Home Business or a Hobby: Is it Time to Take the Leap?
Posted on December 1, 2016
Maine is a place that seems to bring out creativity in people. It’s brimming with artisans, inventors and culinary creators who dabble in ventures at all levels. For many, it’s the genesis of a burgeoning small business; for others, it’s destined to remain a hobby. How to you know when it’s time to make the leap from an enjoyable pastime to a professional pursuit? Taking a close look at the key drivers for long-term success and asking yourself the difficult questions are the first steps in making a rational, objective decision.
1. Nail your idea
Does your hobby involve a brand or service that someone would pay for? Crafting a product or service that is enjoyable for you does not guarantee you will be paid for your efforts. In the business world, it’s called a value proposition: defining the problem your business is solving. Engage family, friends and potential customers to provide critical feedback on your product. Ask what they like most about your product, how it helps them solve a problem and what they might pay for this product. Ask no fewer than 25 people and jot down their response.
2. Articulate your product promise
From your research, compose a 60-second message (often called an elevator speech) that clearly spells out your brand or service and three reasons why someone would pay for your brand or service. Test that message on 25 more people and refine it based on feedback.
3. Consider Your Costs
A business without a plan to make a profit is considered a hobby. If you’re seriously consider a business venture, take the time to determine what it costs to produce your product. Figure out your fixed and variable costs and develop a breakeven analysis: What is your breakeven point and do you have the financial resources to continue until you get there? Though it may be standard practice not to take a paycheck when you start out, the business should generate an income for your efforts. It’s interesting to note that personal savings are the most common source of funds to start businesses.
4. Take a personal inventory
Do you have the financial, emotional and physical stamina to start a home business? Running a business requires time, money, focus and support from your family. Evaluate yourself realistically. Ask yourself the hard questions. Exploration is an important part of your process.
5. Create a marketing plan
Who is your ideal customer? Is there a set of defined marketing activities to generate awareness and trial? Moving from a hobby to a business requires a marketing plan, and social media and a website are just the beginning. Customers have to know, like and trust you before investing their hard earned money in your new product.
6. Find Your Customers
Nothing else matters if you don’t have customers. The majority of your time and effort must focus on sales. Make certain you are comfortable and confident talking about your product. Create a list of 50 potential customers that you’ll go after and begin making calls one by one.
7.Get serious about the process
A hobby balances flexible time with pursuit of a passion. Running a business has to be your top priority. You can’t assume your hobby will magically turn into a business; you have to invest the time and money in the process. Give yourself time to find the balance between creating and running your business. There is a subtle, but significant difference between “making the cupcakes” and the “business of making cupcakes.”
At the end of the day, the difference between hobby and home business is clear. Hobbies evolve from passions, and turning a hobby into a business is a lot more work and can squeeze all the fun out of your passion. If you want to make the leap, you have to refocus yourself as an entrepreneur.