MBA2247 Should You Build a Business to Sell or a Lifestyle Business? + Free Ride Friday

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Hey oh. Welcome to the $100 MBA show. No fluff, just the good stuff every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014 and today's episode is Free Ride Friday. On Free Ride Fridays, we give away a lifetime membership to one of our programs. We're giving away our Automated Webinar challenge over@webinarninja.com AWC showing you how to automate your leads and sales with automated webinars. It retails for $499 or you can win it for free. Just leave us an Apple Podcast rating and review and you enter our weekly random draw we call Free Ride Friday. Listen in on Friday, just like today, to see if you won. We announce this week's winner a little bit later in the episode. In today's episode you will learn should you build a business to sell or a lifestyle business? These are two very different types of businesses and it's important to make this decision as early as possible in your journey. Are you building a business that you want to run forever and build a comfortable lifestyle around it, or are you looking to sprint to Build a valuable business that you can sell to another entrepreneur or organization, private equity firm, in the form of an exit. One is built for sale and the other is built around your life. You might be wondering, can I do both? Well, we'll answer that question in today's episode, but also explore what both businesses look like, what it means for your life, and the value you're building through the business. Let's get into it. Let's get down to business. I'm a big believer that entrepreneurship is a tool. It's a vehicle to live out the life you want. Now, for some people, they like to use this tool to build a valuable company that they can sell and retire early. And for others, some people want to build a business, that same tool to earn a healthy income while enjoying the process with no intention of selling the business ever. In other words, they build a business as if they can never sell it, that they're going to be stuck with it for life. And that's a totally different business, often called a lifestyle business. Now, I want to say off the bat, there is no right or wrong answer. There's only what's right and wrong for you. And my job is to show you the difference between the two so you can make the right choice for you and your life. I want to start with risk. Yes, risk. All business is risky, right? All of life is risky. But depending on your appetite for risk, one business is definitely riskier than the other. And it's not financial risk we're talking about here, although that's a part of it, too. Building a business to be sold one day is far more risky than building a lifestyle business. And let me explain why. When you're building a lifestyle business, you're creating a business with the intention of selling it one day. That means you're building an asset. You are totally mindful of the fact that I want to build something that's easy to pass on to somebody, somebody else with systems, with procedures, with intellectual property that's easily transferable, that has the right legal backing or trademarks behind it. All that jazz. And the reason why you invest so much time in that is because that increases the value of the company when you go to sell it, because it's actually quite easy to take over, making the choices for buyers a little bit wider. Also, if you're building a business to sell by nature, you are seeing this as an investment. You're seeing this as, I'm going to sacrifice my time, my energy, my years, really, so that I can have a payoff one day. You're not really benefiting from all that hard work because you're really trying to grow it, make it as profitable as possible, make it as valuable as possible, so that when you do sell, it's as valuable as possible so you can get the best exit price. So you might be saying, where's the risk here, Omar? Well, you might not get the exit you were hoping for. The sacrifice may not be worth the exit. Many people think that selling a business is like a given, it's easy, sort of just like a formality. No, a lot of people I know personally have really successful businesses. They've tried to sell it and they just can't find a buyer. They can't find a suitable buyer at a reasonable price. This happens sometimes. And when they do actually sell, it could take 18, 20, even up to 36 months, three years to sell their business. And that's a lot of time. Money, headache, paperwork, legal work, it's a lot of sacrifice. And the risk here is that you may or may not be happy with the end result, what you sell it for, or even if you sell it at all. And in order for you to get to that position, you probably had a sacrifice a good chunk of years, maybe five years, maybe a decade, maybe 20 years of your life. And every time you make a decision in that business, you're doing it because, hey, this is going to help me get a great exit. In the back of your mind, those late nights that you put in, working on the weekends, you know, not taking holidays or vacations with your family, those things add up year after year because, hey, you're thinking it's going to be worth it at the end. Maybe, maybe not. And that's the risk. Now, for people that are not risk averse, they're willing to take that risk because they truly believe that the exit is going to be life changing for them. And they're willing to put in 10 years of hard work and sacrifice if it means having a $50 million exit, $100 million exit, it's going to change their life, their family's life, and maybe even generations to come. And they're willing to take that risk. A lifestyle business, on the other hand, is built so that you can enjoy life right now. Risk is a lot less. Yeah, you still have to make your business successful and be profitable and grow it. But you're building a business around enjoying life, not overworking yourself. If you love to travel, to travel, to do things that you enjoy, and yes, maybe you are not going to have a big payday. One day. But maybe over the course of the years, you'll be able to grow your revenue and pay yourself and earn a pretty healthy living doing what you love. So the risk is much lower because you're actually getting the benefit immediately, which is allowing the business to work for you rather than the other way around. Again, there's no right or wrong answers here. Some people feel like I can't do that because I'm super ambitious and I have to go for gold. I gotta go for the big numbers and I'd get bored with a lifestyle business. Some people say, no, I want a lifestyle business because that's the whole reason why I wanna quit my job, is I wanna live a more flexible life, a more enjoyable life. I wanna be able to do things while I'm still young. All that kind of stuff. It's all about your values and which one aligns with your values more. What's another point of difference between the two? Well, branding. If you're the kind of person that likes to infuse your own personality, your own personal brand in your business, it's much easier to do that with a lifestyle business because you're not going to sell it. You will be the face of that business, you will promote that business and it's going to benefit you as you build and grow that business and allow it to fuel your life. Now, a lot of businesses that are built to sell try their best not to have a face to the business. They let the product kind of be the mascot of the business. Because if you run a business and the branding and what drives the marketing is you, and then you want to sell it, the owner is going to be a little bit hesitant to buy because they're like, well, what am I going to do without you? You drive maybe 40% of all sales because your personality and who you are and your personal brand, at the very least, they're going to ask for a long vesting period, which means you're going to have to work for that new company that bought you for a period of time, maybe 18 months, 24 months, to help with the transition. Let me give you a pretty clear example. If I was a multi billionaire and I wanted to buy a business, buying a personal branded business has a lot of risk. Like, for example, I wouldn't buy Tony Robbins business because the reason why people go to his events, buy his programs, hire him to speak at their events is because it's Tony Robbins. They like him, they like his style, they like what he teaches. And yes, he's got IP and a methodology that he packages. But he's a big reason why people go to his events and buy his products and services. Even if those products and services are not him, like vitamins or something that he endorses, but they buy them because he endorses them. That's not an easy business to buy and take over because he is the celebrity, he is the person behind the brand. So if you're the kind of person that doesn't like to be the face of the business or the brand, then creating a business to be sold one day might be up your alley. A company like Slack, a team messaging app, got bought out by Salesforce. Salesforce bought it because of the product. There was no face and name attached to Slack. Stuart Butterfield, the founder, people didn't know he's a founder most of the time. So an acquisition like that is easy. So branding and personal branding is another factor. Now I want to share with you one more differentiator between the two types of businesses. This might be hard for you to hear, might be a gut check for some of you, and that's are you willing to put the business before yourself? Because that's the essence of the difference between the two. With a lifestyle business, the whole point is that you're building a business that helps you live a better lifestyle, to enjoy your life, to enjoy the process. Meaning if you want to work from 6am to 2pm, you're going to build a business around that. You're putting yourself first what you prefer. But let's say for example, you're building a business to sell and your whole goal is to get it as valuable as possible so you can have a maximum exit. The business is going to demand things at different stages. That 6 to 2pm schedule may not work for your business because maybe the key players that you just hired live in a different time zone or it requires more hours of work or attention, or you're working on a new feature launch and it requires you to work 12 hour days for the next three weeks, you're putting the business first. Now for some people, especially people that have less personal responsibilities in terms of family, children, this might not be such a huge deal or a big sacrifice. But for those who have responsibilities at home, this is a tough one because they have to choose between themselves, their family and the business. And I have grown a software company over the last 10 years and that company demands me to do things I sometimes don't want to do because I need to grow it. And the thing about a lot of businesses that are built to sell software business in particular, it's either you're growing or you're dying, and you have to give it what it needs at different stages or it's just not going to serve you. It's actually going to hurt you and cause you more headaches and problems. So are you willing to put the business's needs ahead of your own needs?

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All right, I talked about all the different differentiators between the two types of businesses. Now let's answer the question, can you do both? Can you build a business that's a lifestyle business that you can sell one day? The answer is yes you can. But it may not be worth it to you because if you built a true lifestyle business, you're not going to want to sell it. It's actually helping you live the life you have today. You also might have some regrets because you didn't build it and build the value as much as possible to get the proper exit to make it worth selling. But I have seen a lot of my own personal friends sell lifestyle businesses just because they kind of got tired of it and they wanted a change in their life. They didn't make life changing money, but they made enough money to invest in the next adventure, the next business. And a few did make some life changing money. They reduced their expenses, kept life simple and retired early. Thanks so much for listening to the $100 NBA show that wraps up today's lesson. But today's episode is not over. Today's free ride Friday. Let's see who won this week's free ride. And the winner is. Shai Tabali. Shai says, a brilliant and effective concept. 5 stars. This podcast is an ideal companion on one's journey to a holistic entrepreneurial success. Thanks so much, Shai, for that great review. Your mission is to email me over at omar100mba.net so I can hook you up with the Automated webinar challenge, our $499 course on how to build your own sales machine on autopilot with automated webinars. If you want to win a free ride, just leave us an Apple podcast rating and review and you enter our weekly random draw. Listen in on Friday, just like right now to see if you won. It's that simple. Before I go, I want to leave you with this. I want to leave you with a little bit of advice. Life is short, so even if you're building a business to exit, make sure you don't kill yourself in the process. You don't want to look back and say, I sacrificed everything in my life for this business so I could sell it. You can't get those 10 years back or those 20 years or those 30 years that you invested in building that business. So make sure that even though it's challenging, you live in the moment. You enjoy the process as much as possible. Thanks so much for listening. I'll check you in Monday's episode. I'll see you then. Take care. Of.

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