Top 3 Reasons Why Lifestyle Businesses Fail


My friend Andy made a comment about lifestyle design that resonated with me because it’s so true and so funny:

A few years ago, everyone read the 4 Hour Work Week and got a boner for building a lifestyle business. Very few people actually succeeded because it turned out to be much harder than they had expected.

8 out of 10 companies fail in the world of internet startups. Of the two that succeed, 1 will have a small exit and the other will have the HUGE, Instagram-like exit.

But what about the world of lifestyle businesses? While internet startups have huge online publications such as TechCrunch, Mashable, and Venturebeat, it seems that the majority of lifestyle businesses quietly succeed or fail, practically invisible to the majority of the public.

Side note: do let me know if there is a popular online publication that documents the rise and fall of lifestyle businesses. If there isn’t one, perhaps this is a good opportunity for an entrepreneur to start one.

I have seen several of my close friends attempt to build a lifestyle business, only to fail and retreat back to the corporate world.  I don’t want this to be you.  These are the top 3 reasons why lifestyle businesses fail:

1. The business is a vitamin as opposed to an aspirin

Vitamin: a product that is bought and used because the user has available income AND is educated about the benefits of a vitamin

Aspirin: a product that is bought and used because the user is in pain and will spend any amount of money to relieve the pain

Notice that a product that is a vitamin is nice to have.  It requires that the user has excess money and that the user is educated about the benefits of the product.  A great example is how I pay $100 per year for Dropbox, which allows me to store my personal files online.

On the other hand, a product that is an aspirin solves an immediate pain for the user.  A great example is how I pay $30 a month for DocuSign, which allows me to easily send and get contracts signed without having to print and fax.

2. The product is developed and launched before there is market validation

Too often I see entrepreneurs work tirelessly to build the product, only to realize that the product they built isn’t what the market wants. You need to make sure that your target market needs your product, and more importantly, will pay for your product before you build it.

How to test your product

E-commerce store: build the store and put up the product for sale without buying any of the inventory. Drive traffic to the store via Google Adwords and analyze how site visitors behave. If visitors make a purchase, just send them an email letting them know that unfortunately due to a high demand for the product, you’ve recently sold out but that they’ll be the first to know when you restock.

Service business: message all of your friends and let them know of your new service business. Desperately ask for referrals to anyone they think might want to pay for your service. Do NOT do any work for free; doing work for free proves that a person will use your service for free, but it doesn’t prove that a person will pay for your service.

Affiliate business: to succeed in an affiliate business, you need traffic and optimal conversions.  But more importantly, you need someone that will purchase the leads you generate. Approach businesses that sell products online and let them know that you have a website with relevant traffic looking to purchase their product. Ask them about their affiliate commission rates. If the rates are favorable, then work towards building a site with relevant traffic.

3. The product is built for a market outside your network

Want a head start in your business?  All you need to do is build a product to solve a pain for the people in your network.

There’s nothing more frustrating and more time-consuming than to try and sell a product to people outside your network. As an example, my previous startup aimed to sell a loyalty program to franchise-level executives. Though we were successful, it took over 6 months and over $15,000 in marketing and advertising dollars to close our first deals – a lot of time and a lot of money.

In a lifestyle business, speed and cost-efficiency are key.  Make sure to go after your current market.

It’s hard to succeed with a lifestyle business, but if you avoid the above three common mistakes, then you’ll have a much better chance at success!


Jun Loayza is the Founder of Tour Woo, the easiest way to book a tour online.  In his startup experience, Jun has sold 2 internet startups, raised over $1,000,000 in angel funding, and lead social technology campaigns for Sephora, Whole Foods Market, and Levi’s.