Business vs. Hobby: Which is it?
The Essential Test for Every Small Business Idea:
Every new small business idea must face this simple yet essential question: Is your small business idea a business, a hobby, or both?
Go ahead, take 30 seconds to ask yourself this question.
The Answers:
If you answered “both”, you have failed this test. Chuck your idea and go back to the brainstorming phase. You will only lose time and money if you don’t stop now.
If you answered “hobby”, congrats! You now have a new hobby. Consult your day-planner and your family to see if have time for a new hobby.
If you answered “business”, congrats! You now have a new business idea.
The Definitions:
A business may be defined as, “something you do to make money.” Businesses are not about making friends, pursuing personal dreams, doing something interesting, developing personal skills, or having a good time. A business exists to make money, as quicky and efficiently as possible. That’s it. End of story.
A hobby may be defined as, “something you do for personal reasons: enjoyment, socialization, or something else.” Hobbies are not about making money, building economic leverage, developing business relationships, or being efficient. A hobby exists for purely personal reasons, as pleasurably, enricheningly, interestingly as possible. That’s it. End of story.
A business/hobby may be defined as, “something you tell yourself you do to make money while also enjoying yourself.” These mixtures are typically bad at making money (because you get lost in the fun parts of it), bad at personal enjoyment (because you get lost in the economic parts of it), and great at wasting as much time & money as you’re willing to throw at them. That’s it. End of story.
How to Mix Business & Hobby (Because Its What You Really Want To Do…):
Regardless of the dangers mentioned above, most people pursue a mixture of business and hobby anyway, regardless of the dangers, occasionally with great success. In order to do so, the following thoughts may help you on your way:
- Doing a business you enjoy, even love, can provide essential motivation to make it through the tough times. Often, its what makes the difference between a business that dies and a business that survives the dips. Using this to your advantage & choosing a business idea that you actually do enjoy can be the most important decision you make. Just be sure you’re clear on the fact that its a business, not a hobby, or else you’re playing with danger.
- If you think this article is stupid and that mixing business and hobby is a good idea, consider running this small test: choose a small business idea you have no personal interest in (selling a widget you’ve never heard of, setting up an online t-shirt store with designs themed around bikers, babies, parrots, or something else you have zero interest in, or launching an ad-based website on a topic like automotive insurance, drill bits, or dutch elm disease) and run the test over a 4-month period.Chances are you’ll be way more rational about learning how to run a business with this test than you will be if working on a topic you love. Measure things like input cost, revenue, # hours/week, and so forth. Then, once you’ve learned how to turn this business into a money-making machine, try running a new business on a topic you love, but restrict yourself to the same limits you used in your other business (# of hours/week, input cost, etc.). See how well you cope making intelligent business decisions in the midst of a hobby-esque environment.
- Hobbies, friendships, and relaxation are great. If you develop a business that leverages your favourite activities and/or the people you hang out with, will you be able to introduce the pursuit of personal profit without poisoning the things you love? Will business efficiencies and difficult decisions obfuscate your treasured relationships and leisure activities? Be sure to ask yourself these questions before going too far down this business/hobby rabbit hole, lest you end with a failed business and failed hobbies.
The Unexpected Bottom Line:
Despite these warnings, I’m not 100% discouraging a mix of business & pleasure. I actually have a part-time hobby/business which I would still choose to do for free, yet I certainly don’t complain about the cheques which arrive every month. Alternately, I also have several small businesses which are 100% profit driven and hobbies are 100% motivated by fun. The key is to label each activity clearly so that there’s never any confusion over why you’re doing what you’re doing.
For most small business owners (and possibly you), this means getting serious about making a business a pure business; learning to make hard business decisions that have nothing to do with personal feelings. It can really suck to kill a business/hobby isn’t working out, but that’s a lesson many entrepreneurs need to learn in order to move beyond current limitations.
To what extent is your “business idea” a business and/or a hobby? Figure this out and your ability to make clear decision (and your chances of success) will go way up.
