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):
  • 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.

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