And you thought entrepreneurship was all about raising money, courting investors, signing term sheets and working yourself to the bone trying to be the next-big-thing. Well, that’s hogwash! There is an equally valid business model of growing a business organically, avoiding investors, and focussing on being profitable.
‘Entrepreneurship’ is a catch-all term for anyone who runs their own business. What many entrepreneurs do not realise – or do not want to realise – is that there are different types of business owners and a variety of motives that power each one to do what they do.
Many in the present start-up ecosystem are either not aware of ‘lifestyle entrepreneurs’ or prefer to thumb their noses at them. Start-ups are like a boys’ club – closed, snobbish and myopic. Their bigoted view of business keeps them so sequestered in their own little world – and I will tell you just how little – that they want nothing to do with anyone who is not like them.
Lifestyle Entrepreneurs Account for 99.9% of All Entrepreneurs
Well, here’s a reality check. Lifestyle businesses account for as much as 99.9 per cent of all ventures. Before I start plumping for this breed of entrepreneur, let’s first take a look at who a lifestyle entrepreneur really is. To draw on a cliché but one that couldn’t be more bang-on – lifestyle entrepreneurs prefer to mix business with pleasure or business with leisure. Their ventures are primarily a means to maintaining a particular lifestyle, where they enjoy the freedom and flexibility to pursue other interests.
The definition of ‘lifestyle’ could even include something as mundane as running a home and family, visiting the gym and hanging out with friends. The point is, the entrepreneur’s lifestyle is as much a priority as is his or her business. They covet the freedom of choice – the autonomy to decide when they do and don’t work. This is not to say that lifestyle entrepreneurs do not work as hard. In many cases they may even choose to work round the clock.
The Motivation of Lifestyle Entrepreneur Is Different – Not Better or worse
Lifestyle entrepreneurs usually follow a passion or use an exceptional talent or skill at the core of their business. They do not grow their ventures aggressively and they do not raise money. Profit is more important than revenue. They are bottom-line oriented, often at the cost of top-line expansion. Their ventures tend to be highly centralised in control and often lack a high degree of process orientation.
These business owners are usually not mentioned in classic or new media. Though there are exceptions, they tend to be less oriented towards an active digital presence. In stark contrast, any venture that raises even an iota of seed or angel funding gets multiple mentions across the blogosphere. In this world, venture funding automatically means coverage by the media. And if this entrepreneur fails, so much the better. A slew of ‘What I learnt from…’ articles follow! Aha! No wonder start-ups resent the lifestyle entrepreneur.
The Present Startup Ecosystem Undervalues Lifestyle Entrepreneurs
If you attend any start-up related event, you will get the impression that this is the type of entrepreneur that no one wants to be. I was recently a member of a panel at a premier engineering college in Mumbai. In the Q & A session, a student wanted to know the panel's opinion of his business plan of being an air-conditioning contractor. He believed there is plenty of opportunity in taking orders to sell, install and service air-conditioners to small enterprises and residences.
What he hadn’t accounted for was the volley of negative opinions. This despite the fact that his understanding and expectations seemed solid and realistic. It seems, the so-called start-up ecosystem has created a narrow definition of ‘entrepreneurship’ and he simply did not fit the bill!
Which Is Better – Lifestyle Entrepreneurship or the Other Kind?
To begin with, let me point out that there does not seem to be a term for the opposite of "lifestyle entrepreneurs." I am sure that the "other kind," will want to just call themselves "entrepreneurs." If you’re a lifestyle entrepreneur or plan to be one, do not feel discouraged. If you have conviction in your understanding of the dynamics of business, and you’re satisfied with the nature and level of returns that can realistically be generated, you are doing just fine.
It is foolish to let someone else’s narrow view influence your business planning. Venture capitalists have to take an equity position in a rapid-growth company and exit within the lifespan of their fund. So they will not invest in a lifestyle business. That is not your problem. But it would be a problem if you expect VCs to be keen to invest. Alternatively, if money is not an issue, you’re on the right track.
Two decades ago, almost all new businesses in India could be classified as ‘lifestyle businesses’. Get this: things haven’t changed much. It’s just that VC-fundable businesses are noisier. This creates the impression that something's wrong with lifestyle businesses.
The point is, lifestyle businesses are just as rewarding as any other type of venture. Entrepreneurs are known to follow their heart. So, if you want to venture out on your own but don’t want to join the boys’ club, well, don’t.
The author, Ajeet Khurana, wears many hats: angel investor, trainer, author, entrepreneur, digital marketer. He is a screening committee member of Mumbai Angels, one of India's oldest angel networks. In addition he is an angel trainer for new angel investors with NEN (National Entrepreneurship Network). He is on the boards of Carve Niche Technologies and Rolocule Games, You can reach him on LinkedIn and Twitter
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