I have interviewed many entrepreneurs for our Mompreneur Rising course
and the first question I ask them is: Is this a business or a hobby?
It’s absolutely fine if you are doing what you do as a hobby, you might enjoy creating art to sell at markets, or even consulting as a hobby. As long as you know that what you are doing is a hobby and you don’t expect it to give you the results of a Business. If you run a hobby and expect the returns of a business, you are just setting yourself for disappointment and frustrations and as a result, you may even lose your passion.
So let me start by defining what I mean by a hobby and a business.
You are running a hobby when you only dedicate your free time to it, when everything else has priority over it. It’s great to have a profitable hobby, because you can collect a little bit of extra cash for doing what you love doing. And this is totally fine - but you can’t really expect more than this; you can’t expect to scale your business, have a team and cross borders. A business will only bring you those kind of returns when you treat it like a business.
A business is a Business, when you give it more attention than you would give your full time job if you were employed by a company. When you wake up earlier than the kids to send out a couple of emails or work on your strategy before the school run, when you get back to work after putting the kids to sleep, when there is no difference for you between a weekday and a weekend. That’s when a business can thrive.
I always talk about the freedom that Entrepreneurship is supposed to bring to our lives. The freedom of Time, Money and Choice. I also always talk about the overall definition of success and I never recommend to work so hard that you forget about the most important things in your life such as your loved ones and your health. At the same time, you need to at least take some steps in order to run a business and create an automated system that does not depend on you alone. Here are a few steps that differentiate a business from a hobby:
1) Legalize your business:
If your business is not yet registered, it’s more likely that you are running a hobby than a business. I am not suggesting to get a license immediately as soon as you come up with the idea, you certainly need to do your market research and take initial steps. But you need to get a license and register your business at some point, no matter how expensive and complicated it is.
2) Market Research:
You need to know your customers and your market really well when running a business. There are many ways to identify your TAM (Total Addressable Market), SAM (Serviceable Available Market) and Target Market. You need to know the numbers really well and ensure that there is enough need for your products in your market.
3) Financial Forecasting and KPIs:
I know many businesses that ignore their financials and KPIs which makes them fail as they can only guess their upcoming sales every month. I understand that Finance and Money is not a fun subject for a lot of people but whether we like it or not, a business needs to make money to be able to sustain itself. If you are running a business, you need to have your financial statements and forecasting as well as your KPIs clear for every month.
4) Strategy and Planning:
This is one of the fundamental steps to distinguish a business from a hobby. Do you have clear SMART goals and strategy for your business? Where do you want to take it in 1 year, 3 years, 5 years? What markets are you entering and what partnerships are going to help you to achieve your goals? There are many questions you need to have an answer for when running a business.
Entrepreneurs need to delegate their day to day tasks at some point in their business. If you are doing everything on your own, the chances are that you are running a hobby and not a business. Most of your time should be spent on income generating activities, product development, financials, creating partnerships. If you are doing the day to day admin job, you are losing on many opportunities to grow your business, unless you are running a hobby.
whether you have a business or a hobby, both of these are perfectly reasonable ways to earn some cash for a short period of time. It’s the long-term scalability and strategy that will scale your business and your hobby will be always a hobby, make sure your expectations match up with your methods.
Give yourself the permission to think and decide clearly, are you running a business or a hobby? And are you happy with your choice?
When you decide to turn your hobby into a business, make sure you take the extra step to educate yourself and surround yourself with like minded people. We offer an entrepreneurship program for amazing women who are ready to pursue their dream, learn more about the course and join the community here: mompreneurrising.com