Hi all,
Time for something completely different 🙂
As I was doing my weekly accounts the other day I thought I would write about something a bit different and that’s my personal thoughts of when I think a hobby turns into a business and the differences between the two.
I think there is a fine line between a hobby and business, and sometimes it is difficult to understand which you are doing. I would imagine there are a lot people (like me) who have a hobby and want make it into a business. Not too long ago I finally made the transition from hobby to business and so I thought I would share my views/personal experience on what I think is the way to differentiate a hobby to running a business.
So, what is the difference between a business and a hobby? I hear you ask.
Well I think the main difference is that a business is structured to make a profit, while a hobby is just done for your own enjoyment. Although don’t get me wrong running a business is still enjoyable. But ultimately its main goal is to make money.
I’m guessing that for some of you reading this post, you view yourselves as having a hobby or running a business. (Or aspiring to run a business.) But are you really? Because in addition to the goal of profitability, I think there is another very important factor in the difference between business and hobby. And that’s Perception.
There are three areas where I think perception comes into play in your business:
- How you view yourself and your business.
- How you present yourself and your business to others.
- How others perceive you and your business.
What do I mean? Well let’s look at each of these areas in a little more detail.
1. How you view yourself and your business.
In some ways, I think this one seems like the easiest. You tell yourself, “Hey, I run my own business.” You sell your products, so that must be true, right? But as I have learned from past experiences, many of us struggle with the idea of seeing ourselves as running a business. Namely that part about how businesses exist to make a profit and are entitled to do so.
So before you can even begin to scrutinize the other two areas of perception, you need to make sure you are giving yourself credit. You have to get comfortable with the idea that you are a business owner. An entrepreneur. A creative empire builder. And someone who is in it to make a profit. And you have to make a profit/make money to live on, otherwise you can’t live.
2. How you present yourself and your business to others.
Ok, so you’ve come to view yourself as a creative entrepreneur. Fantastic. But do you present yourself as a business owner to those around you?
When someone asks you what you do, how do you respond? Maybe you say, “I make/sell jewelry,” or “I’m a jewelry designer.” But statements like that actually don’t help with the perception that you run a business and not just make jewelry as a hobby. Instead, I think it helps if you change that response to promote the idea that you own and run a business and not just selling stuff? In my case, my hobby was my interest in science fiction and horror and I collected comics. Now I say something like “I am self employed and I have an online business called the world of science fiction and horror. I buy and sell science fiction and horror collectables (mainly comics and books) from my online shop. I also offer a monthly newsletter, games and trailers on my website”. I think it sounds more professional than just “I sell comics”.
I think your actions go a long way towards projecting your persona as a savvy business owner. Do you make your business a priority, or do you try to squeeze it in between the other parts of your life? Do you designate certain hours as “business time” or do you let yourself get interrupted by shopping trips and lunches out?
I used to be totally guilty of this. My office is in the living room and I would sit at my computer and try to plan my day to work, and then my wife would ask me if I wanted to go shopping. I’d usually say yes. Or I would turn the tv on and watch Jeremy Kyle for a couple of hours. Or my son would want me to play with him, so I would. Or something else would distract me. Let me tell you, I don’t think that communicated the idea that I was really serious about running my business to my family. (Especially to my wife, who was probably very frustrated that I was on the computer doing whatever (and not looking for a proper job) while she was at work.). Now I am much more strict with my time. And so now when I’m at my desk/office on the computer then “I’m working.” and so I want to be left alone.
Ultimately, my point is this. If you’re going to talk the talk (“I run my own business”) then you need to walk the walk.
3. How others perceive you and your business.
I think this is essential and is really important to running a business. Sometimes in the past I struggled with the way I was perceived by certain members of my family and other people I encounter in my geographic community. And it was very hard convincing some people that I was running a business and not pursuing a hobby.
My brother for instance, last year when I told him I was thinking about starting a business, gave me no moral support at all and just told me to get off my arse, stop pissing around and get a “proper job”. Fortunately I ignored him but it didn’t install me with confidence at the time. I think these people (in my opinion) are just jealous because they havent got the bottle to try their own business and prefer to just moan about how unhappy they are in their stressful 9 to 5 job, but thats just my opinion :).
But then again it might not be your friends or family. Look around at everyone you interact with. Do your vendors and suppliers view you as running a business? What about your customers?
In order for your business to be successful, I think it’s important that the people you surround yourself with understand that you are, in fact, running a business. For example join/start a networking group.
