These terms may be new to some entrepreneurs. I will admit, I had never heard them until much later in my entrepreneurial career. But how you answer the question makes a difference in how you make your journey through business ownership, particularly as you’re considering a growth strategy.
Let’s start with some common definitions as provided by author Ryan Lazanis, CPA, a CPA from CA that I follow for firm development advice:
• A lifestyle business is one where the owner can work minimal hours and make good money. But their goal isn’t to build a massive company.
• A scalable firm is one where the owner wants to grow as large as possible. Work-life balance might be a consideration, but it’s not top priority.
There is no right or wrong answer to the question; this one is based purely on the preference of the owner. I, for one, consider my firm to be a lifestyle business. I wanted, very briefly, to have a larger firm with multiple locations; then I tried it and watched it all fail. It nearly broke my entire business. So, I re-evaluated my choices and decided I wanted a lifestyle business.
In our Grow-Up Consulting solution, we see lifestyle businesses as well as scalable businesses. That’s because a lifestyle business still needs to live in growth mode from time to time. There are so many factors that can lead a lifestyle business to decide to grow, but here are a few:
• Revenue risk is not diversified; this means that too much revenue is tied up in a single or a few customers;
• Economic conditions require that the company change course and it needs to begin looking for a different customer-type;
• The owner decides that the company should stop providing a particular service to a customer-type and move to something more profitable or more suitable to the company’s vision (this is a particularly challenging area of growth but it can be extremely lucrative if done properly).
Growing without a strategy is a worse idea than not growing at all, in my opinion. Uncontrolled growth has killed many small businesses; I’ve seen it happen. So, when customers come to us with questions regarding growth, we always respond in the same way: “Growth is a fine strategy, but it has to be a strategy and not just a state of being.”
If you have questions regarding a growth strategy for your small business, check out our Grow-Up Consulting solution. It may be just what you need to highlight your path to growing your small business strategically!