[tom_rath]

A business which "...generates single-digit or low double-digit millions in revenue..." is "a lifestyle business"?!?!

I thought lifestyle businesses were small craft or bespoke software development shops which allowed an individual to earn modest revenue while following their lifestyle of choice.

A few million dollars per year in revenue provides one awesome lifestyle!

[bobbyi]

Yes, that's pretty much the standard lifestyle business. It puts you in a similar situation to someone owning a local store or restaurant. You will be able to live a solid middle class life (or a little better), but you aren't going to retire to a tropical island any time soon.

If you were instead doing $100k a year in revenue at (say) a 20% margin, that would mean you take home $20k a year (assuming you revinvest nothing in the business), which would be more of a "hobby" than a "lifestyle".

[tptacek]

I know I'm repeating myself, but: I think this is exactly not the idea of a standard lifestyle business.

Distilled: a lifestyle business is one that makes choices to optimize the lifestyle of its owners rather than the success of the business.

For that reason, "lifestyle business" owners are more likely to drive Porsches than startup owners.

[tptacek]

As I've come to understand it --- and the term is used very often in the professional services world --- lifestyle businesses make the founders comfortably wealthy over the long run, but do little else. Most consultancies with employees do much more than $1MM/yr.

So, no, "lifestyle company" definitely doesn't mean "poor".

[swombat]

"Lifestyle business" doesn't have to mean "cheap lifestyle".

Also, a business that generates a few million a year doesn't necessarily have 100% profit margins (in fact, I think it's safe to say that most don't).

[MicahWedemeyer]

Yeah, I'm spinning up a startup that will require about $2M in yearly sales in order for us to make a decent living off it. But, it's a marketplace app where we take a commission on each sale, so our margins are very low compared to (hopefully) what the actual sellers are making.

[tptacek]

Why are you deliberately choosing a market where you will make low margins?

[MicahWedemeyer]

It's untapped, I like the subject matter, and it will be genuinely useful to the people involved. I'd rather be poor doing what I love rather than rich working on something I hate (or am indifferent to).