Regardless of your background, I think many craft and design businesses (especially those based out of the home) struggle with the perception of what you do as a glorified hobby. Even if this was never your hobby, I think it’s still worth exploring how to make it clear to everyone that you are running a business.
But how do you shift that perception from one of hobbyist to one of business owner I hear you ask? Well, the main thing you need to go from hobby to business is that you need to get serious. And I don’t mean serious in suit and tie kind of way. I very rarely wear and shirt and tie. And I don’t mean that you should never have fun. Far from it. you want to enjoy what you’re doing, otherwise whats the point. What I mean by get serious is that you need to make a commitment to doing those things that make your business into, well, a business. And so now every day I’m working on ways to present myself to change that perception by changing how I feel about myself.
How do I do this?
- Well I think first you need to get serious about the numbers.
If you truly want to run a successful business, you need to get serious about the numbers. Numbers give you so much information – your income versus expenses tells you profit, sales data tells you what’s working and what isn’t, and cash flow projections tell you if you’re going to have any money in the bank next month. Therefore, make a business plan and keep track of your accounts. And make time to update it. I have made a business plan and continually update it.
When it comes down to it, the cold hard truth is that businesses track their profits. Until you do, you really aren’t running a business. I make a point of doing my accounts at least once a week, usually friday, so that I know exactly where I am in any month. In addition, keeping your accounts up to date has the additional benefit of making your tax return at the end of the year much easier to do.
- And then I think you need to get serious about your time.
I stop saying “I didn’t have time for something,” and switch to “I didn’t make it a priority.” Because often, lack of time is really lack of prioritization.
In order to run a successful business, you need to carve out time to run your business. And if that means you need to set a schedule for business hours, then by all means do so. Which is what I do. I set out time which I am working and time that I can spend with family and do other pursuits. I normally start at around 9am and work most of the day. I then have a break between 3 and 6.30pm so I can spend time with my son. I spend most my evenings (after my little boy has gone to bed) focusing on my business. I do focus a lot of my time on my business now and sometimes I really have to force myself to take the odd day off or 2 so I can relax and spend more time with my family.
Running a successful business takes either time or money. If you have one, you can make do without the other. But you can’t run a successful business without investing significant amounts of one of those two things.
The next time you find yourself moaning about your lack of time to run your business, then ask yourself how you can reorder priorities to have time for your business. Can you watch less TV? Can your spouse help with kids or housework? Can you cut out needless shopping trips? Can you focus on taking your business to the next level? I have been very lucky in that my wife is very supportive and tries to make sure that I am not disturbed when I am working.
If you never carve out some serious time for your business, you’ll find it hard to convince others (and eventually yourself) that you’re actually running a business.
- And finally I think you need to get serious about the realities of running a business.
Running a business is hard. Sometimes you lose money. Sometimes customers don’t pay on time. Sometimes customers complain. Sometimes you want to bang your head against the wall. Sometimes you’re filled with an overwhelming sense of panic about how you’ll pay your bills this month. Sometimes you’ll stress over whether or not you’re making the right choices or heading in the right direction. And sometimes you think “I don’t want to do this anymore”.
And in order to run a business, you have to understand and accept all of this. I think you have to be brave, resillient and adaptable. You have to accept that some days it might not be fun. Some days you will have to do tasks you don’t really want to do. Or figure out ways to delegate those tasks to others. But either way, they have to get done.
It’s much happier to pretend all that other stuff doesn’t exist. To just make and try to sell your products. But ignoring the fact that running a business is hard doesn’t make that reality go away. It just means that you aren’t really running a business.
But I think there is definitely an upside to this. And that is once you accept that reality that running a business is hard you then open yourself up to the possibility that running a business can also be really, really great and very rewarding. As a result you give yourself a chance to create something bigger than yourself. Something that can provide a great life for you and your family.
But only if you commit to the fact that running a business is not the same as a pursuing a hobby.
I know running my business is going to be hard work. But I think it has the potential to be so much more rewarding (both financially and emotionally). But it won’t happen over night, it’s going to take a lot of hard work, patience and some luck to succeed. I know I still have a long long way to go but, in my opinion, the rewards are going to be a lot better than working in a 9 to 5 job for some body else. Even Lord Sugar started with nothing and took a long time to get to where he is now.
But at the end of the day its going to be me that is rewarded instead of some manager who doesn’t know what he/she is doing……
Well, that’s what I think anyway. I hope reading this blog has proved interesting for you. So, do you have a hobby that you want to turn/have turned into a business. What are your experiences? Do you agree/disagree? Let me know?
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Blog of Darren Derbyshire 