When I talk with bankers about entrepreneurial companies, it is all too common to hear that bankers view some businesses as “just a lifestyle business.” Bankers are saying that the company is not growing fast enough that they can consider investing in it or buying it. In other words, if the company doesn’t have unlimited growth potential, they’re not interested.
That approach makes sense – to an extent. After all, much of the media coverage of enterprising companies has focused on so-called unicorn companies that could become multi-billion dollar public entities. Of course, investors and bankers are interested in betting on such companies. This way they can earn some money from their investments.
There are good reasons for companies to adopt high growth besides doing well for your shareholders. The most important of these may be that growing rapidly generally creates new opportunities for your employees to expand their career paths.
But – and this is an important but – prioritizing such development also comes with high costs.
What does a balanced life look like?
One of the most popular articles I’ve written focused on living a balanced life. And the balance of entrepreneurs running growth-oriented companies is completely out of whack. I don’t know anyone who works less than 60 hours a week. Most do more than that.
This adds up to an incredible percentage of your time that requires substantial sacrifices in other parts of your life – such as spending time with family and friends or on other things you might enjoy, such as exercise or your mental and physical health. Make time for spiritual health.
So, if you’re pursuing growth, it’s always worth asking yourself: Why? Are you doing it for the money? For your ego? Because it’s more fun than anything else you can spend your time on?
There is no right or wrong answer to this question. But if you find yourself wondering whether you should really pursue growth, maybe it’s time to consider alternatives.
Would you prefer to work 80 hours or 25 hours a week? Maybe running a lifestyle business isn’t that bad.
lifestyle worth living
The ideal lifestyle business grows little, allows you to live a life outside the office, and makes you a lot of money. Not only does it enable you to pursue your passions outside of work – playing golf, volunteering with charities, climbing mountains, getting a doctorate, competing in Iron Man races – it also enables you to enjoy those other activities. also provides sufficient funds for
Then, it comes to the role your business plays in your life. I speak from experience when I say that running a lifestyle business is a great way to strike an excellent work-life balance.
But, just like with running a development business, you have to make sacrifices.
there is a compromise
Speaking of the bankers I introduced at the beginning of this article, the big catch with the lifestyle business is that when it comes time for you to make a move — perhaps to retire or start something else — you’ll be able to. Won’t sell a lifestyle business for the same type of multiples you might get for a growth business. You’ll leave money on the table compared to the entrepreneur who spent years prioritizing growth.
Another potential catch is that if you’re not growing well enough, you could be limiting career opportunities for your employees. This could mean that you will lose some of your employees over time.
But when you add up all the money you’ve earned over the years to run your profitable lifestyle business, plus all the valuable free time you’ve earned, that can balance out bookkeeping. It may even tip things in favor of the lifestyle business in the end. It all depends on your preferences and what kind of life you want to live.
live your own life
The important point is that it is fine if you are running a lifestyle business. Don’t let the banker bully tell you otherwise. Don’t feel ashamed for not moving fast enough. You still have a life, and that’s a great tradeoff.