How Do You Turn Your Life Style Business Into An Authority-based Business That Scales?

February 28, 2018

In this blog we’re going to share how a lifestyle business that has a valuable expertise can transition into a scalable Authority-based businesses.

The Problem

If you started your business with the aim of sustaining a particular level of income and no more; and have come to realize that your business is not going to sell for the multiple necessary to pocket the nest egg needed to sustain your lifestyle  – you’re not alone.  We’ve worked with a number of great lifestyle businesses that need to go to the next level of value in order to attract equity investment or a buyer.  They have a great niche, an audience and a way they’ve always done things that generated the income they needed – and they’ve never had the desire to put the energy into aggressively growing their business…until now.

The Process

Let’s level-set by defining some key terms:  

A lifestyle business is a business set up and run by its founders with the aim of sustaining a particular level of income and/or to provide a foundation from which to enjoy a particular lifestyle. These are firms that depend heavily on founder skills, personality, energy, and contacts.

An Authority-based business has the power to influence thought, enthusiasm, opinion, or behavior to the benefit of others and is led by an individual that has unique and deep knowledge about how to do a job in a unique way that provides an upshot to people’s lives.

To scale an Authority-based business means attracting an ever increasing number of community members at an increasing value to the business for each community member.  Graphically, it looks like this:

An Authority-based business’s community is made up of members that are actively engaged in using the solutions and information that the authority has shared.  Or as we describe it in our recent blog – Community Design: What’s the Right Kind of Community for Your Authority-Based Business? – those that are participating in the uptick that they have experienced in their careers and lives resulting from engaging with the Authority-based business’ information and/or product.

OK – now that we have agree to the lexicon – let’s get into how to scale your impact on the world.

(A major “duh!”): Commit to Grow

This means that you do the math to determine what the EBITDA needs to be to get your desired valuation – and you commit to set ego, time and cash aside and to invest back into the business.

Do the groundwork necessary to scale

The groundwork answers a series of questions:

  • What’s the real job people want done when they buy from you?
  • Would you and your business, as an authority on accomplishing that job, attract an audience?
  • Can you, the Authority, show people how to do the job differently enough that the audience would see the approach as a preferred process?
  • Can the process grow enough in value over time that users will stay engaged and work at getting more value from the process?
  • If so, these need to be nailed down:
    • Target valuation
    • Category definition
    • Strategy for scaling
    • Community Design to support converting audience into community membership – and lock up category dominance strategy (aka scale)

This brings you to a jumping off point from which you can build a go-forward tactical plan.  That plan needs to include a research process to test conclusions around category, community design and communication tactics.

Build a broad management skill set

It takes more than a founder to build a successful business. Though founders have a given expertise, growth requires an expanded skillset. As such, Authority-based enterprises need to build a team with broad and complementary skills.

Establish scalable processes

You will need to reframe the way you think about your business, implement measures that are aligned with the strategy, be open to doing some new things, and tighten down existing processes/behaviors (maybe including your own!).

When it comes to processes, flexibility can be the enemy of growth. It can be hard to admit, but managing the operations by hands-on involvement of founders limits growth. If a lifestyle business is going to scale, managers need to implement standardized and repeatable processes. This will require investments in support systems including IT and training personnel accordingly, as well as delegation from the founder and senior management.

Do’s and Don’ts

Evolving a lifestyle business to a scalable enterprise can be emotional – kind of like waving good-bye to your child after getting them settled into their dorm for the first time!  You know it’s the right thing for them…you just hope that you did all the right things to prepare them for their next phase in growing up!  To make this next phase in your business’ life less stressful for you, the proud parent, here are a few do’s and don’ts that we’ve experienced:

  • Take your team through a process that helps them contribute to the vision, define what’s in it for them, and establish mutual expectations for the journey.
  • Get the category thing right – if you do then you’ll have a home-run. If you miss that your valuation will suffer.
  • Going from expert to Authority-based is a leadership challenge. Experts can be brash and get away with being a “technical snob”.  Authorities turn that expertise into a collaborative skill that attracts customers into becoming committed, active community members.  This is a BIG deal because communities perpetuate themselves.  (As opposed to audiences which are much harder to maintain.)  Businesses with active communities command a  higher multiplier on earnings.
  • Don’t go it alone – get help from a team of experts that have done this before. It’s a skill that’s acquired through doing…and it’s worth every penny to avoid costly mistakes and false starts.

Next Steps

Want to see if your lifestyle business could evolve into an Authority-based business that’ll scale? Drop us a note and let’s set up a time to dig into it together.


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