Welcome to Alledia, the #1 Joomla Training Company

Would you like to learn Joomla? We're here to help you:

Professionally-produced training videos and tutorials.
Guaranteed same-day answers to all your Joomla questions.
No Joomla experience needed. We've taught 1000s of Joomla students.

Home / Business / Lifestyle Businesses or Why I Quit Web Design

Aug

2009

Lifestyle Businesses or Why I Quit Web Design

There's a Japanese show that moved to the BBC as "Dragon's Den" and is in the U.S. now as "Shark Tank". The format is simple: one business owner stands in front of five millionaires and tries to get investment in their company.

I watched two episodes of the BBC version last week and one phrase kept getting repeated "lifestyle business". This meant:

Started primarily because the founder enjoyed doing what they're doing
Depend largely on the skills of one person, with a few possible hangers-on.
Are difficult to scale in income or quantity.

Needless to say, they didn't get investment. The more I listened, the more it sounded like the situation I was in a couple of years ago.

Web Design is a Lifestyle Business

Here's where I was in early 2007:

Had a reputable blog on a sub-par domain name (I know, I admit it): alledia.com.
Had almost everything important about the company inside my head.
Was targeting a very small niche market: people who wanted SEO for Joomla sites. I did it because I enjoyed it.
Had no exit strategy beside quitting and would never have been able to sell this site.
Thought tactically and day-to-day rather than strategically.

Web design is almost always a lifestyle business unless you can grow to become an agency, and most agencies are really struggling in this recession To go even further ... SEO services, template clubs, extension developers ... all of these are lifestyle businesses. How many template clubs would survive the loss of their lead designer? How many extensions sites would overcome the loss of their lead coder? How many SEO companies outlast their founder?

What Changed My Mind?

There were some obvious moments such as talking to people that had made the leap before me or the time a large client went bankrupt before paying and nearly took us down too, but these influences were particular influential:

SEO Blogs. A few years ago the SEO industry was similar to the Open Source CMS industry now ... a lot of smart young people trying to find their way. Then in 2007 the industry grew and matured rapidly. Aaron Wall, Andy Hagans and others blogged frequently about their thought process as they realised they could do much better investing time in themselves rather than their clients. "Be a CEO rather than an SEO" was their rallying cry. They've been down that road, I suspect the Joomla world may also in the next couple of years.

Scary moments. A lifestyle business can be a dangerous option in the U.S. because there are so few safety nets. I don't get U.S. people who like their healthcare system. That's like British people loving their weather ... the worst part about living in a great country. Back in 2007 the business would certainly have ended if I got sick. If I didn't work, I didn't eat and there was nothing of value that could be sold.

Building a More Substantial Business

In the last couple of years I've done less and less web design and now have almost entirely ceased. We've tried to do things differently:

Build only on premium grade-A domain names (ever tried to sell a business on a .info domain?)
Design the business so it can run without me.
Have potential buyers in mind for the business.
Think strategically not tactically.
Target a market that is substantial and durable (as a practical example, in the Joomla world, that might mean adding more platforms).

Joomla Businesses

The good news in the Joomla world is that I'm not alone. As our market matures I'm seeing more and more people think like this. A lot of Joomla people are young, often in their 20s, and this has been their business education. There aren't many MBAs around, just smart designers and coders learning business strategy on the job. Remember this list from 2007? There are now several Joomla companies that have grown much larger than that. Roll on the next few years as we see a lot more of you build substantial, long-term businesses.

Set as favorite

Free Weekly Joomla Tutorials

Your Comments (15)

Cory Webb

August 10, 2009

Great article, Steve. I've been thinking about a lot of the same things lately. I'm sort of where you were 2 years ago.

Kyle Ledbetter

August 10, 2009

Agreed, good one Steve. The tricky part about becoming the CEO is finding another set of duties in which you're as passionate as the "lifestyle" duties, which were the reason the business was formed and gained success.

Andy Miller

August 10, 2009

Great post Steve, I think your post is spot on. Coming from a similar direction I have found that building a well rounded team of skilled and passionate individuals is the best tonic for this problem. Of course it does mean that you have to delegate more and let go of some of the reins, which can be hard to do, but in the long run, its for the best.

Janice Gentles

August 10, 2009

Great post Steve. You've reinforced what my business coach has been telling me. For me it's about finding that market that is 'substantial and durable' and like Kyle said, being a CEO with duties that I am passionate about.

Steve Burge

August 10, 2009

Thanks for the positive feedback on this post, guys.

I hear what you're both saying Kyle and Andy: it takes courage and a fair amount of strategic thinking to step back from the day-to-day running of a business and start delegating, hiring and shouldering more responsibility.

Hey Janice - a business coach is something I would have probably have laughed at when I was younger and more naive but it makes a lot more sense now. I'm begging everyone I know for advice now

Barrie North

August 11, 2009

There was a great post by Rand about how he met with a management consultant and get led through this path. Its really good reading for any wannabe consultant -> CEO

... can't for the life of me find it though...

