Episode 11: LIFESTYLE vs GROWTH/VALUE BUSINESSES

A lifestyle business and a growth or value creation business differ chiefly in their goals, scale, and potential for growth and profit.

• Lifestyle Business

This is a type of business that is set up and run predominantly to maintain a level of income or to facilitate a particular lifestyle for the entrepreneurs. This type of business isn’t primarily aimed at maximising profit or revenue; rather, it serves to sustain the owner’s lifestyle, offer them flexibility, and provide personal fulfilment. Lifestyle businesses are often associated with industries like online commerce, consulting, freelancing, and other services.

Key features

•   Personal income

The primary goal is to earn a stable income rather than business growth or value maximisation.

• Work-life balance

Generally, these businesses allow the owner to maintain a work-life balance.

• Business growth

While lifestyle businesses can experience growth, it is typically not their focus.

• Capital demand.

Generally, requires less investment or external funding.

• Growth/Value Creation Business

On the other hand, a growth or value creation business is a venture designed to grow rapidly in revenue or value. The ultimate goal typically includes a large market share, high profitability, or a successful exit strategy such as a sale or IPO. Growth businesses are often associated with tech startups, but can be found in any industry.

Key features

• Profit maximization

The primary goal is to maximise profit or the company’s value with a focus on aggressive growth.

• Scale

These businesses often aim to grow at a large scale and require a more substantial investment of time and money.

• Risk

These types of businesses usually hold higher risk with the potential for higher returns.

• Investment

Growth businesses often seek external investment to fuel growth and expansion.

In summary, the main difference between these types of businesses lies in their purpose and scale: Lifestyle businesses aim to provide a stable income and personal satisfaction, while growth businesses seek rapid expansion with the goal of maximising profit and company value.

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