#1 Difference Between Lifestyle and Growth Business

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I finally figured it out today. You know, when there’s that thing that has been nagging you for a while and you know the answer is out there, but you just don’t know what it is. There’s a continual debate between lifestyle and growth businesses, specifically, what’s the difference between the two. Here it is, the number one difference between a lifestyle and growth business:

Growth businesses have a repeatable sales process that doesn’t involve the owner/founder.

It seems so obvious. I’ve talked to many entrepreneurs over the years and most talk about increasing revenue, but it is solely dependent on them. The entrepreneurs with a growth business, in growth mode, are working on optimizing their repeatable sales process. There’s a fundamental difference between lifestyle and growth businesses, and the repeatable sales process is it.

What do you think? Do you agree or disagree?

Comments

13 responses to “#1 Difference Between Lifestyle and Growth Business”

May 5, 2010

Raghu Kakarala

Its an interesting take on the the difference between lifestyle and growth – I think another way to think about it is lifestyle businesses have fairly consistent but ultimately limited positive free cash flow while growth businesses have highly variable negative or positive free cash flow

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May 5, 2010

Vladik

Dead on. Although I, as some other people have mentioned before, don’t like the term lifestyle. Not exactly a lifestyle when they work as many hours as anyone else in a founder position. ‘Boutique’ may be more like it, since you aren’t planning on growing it and the business is solely focused on your sales.

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1. May 5, 2010
  
  davidcummings
  
  Thanks Vladik. I agree that ‘lifestyle’ isn’t the best term but people know what it means.
  
  Reply
May 5, 2010

Paul Freet

I have always contrasted a scalable business from a lifestyle business differently. A scalable business is one that can grow faster than you can add people. Founder involvement is irrelevant.

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1. May 5, 2010
  
  davidcummings
  
  Thanks Paul. I agree that ‘scalable’ is a good word to describe the type of business. My observation about a repeatable sales process comes from talking with hundreds of entrepreneurs, many of which aren’t in technology, but have nice companies.
  
  Reply
May 5, 2010

Matt Hyatt

I don’t know about that. I think the ultimate measure of a successful lifestyle business is the amount of free time it creates for the shareholder(s). If the shareholders can create and implement a repeatable system for all business processes, they can enjoy any lifestyle they choose.

Paul, I’m going to challenge your definition of a scalable business a bit. It seems to me that any business can grow faster than it can add people. By your definition, all one has to do is successfully sell deliverables without possessing the proper resources to deliver them. Scalable businesses, in the context of tech companies, are those possessing a deliverable that sells (really well) all by itself, requiring no sales team at all, demanding operational resources that don’t yet exist.

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1. May 5, 2010
  
  davidcummings
  
  Thanks Matt. That’s an interesting angle about freedom being the measure of success with a lifestyle business. I tend to agree with that (even though it isn’t related to a scalable/growth business).
  
  Reply
May 5, 2010

Scott Smeester

Are there really business owners out there – regardless of business/company growth model – who’s not trying to implement repeatable sales processes? An entrepreneur that is, like many of us in this economy, involved with the day to day sales doesn’t necessarily have a limited growth outlook and/or the desire to stay small. I’m hell-bent on developing processes and systems that lead to explosive sales growth while maintaining a lifestyle (to me what is non-negotiable is time with family).

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1. May 5, 2010
  
  davidcummings
  
  Thanks Scott. I know a bunch of entrepreneurs who aren’t trying to build a repeatable sales process. In addition, if they go on vacation for a week or month, no proactive business development gets done.
  
  Reply
June 9, 2011

Growth startup v/s lifestyle startup: why should there be a difference at all? | Paras Chopra’s Blog

[…] and again, people try to distinguish between two kinds of startups: growth and lifestyle. Broadly speaking, here’s […]

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July 31, 2011

Entrepreneurs Want Accountability Without a Board « 10,000 Startup Hours – David Cummings

[…] of directors. This makes sense as these are bootstrapped companies, and many would be described as lifestyle businesses. Here’s the interesting part: when I talk to these same entrepreneurs, they want more […]

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April 10, 2016

Alan

Theres not much detail into the subject and when you talk about lifestyle, theres so much to explain about that as its too narrow and depends on the location location location.

Some places obviously are going to be better for you to have more of a lifestyle than others.

Like taxes for instance

Federal tax is 39.6% and state tax is 10%

So to maintain a high qualty of like you have to work twice as hard as those that had businesses 30-40 years ago and be in a state that has no state tax and put your assets into the LLC to save you a lot.

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November 30, 2017

Lenny

lifestyle firms tend to die with their founders while growth firms are perpetual

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