Lifestyle vs. Growth Business: Pick One or Pay Later
The fork in the road every business owner faces, and why choosing wrong makes everything harder.
Taking a brief break from the Business Pillars series because, well, I just had to write about this topic. It’s come up a half dozen times in the last few weeks.
It first surfaced multiple times last week when I was presenting to a group of 50 business owners with sub-$2 million revenue businesses. In and out of Las Vegas in 20 hours. Yes!
Then it came up again earlier this week when I was having coffee with a new connection, thanks to my friend Rachel in Sacramento. (Thanks, Rachel!)
In both situations, this idea of a “fork in the road,” so to speak, when it comes to starting and building a business came up. That fork is whether to build what I’ll call a Lifestyle Business or a Growth Business.
Let’s define the two.
Lifestyle Business
Lower revenue, with a typical industry-wide ceiling in the $5-7 million range
Higher net profit margin, often in the 10–20% range.
Ownership often works in the business on a daily basis.
Consistency and stability are the hallmarks: same office location, same customers, same approach, same tech for decades.
Very small team, or perhaps just the owner-operator and a single support staff member.
Single geographic location.
Baseball analogy: “Every year, we hit singles and doubles, and we hit for a high batting average.”
Growth Business
Higher revenue, often in the $10 million-plus range.
Lower net profit margin, and sometimes even unprofitable, as scaling is the dominant focus.
Ownership typically relies on a management team for day-to-day operations and, if they work on the business at all, it’s on the business, not in it.
Change is the hallmark: opening new locations, hiring more team members, acquiring new customers. Almost everything changes every three years or so.
Large team, often augmented with outsourced workers and AI.
Multiple geographic locations and/or a distributed sales force.
Baseball analogy: “Every year is either a home run or a strikeout. Risky, but fun to watch!”
Why This Matters
There’s no universal “right” answer between these two paths. But there is a right answer when it comes to two things: the personality of the owner-operator and the product or service the business sells.
Trying to build a Lifestyle business when you’re wired for growth leads to endless frustration and a constant yearning for “more.” Trying to build a Growth business when you’re meant for a Lifestyle business leads to doom.
And as a corollary, some products and industries, due to a host of factors like price point, market size, complexity, and R&D requirements, are simply better fits for one model or the other.
Attempting to swim upstream against either the owner-operator’s DNA or the market’s fundamental constraints is a fool’s errand.
So What Do We Do With This?
Two things: research and reflect.
Research means gathering the data you need about your product or service to determine which path fits best. Sometimes that research happens before you start or before you attempt to scale. Talking with experienced owner-operators in your space is a great first step. Ask as many questions as you need to determine how likely it is that your product or service can scale. Have others done it before? Are most businesses in your industry more “Lifestyle” or more “Growth”?
Hint: if no one else has figured out how to scale it, you likely won’t either. Don’t be offended by that.
Reflection means honestly assessing your own wiring when it comes to Lifestyle versus Growth operations. Most business owners I’ve met are distinctly wired one way or the other, and miserable when they try to go against the grain.
And I hate to say it, but you may realize your product or service and your personal wiring are a mismatch. You’ll forever be the “growth guy or gal” with a Lifestyle product or industry. Or you’ll be the “lifestyle guy or gal” in a Growth product or service, and the competition will annihilate you.
Both outcomes are terrible. Be warned.
Wrap Up
If you’re reading between the lines, you’ll sense the theme of this newsletter: be honest with yourself. Be honest about how you’re wired, what you want, and what your product or service is truly capable of.
You owe it to yourself, your team, and your loved ones to sit with this topic for a while.
Ignoring it may cause you to look up a decade from now and wonder why “none of this is working.”
My sister and I launched a podcast for sub-$20M business owners and operators. Episode 4 is out!
We’d be honored if you’d give it a listen! You can listen on Apple Podcasts, Spotify, or whatever platform you prefer!
Things I've Enjoyed Lately: I’m a big stool guy. I know, sounds odd. But it just feels a bit better to transition from a stool to standing throughout the workday than just sitting in a chair. Kinda mixes it up a bit more. So when I found the Lofi Stool at Living Spaces, I had to have it. And it’s glorious. A soft but supportive cushion, sturdy back rest, high-quality piston for lifting/lowering, and great price point. Grab one. Or three! (It’s also made from “faux” leather, which must be a very common animal because I see furniture made from its hide all over the place!)