In college, venture capitalist Pete Coyne introduced my entrepreneurship class to the concept of a Lifestyle business vs. an Equity business—what I call your agency Growth Style:
- Lifestyle (LS) agency: Your goal is to run a profitable business to fund a comfortable lifestyle. This is the “default” for the agency business model.
- Equity (EQ) agency: Also known as a “high-growth” business, your goal is to sell the agency (or, unusual for agencies, have an IPO). Typically built around making highly-scalable products, but doable in the agency business model if you make the right decisions (and execute well) along the way.
This helps you make better decisions, because happy agency owners typically make business choices that are consistent to their agency Growth Style on the Lifestyle (LS) vs. Equity (EQ) continuum.
QUIZ: Do you lean toward a Lifestyle or Equity agency?
So, which way do you lean… and which one do you want to be if you’re not there now?
LIFESTYLE AGENCY: Put quality of life first
You probably want (or have) 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 an above-market salary and reasonable profits, but don’t need huge distributions each year
Sound like you? You probably lean toward owning a Lifestyle (LS) agency. You’ll structure your agency around maximizing quality of life, while letting profit maximization slide… a little.
Running a Lifestyle agency means planning for the future, but ultimately living for today.
EQUITY AGENCY: Maximize valuation first
You probably have (or want) an Equity (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*
- Want to work with other “work hard, play hard” types, and frequently socialize with coworkers outside of work
- Are OK making a medium-sized salary now if it means having money to reinvest in the agency so you can sell it for a lot of money in a few years
Sound like you? You probably lean toward owning an Equity (EQ) agency. You’ll structure your agency around maximizing company valuation, while potentially letting quality of life slide.
Keep in mind that you may not get the acquisition price you want, or the final terms may not fit your goals; in that case, you may later regret the sacrifice.
* Reality check: Selling an agency typically doesn’t produce enough money to afford buying a private jet or a private island.
So which agency Growth Style is better?
Neither is “better” than the other. When I work with clients, my advice is always within their values.
Choose the business approach (Lifestyle vs. Equity) that gives you the life you want, and then build everything else to support that.
Most people are in the middle of the spectrum
Most agency owners are somewhere in the middle of the Growth Style continuum—leaning toward either Lifestyle or Equity, but wanting aspects of both.
I customize my advice to each agency owner’s Values, Goals, and Resources—so I can help whether you lean toward Lifestyle or Equity. 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.
If you’re undecided, I can help you find the right answer—but I can’t “tell” you which way to go. And you and your business partner(s) need to be on the same page about Growth Style—I can’t help you optimize 100% in both directions at once.
Question: Does your agency Growth Style lean toward Lifestyle or Equity? Or are you undecided?