I’ve been on a “lifestyle business” track for a while now, and one of the questions I get from dreamers — people who are considering building their own business — is what kind of business they can build.
First, it’s important to understand that a lifestyle business is nothing more than a business you own designed to support the kind of life you want to lead. There are no limits on size or revenue. The “lifestyle” part of the name simply says that you’re going to consider how business decisions will impact your lifestyle before making the final decision.
But the kind of business you choose to build will fundamentally impact your lifestyle. Some businesses will require that you spend a lot of time developing technology systems; others will require you to spend most of your time delivering services to your clients.
There are literally thousands of businesses you can build to create the lifestyle you want. These businesses can be divided into four (or five) main categories, and within those categories you can design three different kinds of products or services to make it easier to create the lifestyle you want.
Here’s how this works.
Four (or five) kinds of business
Lifestyle businesses can broadly be divided into two groups: product businesses and service businesses. Each of these can be divided again to give us four main kinds of businesses:
- Own product businesses provide products you manufacture. The range here is huge; everything from home-made produce to art to clothing.
- Sourced product businesses usually curate a carefully selected range of products for a very specific niche. You can specialise in anything from flashlights to hammocks to notebooks — and everything in between. You source the products from anywhere in the world.
- Professional service businesses usually have training in the arts or sciences. This can include consulting, law, website design, graphic design, software development, engineering and so on. Professional services can be licensed (as in the case of legal or medical services) or unlicensed.
- Personal services businesses provide (guess what) personal services to individuals. This includes services like hair styling, personal image consultants, wardrobe consultants, and so on.
There is a fifth type of business that is worth mentioning, and this is the platform business. A platform business brings together buyers and sellers; think Uber, AirBnB or even credit card companies.
Each of these business types have implications for your lifestyle.
Lifestyle considerations for own product businesses
When you’re manufacturing your own products you’re obviously going to spend a lot of time in the manufacturing, sales and delivery of your own products. You will have to devote a lot of time getting your manufacturing processes right, and depending on the price of your products you will have to scale up significantly to generate comfortable or indulgence-level income.
Own product businesses often have significant infrastructure requirements and you will have to have, or find, the funds to expand to where you want to be. This may place additional strain on you and your resources. You will also need to think about competition — no good product lasts long before others jump on the bandwagon. On the upside, if you have a very small niche you can stay ahead of the competition; brands like Charles Simon sell luxury luggage at eye-watering price points (think $19,000 for a carry-on).
Lifestyle considerations for sourced product businesses
Sourced product businesses are easier to start up because you don’t have to invest in your own manufacturing. You can source products from all over the world, and your main activities are going to be sourcing, quality control and sales. You may not even have to worry about delivery; suppliers will be willing to brand their products with your label and deliver them to your customers (if you have sufficient volume).
The success of a sourced product business is most often based on your ability to curate carefully selected products in a very specific niche. This is where you get to indulge in your passion; whatever it is, there is probably a market big enough to support the lifestyle you’re aiming for. But you will face stiff competition; if you can source products from one supplier, others can as well. Sourcing from a wide range of suppliers, careful presentation and being on top of your game in SEO are keys to maintaining a competitive edge.
Lifestyle considerations for service businesses
Professional and personal service businesses have similar advantages and disadvantages. In both cases, you have expertise that you can sell; in both cases you will face a scaling problem. As long as you personally have to deliver your services, you are limited by the amount of time you’re willing to work and how much you can charge. Professional services are actually more difficult to scale than personal services because your expertise has to be duplicated, at least to some extent.
Neither of these should deter you from building a service business; your expertise is something relatively few people have. You will however have to get decent at marketing and selling; something professionals are often not trained to do. If you can learn to do this well you are on to a good thing — I know one-person coaching businesses that generate income approaching seven figures.
Lifestyle considerations for platform businesses
Platform businesses have immense scaling potential — if you can get over the hurdles. The first hurdle is investment; platform businesses (by definition) require a platform, and these kinds of platforms can be expensive to build. The second hurdle is lifestyle; if the business does take off (like Uber or AirBnB did) it will become an all-consuming endeavour.
But you don’t have to scale to that level. One of the businesses I’ve worked with is IMLocum — a platform that brings together veterinary clinics with temporary staff. At the time of writing, the founder is rolling out in western Canada, but her market is effectively unlimited and does not require scaling the back office to expand; the platform can manage the scaling almost indefinitely.
The 3-prong strategy for service businesses
The 3-prong strategy is a powerful way of looking at how you can scale a service business. The basis of the strategy is that you can deliver your services in three different ways:
- 1:1 services are where you work with each of your clients individually. Think consulting or web development services. Your clients pay a premium for your expertise.
- 1:n services are delivered to groups of clients at the same time. This usually takes place in the form of seminars, webinars or group programs. The cost per individual may be lower, but your revenue can be higher because you’re delivering your service to multiple clients at the same time.
- 0:n services is where you build a “service” once and sell it many times. Info products, like a self-study course, are a good example. The cost of these “products” is lower than in the other two prongs.
The 3-prong strategy is attractive because it holds out the promise of more income in less time (in the 1:n prong), as well as passive (or mostly passive) income from the 0:n prong. But as usual, the prize at the end of the rainbow is not that easy to reach. Here’s why:
- Workshops, webinars and seminars are notoriously difficult to fill. The more time you’re asking people to commit to, the more difficult it is. Repeatedly hosting the same workshop in the same area quickly exhausts your market.
- You need a substantial market presence and email list to make a decent income from info products. It takes a long time to build both. Think years, not months.
To overcome these barriers, you need time to build up your market presence and an email list (for 0:n products). And while you’re doing that, you still need income, and that means you will have to do 1:1 work.
So if you’re building a service business, and you want to leverage the additional income potential from the 1:n and 0:n prongs, you should think about a strategy where you start out with the 1:1 prong as your primary source of income, and then phase in the 1:n and/or the 0:n streams over time.
Not all service businesses will be able to use this strategy. If your services lend themselves to the additional prongs, you can build a better lifestyle.
Combining business types
You don’t have to stick to one business type; you can combine them if there is a market need.
For example, if you’re a software developer you will usually be selling your software development skills. But you can combine that with a product you developed to help your clients manage their software development process.
As a consultant, you may do most of your work delivering 1:1 services to your clients. But you could combine that with an outsourced service offering where you take on part of your clients’ operations (usually not mission critical).
If you’re a brand specialist, you could do your best work in the 1:1 prong but you could also capture the hearts and minds of potential clients by offering workshops (the 1:n prong) that show them how to develop their own brand.
And you can even add physical products to something like a productivity course; a custom planner, calendar or specialised notebook could be a great addition.
A lifestyle business is simply one where business decisions are made with a strong consideration for how they will affect your lifestyle. You don’t have to be the next Google or Tesla; but at the same time there are no real limits on how big you can grow the business.
There are literally thousands of business ideas suitable for a lifestyle business, and they can be grouped into four or five major categories. Each category has implications for what you will be doing most of the time. Your skills and personality will determine the type of business you will most likely find attractive. And the kind of business will determine the lifestyle you will eventually be able to lead.
So if you’re dreaming — or even if you’re already on the way — consider these business types and the 3-prong strategy and how it will affect your life. After all, life is not a practice run, so we may as well make it fun.
What you can do now
Click on the image below to download the Beginner’s Guide to the Tornado Method. This is the only framework that captures all the elements of a successful business — get these 11 right, and you will not only have a successful business, you will have a life as well.
Good luck building your business.
Originally published at blog.britewrx.com on September 11, 2018.