Do You Have a Business or a Hobby?

I love new businesses! I love the creative side of coming up with an idea and making it your own. The energy and time it takes to create something new can either be exhilarating or exhausting.

Here is a hard truth: Businesses make income.

I see so many people have a passion for something creative. It may be making something with their own two hands like a piece of jewelry, culinary delights or furniture. They throw their energy into these projects, and it’s obvious that it brings them joy.

I have started several businesses myself that actually turned out to be hobbies.. Here is how you can determine what category you fit in, and how to maximize the value of those activities that bring you joy.

1. Does the activity / creation of something enhance another part of your life? I hope this is a resounding “YES!” but if it’s not, then ask yourself why you are continue to spend time and energy on it.
2. Does the activity / creation of something enhance the income producing side of your business?

For example, I have a podcast and also this blog. Neither of them bring me a direct income, as I don’t monetize either entity. So is it a business or a hobby? Well, that can be tricky. Although I don’t receive direct income from the podcast or the blog, both activities 1) bring me joy and 2) enhance the income producing parts of my business. By publishing both a spoken word and a written word, with guest experts sprinkled in, it has created additional value to my business. It has also created a way for me to set myself apart in my area of business.

3. Does the activity / creation of something need to be developed first before income can be achieved?

This is also a tricky one, and I’m going to follow it up with another question:

4. How much time and resources is needed for it to start making money? You might not know the answer to this, but I encourage you to put together a budget and a plan. It is all too easy to continue to throw time and money towards something forever. What is the timeline and what is the goal?

And finally:

5. Does the income you create from your idea bring enough value to continue? I know plenty of business owners who sell a product or service BUT aren’t maximizing their own value. Ouch! You might own a darling boutique store that makes a profit, but the 80+ hours a week you have to put into it to keep it in the black is causing strain on yourself and your family. If you are not producing enough profit from your business to hire help, or have the life that you are desiring, is it a business that is truly creating value for you?