When most people start a business, the overall plan goes something like this:
- Get funding (angels, VCs, absurd amounts of credit card debt, whatever it takes)
- Find product/market fit (make sure customers actually love what you have to offer)
- Sacrifice everything you have for growth to establish yourself as the market leader
- Sell your business to a major corporation or go for the IPO in order to cash in
And to pull this off, you need to work 100-hour weeks, sacrifice your health, say goodbye to friends and family, and poor every ounce of effort you have into making it happen.
But there’s another option: the lifestyle business.
Instead of building a business that will grab headlines and shake industries, why not build a business that can support you? If that’s your main goal, the entire business strategy radically changes.
So way back in 2007, Tim Ferriss released a book called The 4-Hour Workweek. It became an international bestseller and advocated for building a business that supported your life instead of using your life to support a business.
To build a lifestyle business, the entire plan gets much simpler:
- Grow a business to the point that it can support you
- Prioritize, automate, outsource, and batch everything to give you the largest income with the least amount of time required
You only need a little funding, a small market, and a little luck to get going. Then you work to build a business that doesn’t require your constant attention.
The 4 Pillars of a Lifestyle Business
In business, some tasks have high value. There’s the tasks that only you can do and your entire business depends on the quality of that work. If you’re a freelance designer, the time spent designing is by far the most valuable. But there’s a host of other tasks and responsbilities that a business requires. You needs to keep expense records, manage invoices, find new clients, keep in touch with old clients, etc.
Even worse, a small portion of your overall efforts produce the results you achieve. This is called the 80/20 rule (also Pareto’s Principle). A minority of your inputs (effort) produce the majority of your output (results). Most of your effort is completely wasted. When you learn to identify and focus on the tasks that produce disproportionate results, you can greatly increase your productivity.
So we have to ruthlessly prioritize and only focus on high-value tasks. Get rid of everything else.
But what about low-value tasks that are required? That’s where the other three pillars come in.
Whenever you find yourself doing the same tasks repetitively, think of ways to automate it. You want to remove yourself from the process as much as possible.
Let’s say that you send out several invoices each week. Currently, you use a Microsoft Word template, fill in the details, save it as a unique document, write an email to your client, thank them for their business, and link to your Paypal account every time you have to send one of them. That’s a lot of repetitive steps that suck up a ton of time.
Why not just use an invoice program that saves all your client information and does all the other work for you? All you have to do is fill in the line items, enter the cost of everything, and click send. Done.
Not everything can be automated. But when it can, this will free up a lot of your time.
When a system can’t be built in order to completely automate something, consider outsourcing it. For example, it’s pretty hard to automate customer service. But you can hire someone to help your customers for you.
You also want to outsource any activity that can be done at a cheaper rate than what you’re worth. If you make $75/hour, should you really spend an hour doing data entry? Why not pay someone $3/hour to fill out that spreadsheet for you, work for that hour on more important tasks, and pocket the difference?
The entire goal of outsourcing is to pay other people to do tasks that take up your time. Then you can spend more of your time working on the projects that produce an immense amount of value for your business.
What happens when none of these options are available and you still have to deal with repetitive tasks? When you can’t get rid of something, batch it. So instead of doing something here and there throughout the day or sporadically in the week, do all of it at one time.
Let’s go through an example. You’re interviewing for an open position at your company. Hiring is a pivotal decision so you definitely don’t want to automate or outsource it.
Right away, resumes start coming in sporadically throughout the day. Now if you look at each one as it comes in, all your other work will be interrupted. Simply by having to start and stop each task, you’ll waste a ton of time. Instead, look through all the resumes from the day (or the week) at one time. You’ll do a better job at finding the great applicants and the quality of your other work will also go up. Then when it comes time to do interviews, try to batch them on the same day which will save you even more time.
By being heroically productive, reducing the time that your business requires of you, and building systems to run your business, you create a lifestyle business.
Before long, you have a legitimate 4-hour work week and a full-time income. Is it easy? Absolutely not. But is it easier than starting a business from scratch and having a successful IPO? Of course. Most people can build a lifestlye business, very few can build a company that shapes industries.
Bonus Round: these are also great strategies for people trying to dominate markets and go for a massive exit. But instead of spending their spare time living the lifestyle, they’ll pour it back into their business.
But there’s just one small problem with all this…
As Soon As You Play the Lifestyle Card, You Give Up Growth
As anyone that’s started a business can tell you, growth at any level takes a monumental effort. This is true when you’re starting and it’s also true when you’re trying to take everything to the next level. Building a business from scratch that pulls $100,000 in revenue is only stage one. You won’t magically find yourself at the $1,000,000 in revenue mark within a few years. The next stage of growth requires just as much effort and hustle as the stage before it.
Every time you try to take your business to the next level, you’re going to sacrifice just about everything in order to make it happen. Your lifestyle becomes the business.
Without your determined will and unrelenting passion, you’ll never get there. Your business will stall and next year will look exactly the same as this year.
So when you step back and enjoy life, you’re giving up on growth.
You Also Become Vulnerable to Competitors
The only way to ensure that you don’t get sideswiped by some upstart is to relentlessly pursue growth. If you grow faster than every other play in your industry, no one can catch up to you.
But if you’re not growing, not innovating, and not improving, it’s a matter of time before someone finds your same business model and figures out how to do a better job than you.
And when that happens, you’re finished.
These days, the Apple App Store is ridiculously competitive. People play for keeps. But it wasn’t always this way. For awhile, a halfway decent app with a little luck could rocket to the top of the app charts. Seemingly without cause, an app could bring in $5,000+ each month that only required a few weeks to build. A lot of developers got lucky and started to enjoy the extra income.
Then people started to take notice how building a mobile app could produce great revenue in a very short amount of time. Instead of starting from scratch, they went after the lucky developers. They kept a close eye on all the top 10 charts, looking for any app that had gotten lucky but wasn’t polished or innovating. As soon as they found one, they copied the concept, built a better version, and dominated that market. And all the lucky developers that had stumbled into a lifestyle business by accident? Well, they no longer have a lifestyle business. Don’t belive me? You can hear all about it in this interview on Mixergy (sorry, it’s behind a paywall).
So what’s it going to be? Lifestyle or growth?
“But Lars! You’re wrong! My cousin Vinny only works 6 hours a week and his business keeps growing.”
That’s nice. Your cousin Vinny is an anomaly. If you’re in the right industry, with the right customers, and the right product, at the right time, your company may be lucky enough that it grows on its own without any effort on your part. But this sort of thing doesn’t happen with any regularity.
Some people have been lucky enough to have growth kiss them right on the cheek. The rest of us have to work like dogs to make it happen.
Is a Lifestlye Business Worth it?
It definitely can be. For many people, a lifestyle business is exactly what they need. You’ll get plenty of spare time to enjoy life as you wish, enough income to support a modest lifestyle, and you’ll be the captain of your fate. That sounds like a great deal to me.
But remember: growth is not one of the benefits of a lifestyle business. So if you want to take your business to the next level, you’re going to have to make some serious sacrifices. Get back to eating ramen and hustling until 3 in the morning. Growth only comes to those that are truly committed.