People typically choose a career and then organize their life around it (Truex, 2020). The opposite is done by the lifestyle entrepreneur, who designs their life around their career (Peters et al., 2009). Their enterprises are profitable, yet they use that cash to pursue their interests, aspirations, and passions (Constable, 2015). Entrepreneurs who lead a lifestyle place a high value on freedom such as the ability to work a set schedule or travel when it suits them (Peters et al., 2009). They could simply wish to put in the time necessary to make a particular amount of money, which will sustain their preferred way of life (Kholghi, 2022). They can be less growth-oriented than other entrepreneurs (Truex, 2020). A lifestyle entrepreneur chooses the lifestyle they want to lead, then develops their business to support that lifestyle. It differs from other entrepreneurs’ strategies which prioritize their businesses before adjusting their lifestyles to fit them (Peters et al., 2009). Lifestyle entrepreneurs are not really profit oriented people; rather, they put up a business to live a life they wanted like enjoying their own time, doing what gives them happiness, and alot more non-ecoomic values. They see financial profit as a secondary reason for doing business and self and family as the two primary reasons.
The opportunities that are presented to entrepreneurs today are astounding (Rodriguez, 2020). Social media and the internet have developed a completely new way to conduct business and increase income in the information age (Bond Collective, 2020). These accessibilities have eliminated many of the old gatekeepers (Truex, 2020). Everyone can now have the opportunity to learn techniques and skills that they can apply offline. People can use this knowledge to take advantage of chances that weren’t even possible ten years ago. It gives business owners the chance to build a lifestyle brand around a subject or concept they are passionate about (Constable, 2015). Although there have always been home-based enterprises, the internet now makes it possible to launch and manage a global enterprise from any location, even while on the go. The lifestyle entrepreneur may carry out business on the go with the use of cloud computing, smartphones, and laptops (Truex, 2020).
Many people are achieving their aspirations by quitting their corporate jobs and starting enterprises centered around their passions as people crave for more satisfying and creative work (Rodriguez, 2020). Mark Henricks (2003) examined the origins of this cultural and societal phenomenon and provided a thorough method for evaluating one’s own potential, taking the plunge, and creating a business that enables one to achieve both personal and professional goals.
An individual who starts a business with the intention of changing their personal lifestyle is known as a lifestyle entrepreneur (Bond Collective, 2020). The decision is not just about increasing one’s income; in actuality, many lifestyle business owners first earn less money than they did in a “traditional” job (Truex, 2020). A lifestyle entrepreneur is more concerned with the intangible benefits that come to individuals who truly love what they do and are successful in their endeavors than with the monetary benefits (Kholghi, 2022).
Growth of Lifestyle Entrepreneurs
Wealth is not as crucial to lifestyle entrepreneurs as quality of life (Marcketti et al., 2009). But in order to have a life of one’s choosing, one needs money. A lifestyle entrepreneur does not begin with the life he or she desires, but rather goes through stages of lifestyle development (Ivy, 2015). The lifestyle entrepreneur must be willing to work very hard during the start-up phase in order to establish mechanisms that will allow him or her to live the dream life.
According to Ivy (2015), as adopted from the works of Churchill and Lewis (1983) and Hurt (2013), a lifestyle entrepreneur goes through the following levels of growth:
Level 1 – Creativity Stage
In this stage, a lifestyle entrepreneur develops a product or service with lots of excitement. The lifestyle entrepreneur tries to do everything but would easily burn out. As to the business structure, it is very informal. This is the stage at which most people give up because they rapidly realize that having a brilliant idea is one thing, but running a profitable business is another story. When an entrepreneur is at level 1 of growth, everything and anything seems possible to the lifestyle entrepreneur.
Level 2 – Direction Stage
In this stage, the determined lifestyle entrepreneur will now look for assistance. There is a lot of learning and development going on at this phase like creating a mission, vision, and growth as the lifestyle entrepreneur begins to establish a course for the business. Several repeatable procedures are also developed and implemented following thorough planning during this stage.
