Ontario accountant Brian Allward turned his love of Elvis Presley into a global memorabilia business based in the appropriately named King City. In Burnaby, B.C., new mom Sandra Wilson transformed a pair of non-slip shoes she’d sewn for her infant son Robert into a full-time business called Robeez Footwear. And my brother opened his own bookshop after Mom told him to get his darn book collection out of the house before the bedroom floor collapsed.
Businesses big and small can grow out of simple pastimes. But do hobbyists make good entrepreneurs? Can people who are passionate about Elvis, sewing or old books become excited about marketing and cash flow?
It all depends on attitude. If entrepreneurs can subordinate their love of the hobby to the needs of the business, their energy and passion can go a long way. But you have to start making decisions with your head instead of your heart.
“The easiest way to work it out is to calculate how much money you need to earn in order to profitably leave your job,” says Andrew Patricio, a partner with BizLaunch.ca, a Toronto-based training company that coaches entrepreneurs across Canada. “That will help you decide if it’s doable.”
Patricio’s formula involves totaling your business costs and personal expenses. “Divide those expenses by your profit margin and you’ll get your break-even revenues.” If you need to net $100,000 a year, for instance, and your industry’s standard profit margin is 20%, then you will need annual revenues of $500,000 ($100,000 divided by 20%) to meet your target. Are you confident you can move that much product?
If the answer is yes, you still have to decide if this is something you really want to do. “Are you going to be as much in love with this hobby as a business as you’re in love with it as a hobby?”asks Bridget Field, an information officer with Small Business BC in Vancouver. If you’re a craftsmaker who enjoys making one-off earrings or gourmet muffins, will you still be happy churning them out by the bucketful?
Photo from Dawn Endico.