Verlynda and I have been working hard over the last few weeks at starting our lifestyle business. I’d like to share a little of how we came to that decision with you.
As I see it, there are two primary considerations when starting a business. If you do not get very clear on both of these, you are unlikely to succeed. The first is what type of business you want to start. The second is who your target market is.
Why the Type of Business Matters
When you are starting a small business there are a number of factors critical to fiscal success:
- Net margin: choose your products and services carefully. There are pretty clear averages for most lines of work. Obviously, higher margin is better—not just because it means more money—but because it creates resilience in the business model.
- Return on owner time: your ability to earn revenue is limited to the hours you spend doing the work if the work is primarily service oriented. This caps the income of the business. For example, if you sell your services by the hour your income is limited to the number of hours you can work. Adding people will increase income and expense, but may also take the owner away from the work he or she loves to do.
- Market size: you can have the best product in the world, but if the market is not large enough revenue will also not meet expectations.
- Capital costs and inventory: if you are bootstrapping the business, this needs careful consideration. Investing all your money in starting up may leave you with a great storefront, plenty of inventory or a beautiful website, but no cash to pay for overhead costs or even cover your personal living expenses. Debt financing is an option but the banks will require personal collateral.
- Skills: if you are keeping your overhead low and not hiring at the start, you will have to do your own marketing, sales, and bookkeeping. This is in addition to the services and products that require a skill set specific to those offerings.
- Revenue growth: some businesses launch with immediate revenue. A hotdog stand on a busy corner in New York would be a good example of this. Others require time to build and this must be considered.
Our goal was to create a business with:
- Very high margins
- A return on owner time that would give us a great deal of flexibility within a year or two of launching
- The ability to build the business in the margins of our lives and without sacrificing my full-time work
- A large market
- Low capital costs that would allow bootstrapping without creating debtProducts and services based on our existing skill set
- Scalable revenue growth.
After a great deal of consideration, creating a lifestyle business via an infopreneurial model seemed to be the best opportunity.
Lifestyle + Vocation
When we combined that with our sense of vocational calling, the fit pointed towards the long term creation of an Internet-based business designed to help couples build thriving, passionate marriages. The limitation of this approach is that we have a very small audience who would immediately engage a business like this. That means revenue is going to take a while to build.
The short-term patch is two-fold. First, I will continue with my current consulting work that is providing 40 hours a week of income. It’s not where I want to end up but it is a great solution to our present needs. The second part is to immediately revise and monetize calebsg.com. Something of an existing audience, plus my existing business network, offers opportunity to monetize a coaching service related to business and career needs in the marketplace.
The Internet is a wonderful medium for launching this type of work. Never before in history has such an incredibly large audience been so readily accessible. As well, mass-market advertising has never been as affordable as it is now. Coupled with advanced targeting strategies and social media marketing tactics, the opportunities are terrific.
So this is the road we are heading down! Our goal is eventually to end up in a different subject area but right now calebsg.com is a suitable platform for helping me to move closer to filling my vocational calling. That calling is to educate, empower and mobilize people to grow by offering impactful, creative wisdom.
Now, I know that many of my readers are astute and experienced business people. I’m inviting you to critique my thinking in the comments below. What potential pitfalls do you see? What do you like about this approach?