Attributes of a Lifestyle Business or an Equity Value Business?

[Editor's Note: In the last Issues for Growth, "Which do you have - a Lifestyle Business or an Equity Value Business" we outlined the major differences between a lifestyle business and an equity value business and why it was important to be clear about the "purpose" or intent of your business because the way a business owners  approaches building a business must be very different depending on how you will define success. A number of you who have heard me speak about this issue asked me to publish the matrix of attributes comparing a lifestyle vs equity value business. So, here it is below. I hope you find it helpful.           - DPM]

 

Lifestyle Vs Equity Value Attributes Matrix 

Attribute	Lifestyle	Equity Value
Focus	Short-term Lifestyle; Run for Owner's compensation	Long-term Equity Value; sacrifice short -term comp
Pace	Owner's pace	Dictated by desired outcome
Management style	Command & Control; Centralized	Decentralized; individual decision-making
Owner Management	Can tend to be viewed as inconsistent, capricious and changing	Consistent with overall strategy and core values
Expense Control/ Spending decisions	Tightly controlled at top	Managed through approved dept budgets and policies
Outside Capital	Debt; Investors not interested; Growth may be restricted due to availability of capital	Equity investors
Empowerment	Limited; Loyalty Rewarded; Small circle of trust	Expansive; Performance rewarded; Systems to enhance empowerment
Objectives	May change at owner whim	Clearly outlined; transparent
Employee Equity	No	Yes; equity awarded
Career Development	Limited upside	Significant upside
Employee Capability	"Steady Eddies" Thrive here	High performers thrive here
Sale of Business	Usually only to Employees or Family	To third-party Buyers (Strategic or Financial)