easy business; all businesses are hard at the beginning.
However, a lifestyle founder prioritises personal outcomes as opposed to business outcomes, and vice versa for a growth founder. Think of it as Tim Ferriss vs Elon Musk.
By identifying your goals and priorities, you can be more realistic with your expectations.
Now What?
I hope this blog has helped distinguish the differences between growth vs lifestyle businesses.
I think deciding what kind of business you want to have is just as important as anything else.
If you were to ask me what kind of business I would like to have, I would say definitely lifestyle.
For me, having a business that supports my idea lifestyle would be my dream. In other words, having a business that generates an income regardless of where I am in the world, and not related to my time. I could work as much or little as I want and still generate the same income.
That’s not to say that I wouldn’t want to grow and scale my business every year.
However, I would be happy with a slow and more sustainable rate of growth year on year.
Ideally, I am looking for that perfect balance between personal and professional output.
It may take some time to figure it out, but I will get there in the end!
I hope you guys have enjoyed reading this blog on growth vs lifestyle businesses.
What kind of business would you like to have? Please share in the comments below!
If you enjoyed reading this blog, check out the 5 things you need to start a business.
