But each of these companies would have made a miserable investment for venture capital. I satisfied all of the companies' capital needs from cash generated from profits and from conventional bank financing. And, each time, I took the time to create a strong business plan to allow me to land financing.
Don't think that a lifestyle company is limited to barber shops, dry cleaners and tool and die shops. Owning a lifestyle company simply means you are running your own show and not using speculative investments to try to introduce revolutionary new products to the marketplace.
There are lifestyle companies that boast $1 billion in sales and, if you want to stretch lifestyle to include all family businesses, look no further than S.C. Johnson. Yes, it has professional management and is enormous, but it is nothing more than a lifestyle company that kept growing.
Consider the movie, "Down and Out in Beverly Hills." Richard Dreyfus' character lived in a mansion in Beverly Hills and drove a Rolls Royce. He owned a company that made clothes hangers -- a lifestyle business.
While a lifestyle company can be highly successful, don't bring your business plan for growth to venture capitalists and expect them to salivate. VCs look for opportunities to make very significant returns on their money by investing in businesses with disruptive technologies or services, which can grow quickly to more than $50 million in revenue in less than five years.
If you manufacture clothes hangers and need funds to expand, look to commercial banks, leasing, SBA loans, even factoring, to find the capital you need. Venture capitalists do not lend money --- they invest and become your partner.
So whether you're a high-tech start-up or a mature lifestyle company looking for funds to take your business to the next level, a solid business plan and proforma that outlines your growth capital needs is necessary to land additional funding. Just make sure to approach the proper source to help make it happen.
Erwin Bruder (firstname.lastname@example.org) is president of The Gordian Organization. Reach him at (216) 292-2271.