5 Things Which Make the Difference Between a Hobby and a Business

Posted In:

I'd like you to take a step back, look at your business as an outsider would and ask the question "Is this a hobby or a business?"

Put aside the anger that immediately boils to the surface because, after all, you are working 12 hours a day, 7 days a week; eating and non-sleeping this entity known as your business with little financial return and look at it objectively.

There will come a time (if it hasn't come already) when you get up one morning, exhausted and overwhelmed, and ask yourself "What happened to my vision of carefree self employment where I'm my own boss, there's plenty of money and I'm a raging success? Did I take a wrong turn on the road to success?"

Be thankful for that day.

That is the day you realize you have a great opportunity: to step up and act like a business (and recognize the limitless possibilities) or keep playing with your "hobby" (and be realistic about your income potential). Up until that point, chances are you've been more focused on your specialty (bookkeeping, massage therapy, virtual assistance, etc.) than on running your business (think "technician" rather than "manager").

As a "business", you must focus on the future and look at planning and revenue. As a "hobby", you focus more on today.

If you wish to create a business, especially a successful one, you must have certain success indicators in place (just ask the IRS):

1. You have a business and marketing plan.

If you want your business to be successful for the longer term, you need to define what "successful" and "longer term" mean to you. Your business plan must be written and adaptable to the change that will happen.

I strongly recommend that you have a separate marketing plan which outlines the activities you will do to attract more clients. Your business and marketing plans should be living, breathing documents which you use to keep on track.

2. You act like a business.

Your business has its own identity or brand. You have a "look", possibly a tagline and cohesive marketing materials.

Your email address has your domain name in it (e.g., Sandy@SandraMartini.com) rather than you using a generic account such as yournamehere@yahoo.com.

And, most importantly, you are not mixing money between business and personal. You track your business income and expenses in a software such as QuickBooks and not in a shoebox timidly carried to your accountant each year.

3. You're making money.

Your business needs to be holding its own and then some. OR, at the very least, well on it's way to profitability. You can't be drawing out of your savings or racking up credit card debt with no idea of when you will actually start making money.

Hobbies can cost a lot with no hope of financial return aside from the sheer pleasure of engaging in them. Businesses don't have this luxury.

4. You have a team.

As a solopreneur, there is only so much you can do. . .and do well. To build your business to the point where you are focusing only on your core strengths (which should be the same things that bring in the revenue), you need someone to delegate to.

5. You continue to learn and improve.

As a business owner, you must continuously review what's working and what's not in your business and make changes accordingly.

Personally, I do two things to insure that my business (and I) continue to improve: 1/ I invest in myself by hiring good mentors and 2/ I created a "Flash Report" for my business — one of my virtual assistants populates the report and sends it to me each Friday. It tells me what's working and what needs tweaking within my business.

If you dream of a business where you fulfill your passions, work less, yet make more while making a difference in the lives of your clients, these are just a few of the indicators that you want to insure are in place. The proper systems will do more for you than a thousand networking meetings. 🙂

I challenge you to take a hard look at your business over the coming days and see where you can improve – – make a list and choose one indicator to work on over the next 90 days.