There's somewhere between a "lifestyle business" and a unicorn though. You can be a contractor with a focus on re-doing roofs and pull in $1m/year without too much work once you have things running. You will be wealthy, but you won't ever pull in $20m/year. I think it's fair to call that a "lifestyle business".
I know of a company near me that has $300M/year revenue (gross, not net) that sells cables and other equipment to ISPs in the region. It's owned by one person. I don't know their margins, but that person might be making $20M/year. They might be able to grow that business and sell it for $500M dollars if they play their cards right. I wouldn't call that a "lifestyle" or "small" business. It's somewhere in the middle.
I think it's the latter type that the article is referring to.
Oh, come on. You are putting one third of the economy as "lifestyle businesses"? How many fast food franchises make less than that per year, are they "lifestyle businesses"?
Lifestyle business doesn't mean what you think it means. Supports a persons or family lifestyle (i.e. you need a place to live, food, essentials, and could be more than just that...), rather than being for investors to make equity growth.
That definition is still horrible. Plenty of investors interested in buying equity in a franchise or retail shops. What that has to do with "lifestyle"?
No. The definitions of these are clear. It's pretty easy to define what is a franchise and what is a retail shop.
The problem is with this definition of "lifestyle business". What is the cutoff? What does it mean to "support a lifestyle?" If a company makes 10M/year and it is growing at a healthy pace without VC capital, is it "lifestyle"?
If someone makes a living of investing in fast food franchises, each shop by itself taking 500k of initial investment and then returning $100k/year in profit, do you count each individual franchise as a "lifestyle" business or the whole thing as an "equity investment"?
Like others said already (and maybe that is the point of TFA), this definition of "lifestyle business" seems to serve only as a way for VCs to downplay the significance and importance of so many businesses that exist in every sector.
Clear and broad at the same time. A Times Square McDonalds store and a country town uniform shop fall under this umbrella.
Cut off is “would an investor buy equity for growth”.
Some people own say 5 mcdonalds franchises: the owning business might be a growth one if they are planning to expand. Might be lifestyle if they don’t. Dynamics
matter as much as a static snapshot view.
Might be a middle ground but I think it is small. Coops for example.
My interpretation of the comment was that tons of business are just clumped into the “lifestyle” category just because they don’t aim to maximize valuation.
I know of a company near me that has $300M/year revenue (gross, not net) that sells cables and other equipment to ISPs in the region. It's owned by one person. I don't know their margins, but that person might be making $20M/year. They might be able to grow that business and sell it for $500M dollars if they play their cards right. I wouldn't call that a "lifestyle" or "small" business. It's somewhere in the middle.
I think it's the latter type that the article is referring to.