Do You Have a Business or a Hobby?Jan 25, 2023
On the horizon is National Small Business Week (April 30 - May 6, 2023) let's talk business! Let's talk your business!
Have you been plagued with doubts whether your business is real or not? Do you constantly compare yourself with other businesses and/or business owners? Has your spouse or partner flat out said or joked around that your business is a "just" a hobby? Do your parents suggest that you need to get a "real" job? Well, pull up a chair; we've all experienced nay-sayers and critics and we've personally entertained doubt and comparison. But that doesn't serve you. So how do get beyond the critics and the doubt and comparison?
The first thing you have to do is know the terms so can defend yourself to others, your spouse, your besties, and most importantly, your inner critic. So, let's start with defining the difference between a hobby and a business:
HOBBY: an activity or interest pursued for pleasure or relaxation. Money is spent on the hobby, but money is not derived from it. There is nothing wrong with spending money or time on a hobby unless it is excessive or necessities are being neglected.
BUSINESS: the activity of making, buying, or selling goods or providing services in exchange for money.
Once you've identified you have a business, you define what style it is. There are two main types: lifestyle and growth.
A lifestyle business is defined as one that allows you to maintain a particular lifestyle. It is often thought of as a solo endeavor. It typically has limited scalability and potential for growth. It can have employees; it can even have big revenue. But, it's purpose is to allow you, the business owner, the ability to live your life on your terms while you run your company. Old school pundits pigeon-holed creatives, photographers, artists, even solo-practitioners (doctors, lawyers, CPA's, architects, interior designers, realtors, etc...) into this category.
But the landscape is changing rapidly and there are two large social shifts to explain it: millennials and COVID-19. Millennials have been demanding a work-life balance for years but it was the pandemic that accelerated that movement with the majority of the working population forced to work out of their home. Those in the service profession (travel and leisure, retail, etc...) were not able to work but were forced to stay home. As a result, an escalation of on-line and ecommerce-led businesses were created. All of these external forces, the explosion of available technology, and the now it's "ok-to-work-out-of-your-home" attitude, are changing the meaning of the word "homework." A significant number of businesses are now run remotely, even from home, without the stigma. The virtual and nomadic lifestyle is the new dream.
A growth business is defined as having revenues increase significantly every year, a strategic long-term vision, and an exit strategy for investors, even if you have only one investor, you. Typically the business has employees. The SBA defines small business has having under 500 employees. The business owner is typically your quintessential 80-hour p/week entrepreneur. A born or self-made entrepreneur typically has a higher risk-tolerance, can pivot faster, and are resilient. Understanding the growth business takes an intimate understanding of the life-cycle of business. There are victorious highs and crushing lows.
Now that you are armed with information the next step is knowing your truth. How would you categorize your business, as a hobby or a business? If you have a business go deeper and understand if it is a lifestyle or growth business. There is no right or wrong answer. But, having one and saying its another creates internal discord and can be a barrier to your success...regardless if its a hobby or a business. So, do you have a business or a hobby? Discern, declare, and defend what you have! Feed your creative longings with your hobby or boast about your business. As the ancient wisdom proclaims, "the truth will set you free!"
As always, I welcome family-friendly, helpful comments.
Your Success. My Support