What is the difference between a business and a hobby?
Before I get into the psychological differences, I want to share a more pragmatic definition. For the purposes of this conversation, my definition looks like this.
A business is structured to make a profit, while the hobbyist sells primarily for other reasons. (Such as social currency or to cover their costs.)
I’m guessing that for most of you reading this post, you view yourselves as running a business. (Or aspiring to run a business.) But are you really? Because in addition to the goal of profitability, there is another important factor in the difference between business and hobby. Perception.
There are three areas where perception comes into play in your business:
- How you view yourself and your business.
- How you present yourself and your business to others.
- How others perceive you and your business.
Let’s look at each of these areas in a little more detail.
How you view yourself and your business.
In some ways, this one seems like the easiest. You tell yourself, “Hey, I run my own business.” You sell your products, so that must be true, right? But as I learned from many of the responses to creating a culture of profit, many of us struggle with the idea of seeing ourselves as running a business. Namely that part about how businesses exist to make a profit and are entitled to do so.
So before you can even begin to scrutinize the other two areas of perception, you need to make sure you are giving yourself credit. You have to get comfortable with the idea that you are a business owner. An entrepreneur. And someone who is in it to make a profit.
How you present yourself and your business to others.
Ok, so you’ve come to view yourself as a creative entrepreneur. Fantastic. But do you present yourself as a business owner to those around you?
When someone asks you what you do, how do you respond? Maybe you say, “I make jewelry,” or “I’m a jewelry designer.” But statements like that actually don’t help with the perception that you run a business and not just make jewelry as a hobby. (You can insert whatever product you make for the word jewelry.) Instead, how can you change that response to promote the idea that you own and run a business?
Your actions also go a long way towards projecting your persona as savvy business owner. Do you make your business a priority, or do you try to squeeze it in between the other parts of your life? Do you designate certain hours as “business time” or do you let yourself get interrupted by shopping trips and lunches out?
I used to be totally guilty of this. I would plan my day to work, and then my mother would call and ask me if I wanted to go shopping. I’d usually say yes. Let me tell you, that didn’t communicate the idea that I was serious about running my business to my family. (Especially to my husband, who was frustrated that I was off doing whatever while he was at work.) Now when my mother calls, my response is usually, “I’m working.”
Ultimately, my point is this. If you’re going to talk the talk (“I run my own business”) then you need to walk the walk.
How others perceive you and your business.
I’ve struggled with the way I’m perceived by certain members of my family and people I encounter in my geographic community. But every day I’m working on ways to present myself to change that perception. But it might not be your family. Look around at everyone you interact with. Do your vendors and suppliers view you as running a business? What about your customers?
In order for your business to be successful, it’s important that the people you surround yourself with understand that you are, in fact, running a business.
Moving from hobby to business.
So how do you shift that perception from one of hobbyist to one of business owner? I want to share a few strategies that I’ve been working on to help communicate that I am running a business. (Not to mention that help make my business more successful.)
But before I do, let me clarify another point. You may not actually be moving from hobby to business. Perhaps, like me, you studied your craft or design process in school, and have always viewed it as a career. Regardless of your background, I think many craft and design businesses (especially those based out of the home) struggle with the perception of what you do as a glorified hobby. So even if this was never your hobby, I think it’s still worth exploring how to make it clear to everyone that you are running a business.
So what do you need to do to go from hobby to business?
You need to get serious.
And I don’t mean serious in suit and tie kind of way. And I don’t mean that you should never have fun. (Far from it. I want you to enjoy what you’re doing.) What I mean by get serious is that you need to make a commitment to doing those things that make your business into, well, a business.
- You need to get serious about the numbers.
- You need to get serious about your time.
- You need to get serious about the realities of running a business.
Get serious about the numbers
If you truly want to run a successful business, you need to get serious about the numbers. Numbers give you so much information – your income versus expenses tells you profit, sales data tells you what’s working and what isn’t, and cash flow projections tell you if you’re going to have any money in the bank next month.
If you aren’t tracking your numbers (or are only paying attention to say, the number of sales or the number in your bank account), it’s probably for one of two reasons:
The first is that you legitimately don’t know how. If that’s the case, there’s never been a better time to learn. Sign up for an account on outright.com. Check out Holly’s suggestions for tracking your profit. Use the business growth planner to see where you’ve been and where you’re going. (And if you aren’t sure what all those number mean, you can always hire me to help.)