Sean Cook

August 11, 2009

Now you are thinking like an MBA! smilies/wink.gif

Since you have a good idea how to crow an online business Steve, you can somewhat replicate it and sell it. It is like remodeling a house knowing your market, comps and not over-building. Build something that is sell-able. That is what house "flippers" do, make small upgrades or if needed large ones, then re-sell. (Yes, the housing markets sucks right now, but it is just an example).

I didn't start thinking that way either and still don't, it is just getting me by for now, but you really have something here along with other sites I see powered by a strong Joomla! community. Yo have to think ROI when doing anything and a large website with products to sell and subscriptions needs to be strategical for the long-haul with an eventual sell.

A lot of sites have good traffic, SEO/SEM, products, solid teams, and subscriptions. Now you need to think about how much that is worth and the idea of selling it. smilies/cool.gif

Regards,

Sean Cook, MBA/TM

Steve Burge

August 11, 2009

Hey Barrie - SEOMoz is another good example. They finally got their business clicking in 2007 also. I suspect the SEO industry provides a very interesting roadmap for what might happen in the Open Source CMS business over the next couple of years.

Commercial_Matters

August 12, 2009

CEO is an interesting idea, but it is cash flow and sales that are what really drives business. Thinking commercially is the only strategy.

You are so right about lifestyle businesses thought, there is no point, there is just no future in it long term. It is the end game that is important, if you can't sell what you are building, then what is the point. May as well be working at Walmart!

/Peter.

Rick Blalock

August 12, 2009

Hey Steve,
I agree with the principles of this post but I don't agree with this statement: "Web Design is a Lifestyle Business".

A business is only a lifestyle business if, perhaps, it meets the criteria you mentioned above.

I could say "Dry Cleaning is a life style business" if it was one guy who started his own shop because he liked it. However, the smart business man would say "Ok...I grew this now let's start 5 more in our county....let's franchise...." etc.

a web design business does not have to be setup as a "life style business". In Brendan Sinclair's "Web Design Business Kit" he admits he knows very little about web design and development. He's just a good business man and sales man. He has built an empire not because he was the head dev or designer and enjoyed coding but because he saw an opportunity to make money and jumped on it.

Life style business, to me, means no vision, purpose statement. No desire to grow. And from what I've seen, targeting the wrong type of clients.

The web agencies I know are booming at the moment. One agency I know just became profitable (out from under venture-capital) and is getting ready to be sold for big $$$.

Another I know has grown by leaps and bounds in the last year. They landed 12 clients just last month, all with contracts that started at $20,000.

Steve Burge

August 12, 2009

Thanks Rick - a nice rebuttal to my points. I guess the profitability comes when you become a CEO in webdesign also ... offices, larger numbers of support staff, setting a very high minimum price for projects you take on.

Maybe I'm hanging around the wrong agency guys at the moment but I've seen quite a lot losing work to cheaper competitors.

Rick Blalock

August 12, 2009

I'd say that if a client goes to another agency because they're cheaper...they probably aren't the right client.

Of course this is all relative because I don't know what "cheaper" means.

If a client chose another competitor because they'll do the site for $500....I'd say they aren't my competitor because I'm not targeting those clients.

Steve Burge

August 12, 2009

True - the agencies I know have a bag of tricks to keep lower-paying customers away.

The contact form has a "Budget" option starting at "$20,000 to $30,000" for example.

FWIW though, these agencies have been losing Fortune 500 companies. Even some of the biggest Atlanta names are trying to cut back.

Richard Byrd

August 22, 2009

Thanks Steve for the blog post- I have been struggling with this same concept for a while. I give this advice to others but find it hard to take myself.

I have started to let go of the design strings at my firm and I will be handing over day to day operations in a few weeks - I then will concentrate on the overall vision and making this thing a profitable place.

Again thanks for posting

Clive Clifford

August 23, 2009

Interesting discussion. As someone who has been a small business coach for over 7 years it is my view that their are very few businesses that have to be what you called "lifestyle businesses".

However, there are many businesses that operate this way because of the mindset of the owner / CEO. If you have not read Michael Gerber's book "The E-Myth" I strongly recommend it. He is credited with coming up with the philosophy of "working ON your business and not IN your business".

You are correct in saying that what you need to do is to adopt an attitude of "building a business that works without me" (the business owner). Obviously as you start out this is normally not possible but if you make your decisions with that goal in mind - there are very few businesses that can not be set up that way.

The thing that normally gets in the way is the owners passion for some technical aspect of the business. Giving this up is not very easy, especially as the business hits some tight patches.

The interesting thing is that if you get it right you end up with the choice of indulging your passion as much as you like. You get to pick and choose what you want to work on because the business no longer depends on it.

On last comment on "lower-paying" or cheaper customers. Every business has its ideal customers and if you are set up to deal with them profitably, that's all you need. One company may choose to have clients that pay it a lot of money and only have a few of them Another may choose to have hundreds or thousands of clients that pay much less.

They can both work!