Building a Lifestyle Startup in a business world

The cheerleading tech press and massive valuation rounds have built a mystique around startup culture. And, it seems like exciting new companies are popping up daily, led by founders just a few years out of college (or never having finished school).

The allure of this narrative is obvious: the smartest kids in the room get to hire their friends and build a company with other people’s money. However, they attain unicorn status and sell for a cool billion dollars of fame and fortune await.

However, look past the headlines and you’ll find that hundreds of businesses fail for everyone that makes both their investors and founders money. Furthermore, You just don’t hear about them because the startup world is very good at triumphantly celebrating their heroes, and quietly burying their dead.

“Lifestyle business” is a term in the startup lexicon that refers to businesses that aren’t a fit for venture capital. And, this notion is completely false, as many lifestyle businesses are great companies that can lead to a prosperous and fulfilling life for their founders.

Characteristics of a lifestyle startup

If the idea of a business where you maintain control and can lead a quality lifestyle sounds attractive, a lifestyle business may be right for you. And, the characteristics your company should exhibit in order to be a sustainable lifestyle business.

1, Minimal hiring

Every person that you hire should be freeing up your time in a money-for-time trade that you deem worthwhile. Moreover, with lifestyle businesses, it’s best to stay as small as possible and only hire to run operations that have been established.

You may end up deciding that it’s better to just do it yourself and enjoy the incremental cash flow. Furthermore, remember to factor in costs in addition to salaries like payroll taxes, Social Security, and Medicare.

2, A clear end goal

This can be done with many types of business models, but all of them must be able to scale beyond a linear relationship between the dollars you earn and the hours you work.

However, move that store online, setup fulfilment services by a third party (e.g. a fulfilment by Amazon business), and hire someone to handle customer service, and you’ve freed up your time immensely while the store sells 24/7.

3, The equity

Selling ownership in the business, even minimal amounts to like-minded investors, will mean that you’re responsible to someone else. This means giving up much of the freedom that is the goal of lifestyle businesses.

Moreover, Depending on who you sell to, you can consider other forms of financing that use business accounts receivable as collateral and are repaid when your customers pay their invoices.

4, Established company culture

Because a lifestyle business typically doesn’t have the perceived upside of startups or the cash flow to pay big salaries, you’ll need to manage the talent that you can hire carefully. Moreover, your goal should always be to establish systems and operations that will allow you to work less eventually.