The second reason you might not be tracking your numbers is that ignorance is bliss. If you don’t know how much money your business isn’t making (that’s a twisted way of saying you might be losing money) you can pretend it’s not true. While you may be able to get away with this in the short term (especially if you are relying on income from another job or partner) this lack of strategy will eventually be the downfall of your business.
When it comes down to it, the cold hard truth is that businesses track their profits. (And at least a few other numbers.) Until you do, you really aren’t running a business.
Get serious about your time.
I’ve got a new mantra. I’m trying to stop saying “I didn’t have time for something,” and switch to “I didn’t make it a priority.” Because often, lack of time is really lack of prioritization.
In order to run a successful business, you need to carve out time to run your business. And if that means you need to set a schedule for business hours, then by all means do so.
Tara shared with me how when she started having her husband watch their daughter in the evening so she could focus on work, her business took off. Because she was able to commit time to her business.
Running a successful business takes either time or money. If you have one, you can make do without the other. But you can’t run a successful business without investing significant amounts of one of those two things.
The next time you find yourself bemoaning your lack of time to run your business, ask yourself how you can reorder priorities to have time for your business. Can you watch less TV? Have your spouse help with kids or housework? Cut out needless shopping trips? Can you take a week off from your day job to focus on taking your business to the next level?
If you never carve out some serious time for your business, you’ll find it hard to convince others (and eventually yourself) that you’re actually running a business.
Get serious about the realities of running a business.
Running a business is hard. Sometimes you lose money. Sometimes clients don’t pay on time. Sometimes you want to bang your head against the wall. Sometimes you’re filled with an overwhelming sense of panic about how you’ll pay your bills this month. Sometimes you’ll stress over whether or not you’re making the right choices or heading in the right direction.
And in order to run a business, you have to understand and accept all of this. You have to accept that some days it might not be fun. Some days you will have to do tasks you don’t really want to do. (Or figure out ways to delegate those tasks to others. But either way, they have to get done.)
It’s much happier to pretend all that stuff doesn’t exist. To just make and try to sell your products. But ignoring the fact that running a business is hard doesn’t make that reality go away. It just means that you aren’t really running a business.
But there is an upside to this. Once you accept the reality that running a business is hard you open yourself up to the possibility that running a business can also be really, really great. You give yourself a chance to create something bigger than yourself. Something that can provide a great life for you and your family.
But only if you commit to the fact that running a business is not the same as a pursuing a hobby. It’s much more work.
But it has the potential to be so much more rewarding.
::clapping::
GREAT post. And combined with the recent “creative tithing” post, just the kick in the pants I need to really think about my business as a business. I’ve gone from thinking of it as a hobby (when I first decided I wanted to make jewelry) ,to a little business to support that hobby and make a little extra cash, to now wanting to make a substantial amount of money.
It’s still something I only plan to do part-time (still like my full-time job too much!), but I need to make a better effort to carve out time specifically for my business, because the more money I make, the more cool stuff I can buy from fellow crafters and help to support their businesses! This may be as simple as writing in my calendar the blocks of time I plan to spend creating, photographing, promoting, bookkeeping, etc. It’s easy for me to brush something off if I haven’t written it down, but once something is on my to-do list I have a compulsive need to cross it off. 😉
Thanks Steph – I agree – I think scheduling blocks of time in your calendar is a great way to make working on your business a priority!
Another fantastic post! I love the thing about not having enough time versus not making it a priority. So true. I need to stop saying “I don’t have enough time” and schedule hours into my day (and stick to it!) to work on my business.
Thanks Gina!
The time vs. priority idea has been a really important mindset shift for me. Now, instead of worrying about what I don’t have time to do each day, I ask myself, “what do I need to make a priority?'”
Megan, thanks for such a great post! I listened to your interview over on CraftyPod and it was very confirming to hear. I have received a lot of advice that because I am just starting out as an artist, I need to price my products lower until I “make a name” for myself. As if I am not really an artist until people are willing to buy my art. Fortunately, I have a better business sense than to listen to this advice. I don’t want to be seen as another hobbiest trying to sell stuff. I have an artist in my family who prices her art way too low, but her business has never actually taken off because of this exact reason. I also loved what you had to say about not marketing yourself just on Etsy. I somehow knew this instinctually and it was very encouraging to hear that I am on the right path.
