I thought lifestyle businesses were small craft or bespoke software development shops which allowed an individual to earn modest revenue while following their lifestyle of choice.
A few million dollars per year in revenue provides one awesome lifestyle!
If you were instead doing $100k a year in revenue at (say) a 20% margin, that would mean you take home $20k a year (assuming you revinvest nothing in the business), which would be more of a "hobby" than a "lifestyle".
Distilled: a lifestyle business is one that makes choices to optimize the lifestyle of its owners rather than the success of the business.
For that reason, "lifestyle business" owners are more likely to drive Porsches than startup owners.
So, no, "lifestyle company" definitely doesn't mean "poor".
Also, a business that generates a few million a year doesn't necessarily have 100% profit margins (in fact, I think it's safe to say that most don't).