Do you have a vision for where you see your business in 5 years? In 10 years? Have you actually thought about it? A good reminder comes from historic baseball great, Yogi Berra: “If you don’t know where you are going, you’ll end up someplace else.” You may have heard this advice before, but do your goals reflect it? A key question to ask yourself is whether your vision is to build a Lifestyle Business or a Growth Business. Whether you are just starting in business or have been in business a while, it’s a question you may not have thought about. It’s an important decision to make so let’s look at both types of business mindsets, and their advantages.
First of all, one is not “better” than the other. It’s a matter of knowing which you want to build to fit your goals. A Lifestyle Business is a small business to sustain income – to support the owner’s lifestyle. A Growth Business is more complex and expands to be scalable beyond the founder. Before you decide which is best for you, consider the differences.
Your Goals
Many designers become entrepreneurs but haven’t clarified their vision of what their future business will look like. In addition, they may not have fully realized the importance of considering their personal goals as they set their business goals. An honest understanding of what is important to you is key. Remember, we are talking about the future vision of your business. Ask yourself why you are building this business. Any business will require a higher investment of time and resources when starting out.
The primary goal of a lifestyle business is to allow for more of a work-life balance while still being profitable. You can have a team, but you are the primary owner and investor and you are the main influence on the design. The business is you and often your name is the name of the business.
The primary goal of a growth business is to increase the growth and value of the business. To do this involves re-investing profits in the company which means there will be less money going toward the owner’s lifestyle. Though the profits allow for a comfortable quality of life, it is not the main focus of the business. You will have a team that probably grows and expands. Your business may also expand with designers who focus on a variety of types of design, including product design.
Lifestyle Business
Advantages:
- It allows you to have more freedom to pursue other interests you might have, while still running a successful business.
- They can be more practical for creative businesses and those offering personal services. Both describe interior design!
- It can offer a more flexible schedule that might be needed to work around personal or family responsibilities.
Disadvantages:
- Requires great personal involvement for the business to be successful.
- Challenging to get outside investors so more likely to be financed personally and/or with loans.
- You, the owner, are the business. Without you, what is the business? It’s difficult to be scalable and/or continue without you, and consequently challenging to sell.
Growth Business
Advantages:
- It can more readily attract investors and, later, buyers.
- The focus is to create value – which provides a good income for owners as well as other investors.
- Profits are important but the main goal is to increase the business growth and value. Consequently, much of the profit remains in the business.
- A successful growth business is more appealing to buyers – it can run without you and the sale can fund your retirement.
Disadvantages:
- It could be more demanding of you.
- It usually requires a greater commitment of time and other resources.
- It may involve more sacrifices. You may have less time off to disconnect from the business and pursue other interests.
What is your vision?
You may have no desire to build a company with a large team. If you are looking for a business to fund the lifestyle you envision then the lifestyle business is a good fit. You may however wish to build a design firm that will support you and others, and eventually run without you and/or be saleable. In that case, consider building a growth business.
One of the many advantages of Pearl Collective’s VIP Experience is to help designers identify how they envision their business. The program has helped designers address and answer key questions about both their business and their desired lifestyle. The answers to those questions and the in-depth look at their business help guide them as they create the vision for their future. Pearl Collective offers programs for designers like you, that will help you confirm whether you prefer a lifestyle business or a grown business. We can help those who may have started out creating a lifestyle business, but now are considering the value of moving their business to a growth business. From the Circle Program through the VIP Experience to the Alliance and then Boardroom, Pearl Collective has helped so many designers build great success – whether their goal is to build a lifestyle or a growth business. Which one is right for you?