Level 3 – Delegation Stage
In this stage, the lifestyle entrepreneur realizes that he or she cannot do it alone and needs to bring some partners onboard to help fulfill the direction that has been set in level 2. As much as possible, the main job of an entrepreneur is to optimize the revenue producing potential of the business. Non-revenue generating work should be allocated to subcontractors or employees as much as possible. The level 3 phase is where the repeatable procedures from level 2 are raised. To better deal with the new partners and expanding popularity, procedure manuals are written and processes are further broken down and more clearly described. The business as a whole learns to embrace these processes as an integral element of their growth strategy rather than something that is done as an afterthought when something goes wrong.
Level 4 – Systemization Stage
In this stage, the lifestyle entrepreneur monitors its problem areas and develops processes and procedures to address them. Normally, there will be systems to be defined for all key areas of the business. Over time, the systems are controlled and enhanced. Metrics are created as part of the monitoring and optimization tool. In level 4 phase, processes are measured and metrics report the effectiveness of the process. Most often, if there are processes that do not measure up, they are changed.
Level 5 – Shared Vision Stage
In this stage, the founder’s influence over the company’s everyday operations gradually decreases as more employees who share his or her vision and objective are hired. The founder can relax, live the way he wants to, and yet make a good living. Partnering at the CEO level is the phase one becomes truly financially independent. The lifestyle entrepreneur can literally walk away from the business while other people are working and keep accumulating income producing assets for the business. In this level of growth, the systems are already optimized. Thus, the lifestyle entrepreneur would have adopted an attitude of excellence and will continuously watch its metrics to make sure the processes are meeting the goals they were designed for.
These phases are experienced differently by every lifestyle entrepreneur. Systems are implemented from phase one for some lifestyle entrepreneurs with greater foresight, while phase four is when systems are implemented. No matter how a lifestyle entrepreneur navigates the steps, they will all concur that the ultimate financial aim is to be able to leave their firm behind while still being able to generate a good income to support the lifestyle they prefer.
Types of Lifestyle Entrepreneurs
According to Henricks (2003), running a lifestyle business involves more than just a way of life. Henricks understands that it can be challenging to distinguish between enterprise and lifestyle. After all, owning a business requires more time and energy than getting a job. However, the primary distinction is “the degree of focus on money, on sales growth and on expansion for expansion’s sake” since they are not primarily doing it to get wealthy or build a hugely prosperous corporate empire. Most lifestyle entrepreneurs are driven by a strong desire for freedom rather than financial gain. Included in this is the desire to work for oneself and manage a firm that suits their personal preferences and age ranges. Henricks, however, underlines that businesspeople who choose a lifestyle are not opposed to producing money. In actuality, a lot of these lifestyle business owners have lucrative enterprises. They are aware that the reason they are in business is to support their chosen way of life by earning a living .
According to Henricks (2203), there are different types of lifestyle entrepreneurs and they are roughly divided into three groups:
Burned-out Mid-Careerist
Henricks (2003) defined them as people who spent many years working for corporations, saved a certain amount of money or other assets, and eventually grew quite tired of the whole situation. These individuals have been in their profession for some time and have even found success in it. While their employment may pay well, their lifestyles are not. They are seeking greater enthusiasm so they can accomplish goals or discover a new aspect of themselves. Consequently, after spending their entire working lives in the corporate sector, they yearn for change. They move, quit their jobs, start their own enterprises, and some even completely change their way of life.
Special Lifestyle Needs
These are the individuals that require adaptable work schedules and the option to choose their workplace. They frequently care for others, such as young children, ailing parents, or disabled family members. Or they might have health issues that prevent them from working a full-time schedule-intensive or physically demanding job that requires them to exert themselves. Parents who work from home fall under this category.
Laid Off, Downsized or Fired
When faced with a job layoff, income cut, or loss, some people decide that starting a business is the best option for them. They are forced to reevaluate their lives and make drastic changes to their lifestyles due to changes in their employment situation. Entrepreneurs who pursue a lifestyle business view the loss of their job security as an opportunity to pursue their dreams.
Characteristics of Lifestyle Entrepreneurs
According to Kholghi (2022), personal traits define lifestyle entrepreneurs. He identified the following characteristics of lifestyle entrepreneurs:
- Ambitious
Ambition often has no limitation when one is young. However, the desire slows down in adulthood for most people but not for lifestyle entrepreneurs since they are so adamant about it.
