When I have conversations about entrepreneurial companies with bankers, it's pretty common to hear the bankers look down on some businesses as "just a lifestyle business." The bankers are saying that the company isn't growing fast enough for them to consider investing in or buying. In other words, if the company doesn't have limitless growth potential, they're not interested.
That perspective makes sense--to a degree. After all, much of the media coverage of entrepreneurial companies focuses on so-called unicorn companies that can become multibillion-dollar public entities. Of course, investors and bankers are interested in betting on companies like these. That's how they can make some money off their investments.
There are other good reasons besides doing well for your shareholders for companies to embrace high growth. The most important of these might be that growing fast typically creates new opportunities for your employees to expand their career paths.
But--and this is an important but--prioritizing that kind of growth comes with high costs as well.
What does a balanced life look like?
One of the most popular articles I have written focused on living a balanced life. And entrepreneurs who are running growth-oriented companies are profoundly out of balance. I don't know any who work less than 60 hours a week. Most work even more than that.
That adds up to an incredible percentage of your time that then requires substantial sacrifices in other parts of your life--like spending time with family and friends or on other things you might enjoy doing, like exercise or making time for your mental and spiritual health.
That's why, if you're chasing 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 could spend your time on?
There's no right or wrong answer to this question. But if you find yourself wondering if you really should be chasing growth, maybe it's time to consider the alternative.
Would you rather work 80 hours a week or 25? Maybe running a lifestyle business wouldn't be so bad after all.
A lifestyle worth living
The ideal lifestyle business grows a little, allows you to have 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 a charity, climbing mountains, getting a doctorate, competing in Iron Man races--it also provides you with enough money to enjoy those other pursuits.
Again, the point comes down to your business's role in your life. I speak from experience when I say that running a lifestyle business is a great way to create an excellent work-life balance.
But, just as with running a growth business, you will have to make sacrifices.
There is a tradeoff
Getting back to the bankers I introduced at the start of this article, the big catch with a lifestyle business is that when it comes time for you to move one--maybe to retire or start something else--you won't be able to sell a lifestyle business for the same kinds of multiples you could get for a growth business. You'll leave money on the table compared with the entrepreneur who spent years prioritizing growth.
Another potential catch is that if you aren't growing enough, you might cap the career opportunities for your employees. That might mean you'll lose some of your employees over time.
But when you add up all the money you've earned over the years running your profitable lifestyle business, plus all the valuable free time you've earned, that might balance the ledger. It might even tip things in favor of a lifestyle business in the end. It all depends on your priorities and what kind of a life you want to live.
Live your own life
The critical point is that it's OK if you're running a lifestyle business. Don't let the banker bullies tell you otherwise. Don't feel shame for not growing fast enough. You still have a life, and that's a pretty good trade.