So your hobby is taking off faster than Pokemon Go! Okay, maybe not that fast – but you are battling to keep up with orders from Great Auntie Sheila and Uncle Bob, and are thinking about taking the plunge and turning your hobby into a business. So what is the difference between a business and a hobby?
In a nutshell, a business is structured to make a profit, while the hobbyist sells primarily for other reasons; which usually include covering their costs, making only for friends and family and because they genuinely love what they do. A hobby is defined as a leisure activity conducted in your spare time simply for recreational purposes.
Besides the obvious considerations – of things like making a profit, and what legal i’s needs to be dotted and t’s crossed (like business structures, and taxes) – what a hobby based person often does not think of when they are crossing the line from hobby to business are some tough personal questions that deserve consideration in making the decision to take the hobby to the next level.
Turning the baking into a business, or arranging flowers into a florist is not always the icing on the cake or smelling like roses – often it involves early morning starts, long late nights, 7 day weeks and often steep learning curves with you being the “jack of all trades”, wearing numerous hats at once, with no sounding boards and no security!
Bottom line, turning your hobby into a business is more than just doing the activity you enjoy and
sometimes your dreams can turn into nightmares. Some tough questions to ask yourself are listed
1. Am I able to commit to doing my hobby on a deadline?
No longer are you doing a favour for a friend or family member, you are now making or baking
or arranging something for someone who has paid money, and expects delivery within a certain
timeframe. No more doing it to create a masterpiece with no time constraints.
2. Am I able to enjoy my hobby when there is financial pressure associated with its performance?
There is a massive difference between earning money for lipstick or a Bali holiday and needing to make sales in order to pay the rent.
3. Am I able to put a price on myself?
Are you able to sell yourself and your skill at what you are worth, set a price point on your skills and stick to it? You need to believe that you’re worth every penny.
4. How do you present yourself and your business to others?
If you are serious about starting a business then you need to be dedicated to it, and lunches and coffees and shopping can’t interfere with “business time” – friends and family need to respect that transition and the boundaries you set. You need to “walk the walk” that you “run your own business”.
5. Do I have another hobby that I can do for enjoyment or relaxation?
Your hobby is no longer that – it is now your business, and you will need to find something else that you can do for down time.
6. Are you ready to get serious?
I don’t mean that you need to suit up, or lawyer up – but you do need to get serious about the numbers, your time and realties that come with running your business. Numbers give you information, data and analysis tell you what is working, what is not, and most important if you are making a profit – because bottom line – that is why in you are in business, baby!
There is an upside to this, but only if you commit to the fact that running a business is not the same as a pursuing a hobby. It’s much more work, but it has the potential to be so much more rewarding.