18 Jun Are you running a hobby, a charity, or a business?
Do you know whether you’re running a hobby, a charity, or a business?
This may seem like a strange question — after all, wouldn’t you know what type of organisation you’re running? But I’ve found that this is actually an incredibly important question, especially for people in the first few years of business.
The difference between the three:
Something that you like doing. Anything can be a hobby; you don’t even have to involve other people. But they key is that you don’t get paid for it — so it’s not a business.
Something that you like doing and that helps other people. But it’s still missing that essential component of a business: revenue. I’m not talking about big charities like Oxfam as they are clearly run as big businesses with a lot of staff – I’m talking about the time that you dedicate to a cause that helps other people, but doesn’t pay you.
Should be a combination of a hobby and a charity that has revenue, so it’s something that you enjoy doing that helps other people AND that pays you.
Note: Even if you are running a social enterprise, the business still needs to be making money so that it can be ploughed back into the cause that you are supporting.
Here’s why this is so important: even if you’ve founded a business, if you’re not making money from it, then you’re not running a business — at least not yet.
I see the same thing again and again at events and on social media — people really want to build a business that lets them live life on their terms, so they go out and start doing something they love, that helps other people … and then they accidentally end up running a hobby or a charity because they just don’t have the strategies and training they need to turn it into a proper, profit making business. This is such a shame.
The bad news is that if they don’t get help, they usually burn out pretty quickly.
Depending on which study you read, between 50 and 80% of small businesses fail in their first couple of years — and if you counted the number of people that buy a domain name, get a website set up, and try to sell services online, I would guess it’s even more.
The good news is that you can absolutely turn your passions into a business. You’ve just got to know how.
First, you’ve got to make a choice: do you actually want to make money doing what you love or would you prefer to just keep that as a hobby?
There are lots of ways to make money, lots of ways to help people and lots of hobbies out there – you just need to be clear on which is which.
There’s nothing wrong with saying no — after all, just because you enjoy doing something doesn’t mean that you want to build a business around it. And a lot of people who do try to build businesses around their hobbies end up hating the hobby because they do it over and over again as part of the business.
So ask yourself, do you really want to use this thing you enjoy as a source of income, or do you want to build another business that will give you the time and freedom to enjoy your hobby?
If you do decide to make a business out of it, then you need to figure out what your target market it, test the viability of your product or service with a mini-version of it (called a minimum viable product, or MVP), and you need to determine how you’re going to invest your time and your money, which are equally important.
The key is to focus on your return on investment — whether you’re spending time or money, if you’re not getting a good ROI then you need to start tweaking what you’re doing.
Finally, learn from people who’ve gone before you! There’s no point in reinventing the wheel, find people who are great at starting and running businesses and learn from them. Whether that’s by finding a mentor, attending one of my Bootcamps, or working in a similar business so you can learn it from the inside out, don’t try to go it alone.
I would love to know … Are you running a hobby, charity, or a business? What do you want to be doing and what do you think is holding you back? What ONE step could you take TODAY to work towards turning into a profit making business?