To begin your journey as an entrepreneur, you will first need to consider whether you want to pursue a “lifestyle business” or a “go big” business.
Business owners come in all forms. There are the Bill Gates and Steve Jobs of the world who took their businesses from their garage to being publicly traded juggernauts. There are thousands of entrepreneurs who had a good idea for a product or service, started a business and made a great living with a hundred or so employees and reliable customers. There are the highly skilled professionals who go out on their own to start small consulting, law or other service oriented firms. Finally, there are the thousands of small “Mom and Pop” business owners who run their business out of one or a few locations.
If you want to begin a journey as an entrepreneur, you will need to consider whether you want to pursue a “lifestyle business” or a “go big” business. Your choice will ultimate dictate your approach and many key decisions.
A lifestyle business is generally considered to be a business that is established by its owners primarily to provide a platform from which they can enjoy a particular standard of living or level of income. Entrepreneurs who run lifestyle enterprises typically are not focused on developing a home run shareholder exit strategy or on scaling their businesses exponentially so they can attract institutional investors. Often, this is because the effort required to scale would likely hamper the lifestyle the business is intended to support.
Businesses requiring large infusions of capital in order to purchase manufacturing equipment or conduct technology research and development, for example, are not good candidates for the entrepreneur who is interested in a lifestyle business. On the other hand, creative and service oriented businesses – such a marketing firms, restaurants, small retail boutiques or solo or small law practices or accounting firms – tend to be quite suitable as lifestyle businesses because they are established for reasons beyond the monetary return on investment (more flexibility, the pursuit of a lifelong passion, being more in control of your destiny, etc.). A lifestyle business relies heavily on the skills, efforts and contacts of its founders, a situation that often creates a cap on the enterprise’s ability to scale. In order to scale, a service business must add people while simultaneously adding customers.
By contrast, businesses like Apple, Tesla Motors and Microsoft are “go big” businesses. They are business that can scale to millions or even billions of dollars in revenue. They can create amazing wealth for people who get involved early and can touch the lives of millions of people. A well-run lifestyle business could generate just enough to pay the bills each month or it could turn its owners into millionaires over the long haul. A “go-big” business could land its founders on the Forbes 400.
Technology companies often fall into the “go big” category because their products can be easily and often rapidly reproduced for multiple customers. The production limit is a function of cost only – not a function of limited human bandwidth. In a “go big” business, you will constantly think about how to scale your efforts. While you provide value for your first customer, you will simultaneously plan how to do the same for your one-millionth. You may focus more on innovation, whether it is an innovative approach to service delivery, a disruptive technology or a large scale manufacturing play.
The “go big” entrepreneur loses sleep while trying to get to the next fundraising event or wondering how the newest product version is going to be received by the customers. In a “go big” scenario, the founders will focus on ways to take themselves out of the daily operations of the business so they can spend more time strategizing about how to grow the company. This means a “go big” entrepreneur must build a solid management team and create sound systems and processes.
If you start a lifestyle business, you will need a more basic infrastructure. Your initial customers will often be people you know or with whom you have done business with in the past. You will focus on being the best at what you do and will, hopefully, be well paid for it. You will think like a subject matter expert and strive to be the best in your trade.
The path you choose will depend on the journey you want to take. There are no right or wrong answers. Each type of entrepreneur has his or her own set of stressors. The lifestyle entrepreneur sometimes gets burned out and wishes he could take a month off without losing customers, money or, even worse, his business. The “go big” entrepreneur wishes she had not wasted money on that last marketing campaign or wonders whether betting it all on a start-up venture was the right decision.
Whatever choice an entrepreneur makes – lifestyle or “go big” – launching your own business takes courage. If you are heading down the path of entrepreneurship, take time to think about your end goals. Once you do that, you will be able to see much more clearly what type of business makes the most sense for you.
For more advice on developing and growing your business, visit OppsPlace today.
BET National News - Keep up to date with breaking news stories from around the nation, including headlines from the hip hop and entertainment world. Click here to subscribe to our newsletter.
(Photo: Cavan Images/Getty Images)