It seems that most of you entrepreneurs I meet in my role as business advisor are convinced that starting a new business requires equity investors, exponential growth, and a plan to go public via IPO. I often recommend a less painful alternative, called the lifestyle entrepreneur approach, where your focus is on making a living and a work-life balance, rather than changing the world.
According to recent statistics from the Small Business Administration (SBA), this approach still accounts for 99 percent the businesses out there today. Of course, every lifestyle entrepreneur wants their business to be “successful,” but I find that the definition of success and the expectations along the way differs from that usually associated with what I call “growth startups.”
Here are some of the key indications that you might be a good match for a lifestyle business, for you to compare and consider against your own objectives and strengths:
Enjoy interacting with customers and products every day. Growth entrepreneurs quickly find themselves removed from day-to-day operations, and become more and more occupied by transactions with lawyers, investors, and potential acquisition partners. If your passion is customers, you definitely will be happier as a lifestyle entrepreneur.
In one stage of my own career, as an executive with a large corporation, I found myself almost totally occupied with managing personnel and organizational issues, including hiring and firing, which kept me away from the products and customers that I loved.
You want to be your own boss, and do things your way. Once you accept equity investor money, or go public with stockholders, you won’t believe the things they demand, and the legal rules you have follow. As the total owner of your own small business, you have maximum control of where and how to spend your time and money.
Take pride in your leadership role in the local environment. Most lifestyle business owners are proud to be recognized as leaders in the local business, education, and civic organizations. They enjoy not being on the road most of time, and able to balance their activities and leadership roles between work and family, sports, or recreation.
With a focus oriented toward your local community, you might even take an active leadership position in a key environmental or political issue, without fear of how it could hurt your business in another geography or culture. Use flexibility to match your lifestyle.
Personal income is related to operations versus equity. With major investors, your equity and return is diluted and delayed. With most small businesses set up as sole proprietorships or LLCs (Limited Liability Corporations), net income flows more directly into your personal income. You get to enjoy directly the results of your efforts.
In addition, your income and how you spend it won’t be part of the published record associated with public corporations. For those of you who value your privacy, and want flexibility to live your own lifestyle without continuous scrutiny, this is a major advantage.
Freedom to maintain creative “hands-on” control. A lifestyle business assumes that you will be able to put your ideas and skills to use in implementation as the business evolves, while working directly with customers as well as your own team. This can be a key source of personal satisfaction, as well as the ultimate success factor and legacy.
Lifestyle businesses offer personal tax advantages. Tax laws in most countries are more flexible for small businesses, giving the owner more choices. Thus, owners can often benefit personally from tax-related business deductions, such as vehicle expenses, facilities alternatives, entertainment events, and gains and losses from real estate.
Ability to keep the business in the family until retirement. With a lifestyle business, you plan your exit rather than have the Board of Directors do it for you. You make the decision, if you like, to keep it in the family, sell it, or simply close it down when you retire. Lifestyle businesses can change to match their owner’s interests and long-term desires.
In my experience, the costs and risks of a lifestyle business continue to come down, as websites, social media, smartphone apps, open source tools, and customers via the Internet become more and more the norm. Also more women have been jumping into business ownership, and they have long fought to have more integration of their work with family lives.
Certainly, choosing the path of a lifestyle entrepreneur should be a point of pride, in doing what you really want, instead of just chasing the almighty dollar. Let business success be your definition of satisfaction and happiness, rather than some arbitrary monetary statistic.
*** First published on Inc.com on 10/23/2020 ***
Orlando firms enjoy strong Q3 for VC as startup investment rebounds Orlando Business Journal
“startups when:1d” – Google News
As an angel investor and a mentor to aspiring entrepreneurs, I’m always disappointed to see founders who seem stressed out most of the time, and more annoyed than energized by the abundance of challenges they see in building their startup. The entrepreneurial lifestyle is a tough one under the best of circumstances, and it’s one you have to love in order to succeed.
Obviously, it’s not that simple, but making the right first impression is critical for an entrepreneur, not just with investors, but also with partners, customers, and even yourself. Even though I’ve been working with entrepreneurs for many years, I’m sure I’m not the only person who can quickly spot the ones whose mentality for the role is suspect.
We would all prefer that aspiring entrepreneurs take a hard look in the mirror early, before they assume they can step easily into the role of a Mark Zuckerberg, Richard Branson, or Bill Gates. Here are some key mindset attributes to look for, which I believe are essential for every entrepreneur to see in themselves:
- You relish the role of leading the charge. Being a visionary or an idea person is not enough; you have to be anxious to jump in and get your hands dirty. Most success stories in business are not about envisioning the next big thing, but about making that change happen. Investors and strategic partners look for entrepreneurs who can execute.
- Able to balance right-brain and left-brain activities. Most technical entrepreneurs are left-brain logical thinkers, even perfectionists. Yet every business today needs a focus on visualization, creativity, relationships, and collaboration, which are normally in the domain of right-brainers. Successful and happy entrepreneurs have that rare whole-brain focus.
- Enjoy being outside your comfort zone. New businesses are an adventure into the unknown. You need to be mentally prepared to enjoy the roller coaster ride, rather than face it holding your breath with your teeth gritted at every turn. Only then can you enjoy the thrill of victory when you survive a major turn, and be energized for the next one.
- Proactively seek input, but make your own decisions. Great entrepreneurs seek out critical customers and industry experts, and actively listen, but are not afraid to trust their own judgment as well. Ultimately they accept the responsibility of “the buck stops here,” meaning they live by their own decisions, and never make excuses.
- Willing and able to do a little bit of everything. Technology experts tend to have a very deep level of knowledge, but not very wide. If your real interests are not very broad, then building a business will likely be frustrating and expensive. Startups have limited resources, so the founders have to enjoy trying things, and learning from their mistakes.
- Viewed by others as a successful problem solver. The best ideas for a new business are solutions to a real customer problem, rather than great ideas looking for a market. Creating a new business means tackling one difficult problem after another, until success suddenly appears. Entrepreneurs see problems as milestones to success, not barriers.
- Don’t demand or expect immediate gratification. Seth Godin once said “The average overnight success in business takes six years,” and he is an optimist. For some entrepreneurs that success is financial, and for others it is a legacy of good deeds. Because it takes so long to get there, it is important to be happy with the journey.
I’m not suggesting that you need to fit every aspect of my view of an entrepreneur’s mentality for success. Certainly there are winning businesses run by people from every background and personal style. But if you are looking for investors, team members, and demanding customers, it helps to understand what their biases might be in committing to and helping the ideal partner.
I do believe that if every aspiring entrepreneur spent at least as much effort looking inward, understanding their own drivers and preparing, as they do in working outward by building solutions, seeking investors, and writing business plans, the startup success rate would go up.
Overall, the entrepreneur mentality is a state of mind that enjoys the activities and requirements of starting a business. Happiness is more likely to lead to success, than success leads to happiness. Are you certain that your desire and expectations of being an entrepreneur are being driven by the right perceptions?
Startup Professionals Musings
I really enjoy the process of starting up. I like ideation as well as actually building things but once everything is in place and ready for customers, I can't get myself to market what I've built. I just want to move on and build my next idea.
Perhaps I don't like marketing? Perhaps I have shiny object syndrome? Perhaps I'm afraid of failure? I'm not exactly sure why but I know it's a problem.
Anybody else experience this problem and how did you overcome it? Any advice would be greatly appreciated.