EVOLVE - Navigating the Path: Fast-Growing Companies vs. Lifestyle Businesses
The choice of what type of business you want to build is a pivotal one, and one that is too often forgotten by startup entrepreneurs setting out on their journey. When I say “type” I don’t mean “what your business does”, but the shape, size and direction of travel. Considering why you want to start a business and where you want to end up is a process that would help many founders avoid early-stage decisions that slow their progress further down the line.
The most common distinction is between building a growth company and building a lifestyle business. Both of these paths are equally valid, but very often entrepreneurs end up stuck in a lifestyle business when they meant to build a growth company.
Now if you’re set on building a lifestyle business, then creating a successful one is a dream come true. Working with customers every day, doing what you love, making a difference and potentially earning good money are all part of a great recipe for a happy life. However, if you want to build a bigger business then a very different mindset and approach is required, and that’s something that many entrepreneurs miss in the early stages of their business.
In our accelerators we encourage and challenge entrepreneurs to start thinking about this before they move full-time into the business. The Inception stage (working part-time on your business) is a crucial one, because it allows you to lay foundations to build on when you do move full-time into your fledgling company. And the foundations you lay are a huge factor in directing whether you end up stuck as a solopreneur, or breaking through the funding gap and starting to build your team.
Filling Your Time
Here’s the essence of it: the most common path of moving from side-hustle to full-time founder is to start making money with your side hustle until you are confident enough that you can go for it full time. So you quit your job (if you’re working) or find a way to free up some time (if you’re parenting, caring or have other responsibilities) so that you can work more and more on your startup.
The problem many of our accelerator participants have found with this approach, is that it fills your time with making money. That’s great in terms of paying yourself a salary, but as a business model for a growth company it’s hard to break out of, for a few reasons:
It doesn’t leave a lot of time for other activities like raising funding, experimentation or finding talent. The second two of these are essential for building your business model, and the first is highly likely to feature.
It’s hard to make enough money for two salaries with only one person’s time (whilst shouldering everything else that comes with running a business), so earning revenue to the point where you can take on a team member can be a drawn-out process.
All the knowledge of the business is in your head. This means when it comes to delegation, you have to teach someone your way of doing things rather than co-creating with them. This can breed a habit of having to come up with everything yourself and hand it over, rather than enabling future team members to build your business with you.
Building for Growth
To help you get started on the path to growth (if that’s what you choose) we are sharing the key actions that you can take when you are still at Inception stage to ensure your lay good foundations. These are from a combination of supporting entrepreneur through success and failure in our programmes, learning from the experience of others, and our own unique, bitter and triumphant experiences!
Set yourself up for delegation as early as possible. This means identifying activities that you can outsource and bringing people in to help you with them. This can be paid (instead of going full time, start to pay other part time team members or freelancers), or using favours or freebies where you can find them. Build the habit of not doing everything yourself as early as possible to cultivate a mindset of delegation.
Build a business model, not just a business. Remember that your objective at this stage is to learn how to get repeatable results in acquiring customers and delivering value. Yes, making sales may be important. but just as important is understanding why that sales mechanism worked and another didn’t. The idea is that other people can replicate and build on your results so that you can build a team, rather than having to go back to the drawing board because only you can generate those outcomes.
Set your mind on taking some risk. What you start off building should excite you! The Inception stage is a great time to take some of those early risks, while you may still have other income to fall back on. If your plan only involves doing things that you can clearly see a path to, of know how to do, then you could be missing out on stretching for those big goals. It’s much harder to pile on risk once you have got into the habit of moving incrementally slowly, so make sure the business you are building is bold enough and get outside your comfort zone in the early experiments and networking building.
Adopt a competitive mindset. It takes a lot of work to get a business going. The most successful entrepreneurs at Inception stage are willing to go after it! Chase those results; be better than the competition; be better than you were yesterday! Tenaciously find new ways of doing things that no-one else has thought of and build your unique proposition. If you find you are spending most of the time on your startup doing admin tasks or wondering what to do next, you might need to try out more competitive behaviours.
Have a plan. We see too many entrepreneurs stall in their progress because they haven’t put effort into thinking about how they’re going to get where they’re going. Yes, very often plans will change when they encounter the real world, but making, executing and revising plans is a massive part of an entrepreneur’s workload and you should start building these habits. As a starting point, having a plan for when you will go full time and, beyond that, how and when you will onboard your first team members will help you avoid getting stuck in solopreneur mode for longer than necessary.
If we could summarise this into one phrase, it would be with a hockey analogy: Great entrepreneurs skate to where the puck is going, not where it is right now. If you skate towards where the puck is right now, it will have moved by the time you get there. At Inception stage, build a mindset of continually thinking two steps ahead and focus on actions that lay your future foundations, not just those that will pay you a salary.
To learn more, join our FREE EVOLVE accelerator. Find everything from super-focussed programmes to get you to your next growth milestone, on-demand support when you need it, free daily community activities and a place to call your entrepreneurial home