Venture capitalist Pete Coyne spoke to one of my entrepreneurship classes in college. He introduced us to the concept of a “lifestyle” business versus a high-growth business:
- Lifestyle business: Your goal is to earn enough money to enjoy a comfortable lifestyle. Often a services business.
- High-growth business: Your goal is to sell the company or have an IPO. Typically built around making highly-scalable products.
It’s a great framework for looking at things, because the happiest agency owners I know make business choices that match their natural preference on the “lifestyle vs. high-growth” continuum.
QUIZ: Are you a lifestyle or high-growth agency?
So, which one are you now… and which one do you want to be if you’re not there now?
LIFESTYLE AGENCY: Quality of life first
You probably have (or want) a “lifestyle” agency if you:
- Wish you could cut back on your hours
- Love that being your own boss means you can go to your kids’ soccer games
- Want an upper middle class lifestyle, with money for nice vacations and a good retirement
- Want to work with others who work hard but who have priorities outside the office
- Make a nice salary and reasonable profits but don’t need big K-1 distributions each year
Sound like you? You probably want to own a lifestyle business. You’ll structure your agency around maximizing quality of life, while letting profit maximization slide.
HIGH-GROWTH AGENCY: Maximizing valuation first
You probably have (or want) a high-growth agency if you:
- Don’t mind working long hours but wish you were using them more efficiently
- Love that being your own boss means you can invest in growing the business, like creating a product that’ll make money while you sleep
- Wish you could afford a private jet, to fly to your own island in the Caribbean*
- Like working with other work-hard/play-hard types, and socialize with coworkers outside work
- Are OK making a medium-sized salary now if it means having money to reinvest in the business so you can sell it for a lot of money in a few years
Sound like you? You probably want to own a high-growth business. You’ll structure your agency around maximizing company valuation, while often letting quality of life (e.g., vacations and time with your family) slide.
So which is better?
Neither. When I work with clients, my advice is always within their values. Choose the business approach (lifestyle vs. high-growth) that gives you the life you want, and then build everything else to support that.
Most people are in the middle
I find most agency owners are somewhere in the middle—leaning toward either lifestyle or growth, but wanting aspects of both. I can help with that, too.
I customize my agency consulting and business coaching advice to fit your values. This means I’ll support you in your goals (and help you figure out your goals if you’re not sure). This also means if you’ve inadvertently built your agency around a model that’s opposite your personal values, I’ll help you fix that.
Concerned your agency isn’t going in the direction you want? Contact me to set up a brief, free, no-obligation call—with a few questions, I can share a ballpark on how hard (or easy) it’ll be to get where you want to go.
* I can’t guarantee you a private jet. But I bet I can help you figure out how to justify the time and expense for that vacation to Jamaica you keep putting off.