I think "lifestyle" businesses (I like that term) are structured so much different because there are not that many capital costs to get into it. No expensive construction equipment, low office costs such as officing out of your home, only a handful of employees.
As somebody who is currently scaling up I can definitely attest I fall into 847's category #2, except I hope to pass it on to my kids (they will have to buy me out in some form, albeit cheaper than the market would get).
Yeah, and to an extent the term can be wider.
I first came across it as a term used to denigrate a business. It was when I was working for a startup that obviously had investors, and the investors had the typical [tech] startup exit strategy that was either IPO or get acquired. Whereas other businesses in the sector basically said: "We have a certain addressable market, we have a business plan that makes us competitive, and we desire to service that market. It's not a robust growth market, so we'll work to keep a defendable market share and a good enough gross margin to pay our owners and our employees." The very IPO/startup minded folks looked at something like a "
lifestyle business" as more of a "
dead end" business, because it might keep you employed but it'll never make you wildly rich.
That said, these businesses weren't little mom&pop work from home deals. And in many ways, neither is a brewery. It might cost a couple hundred thousand to really get set up to run a small neighborhood brewery.
The difference is that in brewing, someone who wants to scale and expand gets
investors. To lure investors you need an exit strategy for them to get their investment back plus enough profit to justify the risk of investment. If you're looking at brewing as a lifestyle business, you get a
loan. To secure a loan you just need a viable business plan that shows you're going to be able to earn enough money to pay back the loan and remain a viable business beyond your loan servicing cost, and collateral for the bank to seize if you screw up too badly.