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.
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.
Photo by fakhar.
Biz Vs. Hobby: Which Is It?
July 14, 2008 by Rich | 6 Comments
In Advice, Operations, Small Biz
Eric on July 14th, 2008 at 9:23 am
I think it’s a great idea to define what you’re doing as either a business or a hobby from the start, because it is far too easy to get lost farther down the road if you don’t.
My “business,” for example, is really just my hobby. I’ve always known that and I accept the fact that I won’t be making any money with it. What concerns me is the people who don’t understand the difference between the two categories and either jump back and forth between them or end up trying to straddle the line.
Stropp on July 14th, 2008 at 9:51 am
“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.”
So by your definition, a business is not something which one should enjoy. I should head down to my local surf shop and tell the owner that he doesn’t have a valid business because he picked something that he, a) makes friends with the local surfers, b) always dreamed of owning a surf shop, c) finds it interesting, d) has learned a lot about himself and developed his skills, and e) is having a great time.
I’d like to also add, that if you’re not enjoying being in business then why are you doing it? Is it good to break your back for so many years on a business you don’t find interesting?
Frankly, I’d find it hard to motivate myself every morning if I didn’t enjoy what I was doing. I’ve switched jobs simply on that basis.
Angela on July 14th, 2008 at 4:14 pm
I really couldn’t disagree more. Mostly because you should be allowed to enjoy your business. It shouldn’t have to be classified as a ‘hobby’ to enjoy what makes you money.
There are too many success stories that have people who got into their business because they enjoyed what they do, and have done well because of it.
cassy on July 14th, 2008 at 9:16 pm
Well… I been reading many articles about businesses and almost the entrepreneurs said that they go in that kind of business because they love doing it. Thats it. End of the story.
Prashanth on July 15th, 2008 at 11:02 am
Stropp,
The author is not saying that your “local surf shop owner” is not a business. What the author is saying that to truly be a successful business, the goal should be to make as much money as possible. So while the shop owner might still make money, he isn’t making as much as he could be if he were focused on delivering services alone.
You also questioned the reason behind doing a business if it did not provide enjoyment. The answer is quite straightforward: to make money. That is the whole reasoning behind the author’s argument, which is to have hobbies for enjoyment, while having a business for a livelihood. It is important to not mix them, or confuse their roles.
Stropp on July 15th, 2008 at 11:09 pm
Hi Prashanth
I’m going to get a little philosophical here. Your definition of success (and the authors) “to make as much money as possible” is not the only valid definition. Success, as beauty, is a very personal thing. So the surf shop owner, who makes good money with his business, and takes it through to retirement might very well consider his business successful. Someone who owns a nationwide surf empire that makes 10 billion p/a might well not.
If success is defined as making as much money as possible, then failure is guaranteed because it’s always possible to make more money. We all make choices; family, health, ethics, personal satisfaction, that lower our money making options.
As for hobbies. There’s not too many people I know in the bricks and mortar world who own businesses who have much time, or remaining energy, for them. If you’re working 60 - 80 hours a week and have a family (even single) the hobbies go by the wayside. If you’re not enjoying work, then what do you have left?
Of course making money is important for a business. I didn’t mean to imply otherwise. But the most well adjusted people I know are the ones who enjoy their work. There are so many studies out there that people who don’t enjoy what they do, don’t do it all that well.
As an aside, one of the major recommendations to prospective bloggers is to pick a topic that they enjoy. The refrain is that it will make it harder to maintain the blog, and that success is less certain, if the author doesn’t care for the subject. Why doesn’t this also apply to owning and operating a business?
I know I’d find it difficult to start up a box factory since it’s such a boring product.