DO YOU HAVE A ‘LIFESTYLE BUSINESS’?
Have you created a saleable business, or just a job for yourself? And how do you change that?
‘Lifestyle business’ is a term that, understandably, gets up many entrepreneurial noses. When used in certain circles, it can sound patronising, or as if the speaker is seeking to diminish a business’ achievement in getting started.
So firstly, we’d like to make one thing clear: there’s nothing wrong with having a ‘lifestle business’, one that can’t really be sold easily or grow exponentially. Creating a sustainable job for yourself and others is a real achievement. However, many entrepreneurs do want an exit strategy for their business – whether they want a big payday, or simply to do other things later in their working life. In that case, having a business that they can’t walk away from is a problem.
How do you tell if you’re running a lifestyle business? There’s one easy litmus test. Imagine the business if you weren’t working in it, and with another employee drawing down your salary: could it work? If you can foresee it humming along under a competent manager, you have a business that you can sell. If you instead see the whole thing coming apart within a few months, then you’re working in a lifestyle business – one that you just can’t sell and walk away from.
Some business just can’t advance beyond this dependence on the founding entrepreneur – but some can, even well after the start-up stage. If you want to shift away from running a lifestyle business to operating a more independent (and saleable) company, there are a few key steps to take.
Delegate and Replicate
Many businesses are dependent on an entrepreneur who works punishing hours for comparatively little financial reward. However, does this have to be the case? If you look at your team, they may well be able to take some of your workload, especially if this is presented in the right way: most good employees will welcome added responsibility, for example, if this means that they’re being groomed for management positions as the company grows. Taking some of this day-to-day work away will let you work on the business rather than in it. In time, your goal should be to replicate your own role within the company – this will allow you to adopt a strategic position, identifying opportunities, trouble-shooting and stepping back from day-to-day minutiae.
Maximise Profit
Growing a business can be expensive, especially when you’re looking to take on new employees and manage the cash-flow ‘lag’ that comes with new clients. In order to do this, you’ll need to maximise the profitability of current and future clients – this takes discipline and nerve. You can find some useful advice here on getting through the process.
Tie Down Clients
Many businesses could operate without their owner doing the day-to-day work, but are dependent on them because of client relationships. If your customers work with you because of you (rather than the advantages of your company), then that’s an issue you need to address.
Getting customers to feel that they’re working with a company rather than the entrepreneur requires a deft touch, and patience. Introduce them to members of your team, and gradually get them used to dealing with those people rather than yourself. In the early stages, of course, you will probably need to reassure them that you’re just a phonecall away if an issue requires your input. Also, tie clients down to long-term contracts if possible – if you’re looking to sell the business, this will reassure a potential buyer that the customers won’t just vanish when you leave yourself.
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