Thanks again!
Love,love, love this post!! Thank you. Today, my mantra is “make every choice a conscious one”, which ties right into making your business a priority.
This is me reminding myself to write a follow up to this post on the pro-am differences in websites…
😉
Just what I needed to hear–thank you!
So glad you didn’t group everyone into either having a hobby or running a business. I have always considered myself an artist because I have a degree and exhibited occasionally but only recently registered as a professional, which means I am considered a small business by the tax collector where I live (France). Which means I must keep sales records in case of an audit, which lead me to take a few business courses and follow sites like yours to learn as much as possible! BTW, great interview on Craftypod!!
Thank You so much for the great article. You really have some sound advice!
Running a business certainly takes a whole lot more dedication and perseverance than hobbying. And when it comes to crafting it’s definitely important to put down that extra spool of ribbon and stick that money into something that will better grown the business. I think for me, I need to work on those “I design accessories” phrases. Yup. I do.
Hi Megan. I think this is one of your best posts yet.
I had to stop saying to people that I sell greeting cards because they would literally tune out and become disinterested. We actually took the word ‘cards’ off our business name because we felt it had no respect from other business people. So now we are Cartolina inc. And when I meet people I tell them that I run a publishing company. They usually respond with – “Really? Who do you work for?” – which is really irritating. But we get past that pretty quickly. My new line is that “We publish and sell paper products around the world.”
Its a shame that we have to leave the word “cards” out of the description but, whatever it takes!
Love your new leather cuff!
Fiona
In looking at the hobby-business continuum, there are further divisions within “hobby.” There are some hobbyists who do not make money on their efforts, but are extremely dedicated in self-directed learning. I’m thinking of the model railroaders who are very focused on creation and spend hours on their work. There are other hobbyists who dabble in different materials for the fun of it. We’ve all run across prolific hobbyists who enjoy selling items, but price them very low just to recoup material costs.
Sewing used to be my hobby, but it has transformed into a business. But I still have other hobbies like gardening and reading. A further challenge to business commitment is when you have a full time “day” job, as others have posted.
I would hate to see us discard the word “hobby” because that is often where sheer enjoyment and experimentation takes place. Those are good qualities to bring to a business approach.
A very timely & excellent post Megan. I especially like the point about that we do in fact have control over how others perceive us by having pro-active & professional attitude toward our business.
As a home based jewellery artist this is an area I constantly struggle with – that people don’t perceive what I do as a serious business enterprise because I’m operating from home rather than a brick & mortar shop. But perhaps the real problem here is actually my attitude- guilty on all accounts of not prioritising things & being easily distracted by an invitation to coffee or lunch! Very interesting… Thanks.
Last week I decided to quit my day job to focus on my business. While discussing my new schedule with my partner, he said “You’ll have loads more time to do things like the laundry and groceries during the day.” Um, excuse me, I am not at home to the housework, I am WORKING from home!
This is the first article I read on your blog and I find it insightful and motivating. Can’t wait to read more!
Thanks!
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Thank you for your article. I am heavily weighing hobby vs business and trying to figure it all out. So much of me wants to take the plunge but want to make sure I have enough information to help me be successful. I love the priority comment. It is so true.
I am so glad you rounded up some links in your end of the year email, because I hadn’t read this before and it exactly where I am at right now. I quit my job a few months ago and have already had lots of ups and downs. I am going to check out outright.com because I think the finances is the part I say I don’t have time for the most. I set up a system to track my income and expenses at the beginning of the year, and realized I only used it for the first 6 months. Oops.
Thanks again for a great post.
What a great post! I too tip my hat to you. This is what I needed to read to take my business to the next level.
Kudos!
Jennifer
Song Fashions
Excellent post. Gives me a lot to think about. Thanks!
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I’ve been struggling with this and this post really helps. I’m so glad that people like you have helped pave the way for the rest of us. Thank you so much!
Wow. This is going to be a post that I bookmark and come back to over and over. I saw myself in so many areas — and think I might fit both profiles when it comes to the numbers!! Thanks for such practical advice! I’m a new follower!
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Always new things to learn for starters. Business is Business and needs dedication for sure.
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