A respected professional I met at CFO WISE said something to me a few months ago that I have reflected on several times since that occasion. We were discussing a company that has amazing, break-through technology with a wide-open market space. Their
Before I jump too far into this thought, let’s make sure we are on the same page about what a “lifestyle” business is. Wikipedia has a great explanation of a lifestyle business. In essence, it is a company that is not designed to grow much beyond the means or capabilities of the founder(s). A small auto-mechanic shop or a 5-chair beauty parlor would possibly fit this definition along with millions of other businesses around the world. These businesses do not take a lot
Now, let’s get back to the software business. The owners are running it like a lifestyle business. They are not in a hurry to grow, and they are taking only a portion of their relatively minute profits and investing them back into improving their
Technology is changing at light speed. Every software company has a window of time to make their leap and make a run at their market. If they wait too long or become too complacent, they will miss their opportunity. In terms of a lifestyle business, if they only rely on their own means and they do not pull the reseouces together to take advantage of the opportunity, they will not only miss the opportunity but they will likely be out of business in 5 years or less.
Technology is changing too fast and they will not be able to keep up. The competitors will eventually find their way through the window of opportunity even though their technology is inferior and they under-serve the needs of their customers relative to the company’s technology. These competitors will be rewarded with enough cash and resources to adapt and stay ahead of the changing technology.
So, I ask this question: “Is there such a thing as a lifestyle software business?” I haven’t found one, but I’d love your feedback on the subject.