Lifestyle Company or Valuable Asset – Which One Do You Have?
Running your business takes so much time and energy. Spending the profits on some indulgences is the least you can do, right?
This was my line of thinking when my business became successful. I enjoyed the expensive company car, the exclusive business clubs, and the upgraded hotel suites. I took a lot of the excess cash as legal distributions to fund my lifestyle. “I deserve it,” I thought. I had my hands in every part of the business, and it was draining me physically and emotionally. I felt justified treating myself to fancy handbags and shoes.
But treating my business as my personal ATM was an expensive decision in the long run – I wasn’t reinvesting in it so that it could scale. Not only that, but I was also so involved in operations that the company couldn’t run without me. What I really had was a glorified job, not a thriving, growing asset. I had created a lifestyle company.
No one really wants to buy a lifestyle company, and you shouldn’t want to own one because, by their nature, they depend on YOU. Instead, imagine owning an asset that will ultimately take care of you and give you the financial freedom and fulfillment you want. An asset so valuable other people want to buy it.
How do you know if you’re running a lifestyle business rather than building an asset?
- Can the business run entirely without me (no email, texting, or calls) for a month?
- Do I know most of my clients by name?
- Do I spend most of my profit each year?
- Is my business systematized so that it can scale without adding new people?
- Does most of the revenue come from services delivered by the hour?
- Are my initials or name part of the company name?
- Do I spend most of my profit on extravagant trips, expensive homes, and cars?
- Do I handle most of the sales?
- Do I write or review most of the proposals?
- Do I avoid planning? Have I avoided planning my future exit strategy?
- Do clients insist on working with me personally?
- Is the business my primary identity?
If you answered yes to more than six of these questions, you’re probably running a lifestyle business.
Growing your business
So you have time, money, and freedom while enjoying the journey along the way means treating your business as an investment. Start thinking in terms of customers, not clients. Generally, customers buy solutions and products and pay in advance. That’s what you want instead of clients who buy services and pay after delivery.
Take the steps now to turn your business into an asset, so that you get what you want in the end. Start making conscious choices about narrowing your focus, turning away work that doesn’t fit, transforming services into solutions, and replacing yourself. The ironic thing is, when you do these things, you might find you want to keep your business after all because it’s easy to love when it works for you.
Read my other blog: Who Are You? Pay attention to the answer!