When starting out, it’s important to understand what you want to achieve from your business, or, as Stephen Covey famously stated it, “begin with the end in mind”.
Fundamentally, you can choose to build a lifestyle or a legacy business:
Building a Lifestyle
Typically, your goal is to run a profitable business to fund a comfortable lifestyle. If you haven’t determined what you want to achieve, you likely are using this growth strategy. For consulting firms, this is the default.
Building a Legacy
This growth strategy is often called “equity” or “high-growth”. Essentially, your goal is to sell the consulting firm. You are focused on producing scalable solutions and building a management team that is capable of operating without you.
Once you know which growth strategy best aligns with your ambitions and personality, you’ll make more informed decisions in line with your preferred outcome.
Lifestyle Firm: where quality of life comes first
You probably want (or have) a lifestyle business if you:
Love being your own boss and being around to see you kids’ activities
Wish you could cut back on hours versus finding ways to cram more in
Want an upper middle class lifestyle, with money to enjoy nice vacations
Want to work with others that work hard yet have priorities outside work
If this sounds wonderful, you probably lean more toward owning a lifestyle firm. You’ll likely structure your consulting firm around maximizing quality of life (for yourself and your employees) while focusing less on absolutely crushing it from a profit perspective.
Legacy Firm: where growing the valuation comes first
You probably want (or have) a legacy growth strategy if you:
Love that being your own boss means the freedom to invest aggressively into your business and building products and solutions that make you money while you sleep
Have no issue working more hours now, knowing the return will be exceptional later
Want to work with others driven to succeed and frequently hang out socially after work
Willing to make a modest salary now if it means having more money to reinvest so you can sell for a lot of money in a few years
Sound good? If so, you probably lean towards the legacy growth strategy. You’ll structure your firm to maximize its valuation, investing aggressively in growth, while not focusing as closely on your current quality of life.
Which growth strategy is better?
The short answer is “neither”. The decision comes down to your own goals for the future. It’s a deeply personal choice.
Most people actually fall in the middle of these two strategies. They lean more heavily towards one yet desire aspects of the other.
In some cases, they discover they’ve been growing in the opposite direction. If that is the situation, it’s never too late to shift course. The shift will take time, but nothing is insurmountable with the proper motivation and execution plan.
If you’re undecided, I can help you find your way, however, I cannot “tell” you which strategy is right for you. Also, if you have multiple business partners, you all have to be on the same page to make meaningful progress.
I’ll leave you with another quote from Stephen Covey: