How to Succeed as a LIFESTYLE Entrepreneur

Not everyone wants to ‘rule the world’ and create a huge business – in fact in my experience almost all new businesses end up being small and serving the entrepreneur’s needs rather than turning into a household name.

This is not lauded in the press but frankly why else have a business? It should serve your needs, you have sweat blood and tears to make it a success it should give you what you personally want…

In my work with the London Business School, the very first question I ask MBAs is "what do you want from your life?" along with questions like "what sort of person are you? – sporty, couch potato", "what skills do you have", "who do you know", "what resources do you have".

What I am trying to find out is if they will be matched to their ambitions in the business they want to start. In most cases I find that their business idea will not deliver what they actually need from it…So many times I have started a business to get a few years in and find that it’s soaked up all my time and life. And to find that it’s not ‘serving’ me but is actually making life difficult and not meeting my needs at all. Dumb, very dumb.

So now I take care and try to ensure that my business will achieve the right things for me and my family – I go in with my eyes open and know it will not always be ideal for me but it will head towards my ultimate goals for my life.

Now, you may want to create a nice family business or enterprise that meets your needs, that’s really great, these type of businesses I call ‘lifestyle’ businesses.

To work out if this is for you I have found a very useful chapter by Gary Schine, from his book, How to Succeed as a LIFESTYLE Entrepreneur:

Why Do You Want to be a Lifestyle Entrepreneur?

First and foremost, you should be crystal clear why you want to be a lifestyle entrepreneur.  I can pretty much guarantee there will be risks, sacrifices, and other hardships along the way.  So before signing on, it would be helpful to know why you’re putting yourself through the challenges that you will face.

Beyond defining the why, you also need to carefully consider how your business will help you meet your lifestyle objectives.  If your reason for wanting to start a business is to have more time to spend with your kids, and your business concept involves storefront retail, your method is probably not in line with your objective.  There is nothing wrong with running a retail shop for someone whose main goal is to meet lots of people who are interested in the kinds of goods that ship is selling.  However, retail shops demand lots of fixed work hours and, more likely than not, lots of late afternoon, weekend, and even holiday hours – hardly the best structure for someone looking to spend time with kids on a school schedule.

On the other hand, if time flexibility is your main goal, a web-based retail business may work quite well for you.  Although your online store can be open 24 hours a day, you can fill your orders, plan your marketing, and pay your bills any time you wish.  Of course, if your goal is to get out of the house and meet people, an online business just won’t cut it.

A good exercise would be to list your goals concisely in order of their importance to you.  Are you considering starting your business to practice a field you love?  Or is your goal to contribute to the world with business as your vehicle, or is it to enable you to pursue your passion for travel?  Is increasing your income a top priority?  Perhaps your most important goal is setting up a business that can involve your children on a day-to-day basis.

The rest of the exercise is to list the ways in which your business concept will help you reach your goals and then list the impediments you may face along the way.  If you’re going into business because you want to practice the field you love on your own terms, consider how much time you will spend running the business rather than practicing the field that your business is supposed to enable?  If your goal is to travel for months at a time, can you realistically structure your business to permit that kind of time flexibility?  A business that caters to, say, winter tourists in a ski area, may well permit such escapades in the summer months, whereas one with clients expecting services year round does not.

Despite my being a dedicated advocate of lifestyle entrepreneurship, I also advocate proceeding with caution.  There is no point in going through the effort of setting up a lifestyle business if it won’t help you toward your lifestyle goals.  So before proceeding any further, please honestly assess how your business and its structure will and won’t help you toward your lifestyle goals.

The Reality of Risk

By its nature, any new business involves risk, so anyone planning to go into business must be prepared to accept a certain degree of risk.  However, this doesn’t mean a would-be lifestyle entrepreneur has to be a high-risk taker or gambler; in fact, quite the opposite.  Although the stereotypical (and mythical) entrepreneur is a big risk taker, the reality is very different.  Most entrepreneurs are comfortable with modest risk but quite uncomfortable with big risks.  Further, most entrepreneurs greatly prefer risks in which they can influence, if not fully control, the outcome.

Joe Mancuso, a professor and author of books about small business, has studied the issue of entrepreneurs and risk, and had this to say;

`"Entrepreneurs seem to thrive on the 3 to 1 shot – a gamble they judge to be exciting but realistic.  Although they are unwilling to gamble on long shots, they are more willing to take a chance if their individual skills can affect the probability of success.  (How to Start, Finance, and Manage Your Own Small Business, Prentice Hall, 1984, p7)

A good friend of mine is a wealthy businessperson who has owned 15 different businesses over the years.  He is read, willing, and able to invest in new small business opportunities and does, in fact, make one or two investments a year, risking several hundred thousand dollars of his own money.  However, he very seldom invests in the stock market.  Money he has that is not invested in small, privately owned business ventures is invested very conservatively in corporate and government bonds.  For someone who is not shy about investing in high-risk small companies, his investment strategy vis-à-vis to public companies seems uncharacteristically conservative.

When I asked him about this, his reply came quickly, "Sure, I can buy shares of IBM or Microsoft or any other publicly traded company.  But even if I invested all my money in any one of these companies, I would not have control nor even significant influence over what happens to that investment.  When I invest in a small company, I’m taking a much bigger risk to be sure, but I have a good measure of control over how that investment turns out".  That illustrates the philosophy regarding risk held by many entrepreneurs; risk is acceptable when I have some control over the outcome.