- Open-minded
A lifestyle entrepreneur has the mental flexibility to think that they could be able to launch their ideal business.
- Passionate
Most lifestyle entrepreneurs are driven by a passion they hold so strongly that they want to spend as much time as possible pursuing it.
- Adventurous
Lifestyle entrepreneurs long for a profession in which success isn’t a given and where rewards are based more on talent and effort than on hours worked.
- Extrovert
Lifestyle entrepreneurs frequently aspire to live an active life that involves constantly meeting people through networking.
- FONT
For lifestyle entrepreneurs, the Fear Of Not Trying (FONT) supersedes the fear of failing. In most cases, the consequences of failing as a lifestyle entrepreneur will result in going back to having a traditional job.
- Social Circle
Lifestyle entrepreneurs enjoy bouncing ideas with other people and spending time with one another. The energy they receive from being among other upbeat, curious, and adventurous people who share their aspirations is another factor a social circle is important to them .
- Student
The difference between an aspiring lifestyle entrepreneur and a successful business owner is that the former is eager to learn how to accomplish things. On top of that, successful lifestyle entrepreneurs always look to learn new skills.
- Risk-taker
Lifestyle entrepreneurs are not afraid to try something new in order to stand out from other businesses in their niche. It’s the lifestyle entrepreneurs who dare to think outside the box and integrate ideas into their business that really can reap the financial benefits.
- Outsourcing
If a lifestyle entrepreneur has the opportunity of outsourcing certain aspects of their business, they will almost always do so. They are essentially exchanging money for time by doing so. Lifestyle entrepreneurs would rather use their extra time with their family, or to take advantage of their focus on their true passions and interests outside of work.
On the other hand, according to Peters, Frehse and Buhalis (2009), the following are the characteristics of lifestyle entrepreneurs:
- Motivated by quality of life rather than growth
- Main priority is lifestyle rather than customer service
- Very limited growth orientation
- Underutilization of resources and capital investment
- Irrational management and non Return-on-investment based decision making
- Limited marketing and product development expertise and activities
- Under utilization of information and communication technologies
- Failure to appreciate the ICT opportunities arising
- Reluctance to accept professional advice or external involvement
- Motivated by survival and sufficient income to maintain their and their families’ way of life
- Low education and training on management
- Not fully aware of quality management techniques
- Low involvement within industry growth and industry structures
- Distance from lobby organizations and tourism boards
- Unwillingness to let go or to sell their ventures
- Low innovation and unwillingness to cooperate
- High dependency on distribution partners for their earnings even when this is detrimental to profitability and competitiveness
- Questionable economic sustainability as a result of peripherally, distance from the economic core and sparseness of population
In Peters, Frehse, and Buhalis (2009) study, they have identified and listed characteristics that are economic in nature while in Kholghi’s (2022) study, he provided characteristics that are not easily quantifiable – the intangible traits of a lifestyle entrepreneur. Both studies have provided two separate but complementing views on how the characteristics of a lifestyle entrepreneur should be appreciated.
According to the available literature, the characteristics of a lifestyle entrepreneur vary greatly and are notably influenced by motivation and adaptation.
Conclusion
This study on lifestyle entrepreneurship is based on the Psychological Theory of Entrepreneurship (PTE) which is both a psychological concept and process. This idea claims that the main driver of entrepreneurship development is psychological issues. Few authors have spoken their opinions regarding how psychology affects entrepreneurship, including John Kunkell, McClelland, Hagen, and Schumpeter (Economics Discussion, ND). This idea holds that an entrepreneurship is needed to develop when the society has a sufficient number of people with specific psychological traits. The effective role of an entrepreneur, in Joseph A. Schumpeter’s view, is to launch innovation in venture. This theory is also known as the dynamic theory or the innovation theory. According to this hypothesis, people with particular psychological traits, such as will power, self-intuition, and tolerance capacity, become entrepreneurs. Innovation here include introduction of new goods, introduction of new methods of production, opening of a new market, discovering a new source of raw materials, and carrying out a new source of an organization.
Note: This is a portion of the Review of Related Literature of a research study I made on Lifestyle Entrepreneurship in the Tourism Industry
Dominic Rielo Amayun 