Evaluating Lifestyle Business Ideas

So you want to build yourself a business that can support your desired lifestyle? A business that once setup requires little effort from your side and let’s you travel the world in style?

Well I want to discuss a model that I’ve taken from my book that’s almost ready to be published. The model is called The 4S Model and is a way that I evaluate business ideas and models.

By the way… the book is going to discuss several business models in details that is perfectly suited for lifestyle businesses, but you’ll probably hear more about this once the book hits Amazon.

You can use The 4S Model if you’re considering building a lifestyle business and want some kind of idea if this is a business that will let you focus on your overall lifestyle. So this model is not about finding the business models and ideas that will pay you the most, but the models and ideas that will give you most time and mobility.

In the book I will dive deeper into the model, so you can see this blog post as just “scratching the surface”

As the names says the model consists of 4 different parameters that I evaluate the business on, in order to use it you can either just go through each step and see how it fits, or you can go as far as to give your idea a rating from 1-10 on how well it’s aligned with the given parameter (the “S”).

So without further explanation… Here is the four S’s.

Simple setup

First up the lifestyle business should be simple to set up. We do not want a business model that requires us to spend years working on a product or service only to see it fail.

Typically you would want to build multiple streams of income instead of focusing on just one business idea. I know that everybody in the Valley will tell me that I’m totally off and you need to build a huge company using venture capital and then do an IPO after 3-5 years.

And sure that’s one way to go around it. But that’s just no lifestyle business and you will most likely have a couple of years where you don’t see anything else than the office. In the mean time you can find me in my flip flops and shorts, sipping a drink (with umbrella I might add) in our house in Thailand.

I have never spent more time than a few months on a product or service and some of the ones that I actually make money on have most of the time been setup in just a week or two.

So focus on building a small business or product and realize that you can always build another one afterwards to get multiple streams of income.

Small in size

Now something that should be simple to set up is most likely also small in size. In a lifestyle business you shouldn’t go out and hire a lot of employees and sticking them in an office making yourself the manager. I use often outsourcing in my businesses, but they are paid per project or per client so I don’t have any fixed costs or management overhead.

Small in size also means that you should not go out and “do everything”. Focus on selling just one product or one service. This will make your company smaller but also much meaner and focused. And when it comes to say outsourcing it’s also much easier to outsource when you just have one product or service.

In my businesses I do get across a few potential clients that I must refer to someone else. They are just not a good match for my business/product. But doesn’t this mean that I’m loosing out on some business? Sure it does, but I also saved a ton of hours that I would otherwise have to spend on the client. So niche down, focus on fewer products and just do that one thing really well.

And don’t think that you’ll make a million bucks, that’s not the goal. But if you built a business in two weeks that would pay you $2000 each month with little work, wouldn’t that be interesting? And couldn’t you just create another one after that?

And again, if you’re after VC funding you’re probably reading the wrong blog anyway .

Scaling built in

I don’t mind spending a little time setting something up when I know that it will be relatively “hands off” afterwards. Now don’t misunderstand me. I like the term passive income and have used it more in the past than I do now. Because very few businesses are truly 100% passive.

But the business should be able to run without you being the bottleneck. You should be able to party a few days on a remote island without internet only to find 10 new payments in your PayPal account when you get back.

The main factors I’ve used in the past to get this kind of leverage has been

1. Focus on describing the process – this will help you identify if there are any wholes or time killers in the delivery process
2. Use technology – more than once have I had small pieces of code created in order help me with something. For instance PayPal can not show VAT on their receipts when doing recurring payments, something that is required by law in Denmark. So I got a small WordPress plugin done that could send these receipts to my customers automatically. Hours and hours of boring administrative work fixed by paying a developer $200 I think it was
3. Use outsourcing – Could you hire a project manager to take over some client cases? In the past my best project manager I ever had was a guy from the Philipines. I paid him $65 per month for spending 10 hours per week project managing a few of my clients. Money very well spend.

Scaling and automation is something that I really enjoy putting into business models and ideas, because I can see the number of hours I need to work go down as I implement it.

Secondary to your life

This might be a little controversial because of course should you focus on your business in order to succeed with it, but still your business should be secondary to what you want to do in life. Don’t you want to be a good parent? Don’t you want to train for that Marathon? Don’t you want to see the Galápago Islands? Or write that book you’ve always wanted to write (hint hint… ).

Well, perhaps it’s just me who doesn’t think that work and business are all that there is to life.

Kicking Ass with Your Lifestyle Business Idea

So do you have an idea for a lifestyle business that you could build in a month? Let me know if in the comments if it’s something you want to share.

And if you evaluate a lifestyle business using other parameters I would love to know about it