I’ve wrestled with the age-old question: Should I grow my firm, or should I create a lifestyle practice? Ultimately, I decided that I wanted to grow my firm. However, growth is not everyone’s goal. And that’s OK.
In fact, after speaking with a number of firm owners that asked themselves similar questions, I learned that growth can be overrated. Here, we look at three good reasons why you may not want to grow your firm and, instead, build a lifestyle practice.
For this article, a lifestyle practice is one that is usually owned and managed by its founder or a solopreneur. A lifestyle practice may not grow in terms of revenue or head count. The primary goal of this type of firm is to minimize overhead and maximize the take home pay for the owner. A lifestyle practice can be rewarding and offers benefits exclusively to the owner.
There are many reasons why one should build a lifestyle practice, but there are three that I want to highlight.
Reason #1: A lifestyle practice is more agile. If you’ve ever worked for a big firm or company, then you know how incredibly difficult it is to change an app, system, or process. There is usually a lot of red tape and levels of approval that must be obtained before you can change something as simple as the brand of toilet paper in the restrooms. That is a bit of an exaggeration. However, larger organizations tend to be “set in their ways.”
A lifestyle practice can innovate and implement much faster due to its flexibility. A lifestyle practice only has one level of management, so the decision-making process is shortened. This allows for the firm to readily adapt new technology or change the way things are done, so that the interests of the owner are achieved. This is highly desirable due to the rapidly changing environment that we live in. A firm must be able to take advantage of opportunities as they come along and pivot, when necessary, to survive or thrive.
Reason #2: There are fewer complexities in a lifestyle practice than there are in a growth-oriented firm. The complexities of growth can be crippling for smaller firms with limited resources. As you grow, you have to build out your infrastructure, which includes hiring more people, investing in better technology, and developing more streamlined processes.
Sure, growth will help you attain your revenue or profit goals, but it does not come without its drawbacks. A very popular hip-hop song called “Mo Money Mo Problems,” by The Notorious B.I.G., has these lyrics: “It’s like the more money we come across, the more problems we see.” Raise your hand if you feel this is true. Growth is usually equated to generating more revenue or more money. The problems that you experience as a lifestyle practice do not go away because you have more money. The problems only expand or get bigger. An inefficient process in your firm today will be a highly inefficient process in your future larger firm if you have plans to grow.
Another complexity of growth is controlling costs and profit margins. Growth often requires additional capital. Many times, service-based businesses do not have access to bank loans or financing that help fuel growth, and the owner has to rely on cash generated by the business or personal funds. There may be months where expenses exceed cash, and you operate at a loss. That is a consequence of growth. Growth then turns into a bootstrapping endeavor that can really hurt your bottom line and lifestyle.
Reason #3: A lifestyle practice owner can focus on what matters most––family. The general consensus among firm owners is that they start firms because they want greater control over their time. The ability to work as little or as much as you’d like is a much sought-after benefit in the entrepreneurial space. A lifestyle practice tends to only have a few stakeholders and affords the owner the ability to spend more time at home with family, if that is what they choose to do. We talked about growth requiring additional capital in reason #2 above, but growth also requires a time investment. That investment in time comes at the expense of family time.
A lifestyle practice is a great option for someone that wants flexibility in operations, while minimizing complexities and time away from family. Sometimes, growth can be overrated when it doesn’t align with the goals or wants of the firm owner.