So, in essence, you need confidence in your ability to do what you set out to do, because you’ll have ultimate control and ultimate decision-making authority.  You won’t be able to blame an incompetent boss or colleague or co-worker or anyone else.  Further, customers and clients will come with their own personal needs and idiosyncrasies.  They won’t comply with your needs and won’t even necessarily be reasonable, at least from your perspective.  Nevertheless, you’ll have to deal with them as they are and take responsibility for the outcome of your customer relations efforts.

Failure Is a Possibility

By definition, risk means the outcome may or may not go the way you hope it will.  A corollary to accepting risk is accepting the possibility, and sometimes the reality, of failure.  In small business as in life, things don’t always work out as planned and hoped.  I can’t recall any successful entrepreneurs I know who haven’t had a least a few business failures along the way.  But they don’t dwell on the failures.  Rather, they look at them as bumps in the road and unfortunate exceptions – and, in some cases, valuable learning opportunities.

Some people, in fact, argue that a true entrepreneur is someone not afraid to fail.  The person  who tries one business venture, sees it fail, and then never tries again is hardly an entrepreneur.  The person who tries a venture, sees it fail, gets up, brushes himself off, and asks, "How can I learn from this for next time?"  is the entrepreneur I’d bet on.  There will be disappointments.  They may or may not be as big as the failure of an entire venture, but you’ll have ideas that don’t pan out, sales that are lost, advertising efforts that don’t yield results, and more.  This is the definition of risk; some things work, some don’t.  Capitalise on the winners and learn from the failures.

Learn to Be Analytical and Objective

Much of the coursework in an MBA programme involves learning the various facets of modern business.  Like other MBA students, I studied marketing, accounting, finance, and general management.  By far the most important principle I learned, however, was not the focus of any particular course.  That principle was the need to objectively think through and analyse business problems and opportunities.  There is little room in business school or in business for wishful thinking or supposition.  There is room for judgement, even for gut feeling, but they need to be objectively analysed with full consideration of the known facts and research.  More important, there must be an overall business objective – a framework for proceeding according to a clear and stated direction.  That framework can be to become a public company within five years; in the world of lifestyle entrepreneurship, it can be to limit your work to 20 hours per week so you can write, or ski, or spend more time with your family.  Obviously, a company with the former goal would make different decisions along the way than a company with the latter goal.  The point is that business direction would be set based on the chosen objectives, and decisions along the way could be evaluated based on those objectives.

Problems and opportunities need to be evaluated based on their challenges and merits and their impact on the overall objectives and purpose of the business.  Though fe business professors would approve of, or even understand, the objectives of a lifestyle business, such objectives are no less legitimate than more traditional business objectives like going public or dominating a niche.  Though the ends may differ, lifestyle entrepreneurs must apply the same objective analysis to their businesses that other business managers do.

It is often helpful to clearly define a problem or opportunity and list three or four different options for dealing with that problem or opportunity.  In this analytic way, the most appropriate option for a given situation can be chose, based on well thought-out criteria.  For example, suppose you’re a self-employed computer programmer accustomed to short-term projects that pay $3,000 to £5,000.  Then suppose you are asked by a company to prepare a proposal for a contract that would involve on-site work at seven different locations in the United States and Europe.  The job has to be completed in three months; it involves programming in a language that you don’t  know.  The job would therefore require at least one other programmer who knows that language.  The entire contract would be in the $30,000 to $50,000 range.  You define your four options as follows:

  1. Pass on the job entirely.
  2. Contact a larger programming company that you’ve worked with in the past and make a deal to try and get the job for them with a commission for yourself as well as some of the work.
  3. Do the proposal as requested and be ready to hire the requisite programmer at a moment’s notice; also be ready to gear up for a job ten times the size of your normal jobs.
  4. Try to persuade the company to work with you on the parts you can readily handle and offer to assist them in (but not take responsibility for) finding another programmer for the parts you can’t handle.

Any one of these options is viable.  However, if you were committed to being a lifestyle entrepreneur with the business objective of limiting your work-time commitments, the third option is probably not your best one.  On the other hand, if your aspiration is to grow rapidly, the opportunity offered by option 3 could be seen as your potential big break, so only the third option would make sense.

Sometimes the outcome of an objective analysis of your business needs runs counter to the objectives of your profession.  Following business school, I re-entered the video production business.  By applying the analytical tools of business that I had learned, a problem became apparent.  Sometimes, the best decision from a business perspective is not the best decision from a video production perspective.  It is invariably more economical to get a job done in the least amount of time possible, because every additional day taken to complete a job increases expenses and lowers the profit margin.  However, video production is partly an art, and time constraints are therefore not well tolerated.  Translation; sometimes we had to make choices between an adequate video that was profitable or an artistically superb video that was less profitable.

Different people may have made different decisions in a circumstance like this.  There may be no universal right or wrong, but in certain situations an objective analysis will yield a better answer from a business perspective.  To the extent that it’s reasonable, business decisions should be based on an objective analysis of a situation and the available data as well as in keeping with your overall objectives.

How to Succeed as a LIFESTYLE Entrepreneur (Running a Business without letting it Run Your Life by Gary Schine (ISBN No. 0793169413-4)

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