Blog | Entrepreneurship

Hobby vs. Business

Is it possible to turn your part-time passion into a profitable business?

Have you been daydreaming about starting your own business even more often than usual? You’re not alone.

A new survey from Thimble, a company offering on-demand insurance solutions for small business professionals, asked Americans what they would be willing to give up to be their own boss. The survey, which polled 1,500 respondents, examined not only the benefits that people said they would trade in but also found that people believe that being their own boss is the ultimate perk or benefit.

The key survey findings:

• 90% of Americans would give up a key work benefit to be their own boss — such as paid time off (PTO), a yearly bonus, retirement savings, weekends off, and a competitive salary

• Most Americans would trade yearly bonuses and PTO to be self-employed

• Despite the uncertainty of the pandemic, Americans are still motivated to be their own boss

And it looks like some people are actually making their dream a reality: According to the U.S. Census Bureau’s Business Formation Statistics, weekly business applications have increased by 31% since 2019. That’s such great news!

Of course, it does leave me wondering: How many of these new business owners have decided to follow their passion on their path to entrepreneurship? To me, that’s the ultimate way to achieve financial freedom, but it’s not always a successful transition.

Turning your passion into profits

There are many important characteristics when starting your own business: determination, creativity, knowledge, self-confidence, strong work ethic, flexibility, discipline and more.

But in my opinion, the most vital one is passion. It's what gets you out of bed in the morning, and what keeps you going when you face setbacks and doubt (and start to miss your old salary or other corporate perks you gave up). When the day is over, it's what stops you from giving up and going back to the "safe" road of working for someone else.

That's why, when people want to start their own business, they frequently focus on something they're passionate about. Oftentimes, the most natural place they look is in their hobbies.

In theory, turning your hobby into a business makes a lot of sense. You love your hobby, and presumably have a lot of knowledge about it. Those two things should make for a successful business, right?

Maybe, but not always. Sometimes, turning your hobby into a business is a wonderful idea, and other times, it's disastrous.

If you're thinking about turning your hobby into a business, here are some important things to consider before you get started. We’ll also talk about the B-I Triangle, a handy tool to help you see the bigger picture of deciding if something should remain your hobby or could flourish as a business.

Your hobby must be realistic

Let's start with the most obvious point. If you want to turn your hobby into a business, you need be grounded in reality.

We all have hobbies that we love, but that would make terrible businesses — like doing the crossword puzzle, hiking, or strumming the guitar.

Now, some people do manage to find business opportunities in even the strangest hobbies, but for you to start a real and sustainable business, you have to be completely honest with yourself.

In order to determine if it’s a hobby vs business, start by deciding if there’s a way to monetize the hobby. Would it make sense to do so? You might be able to monetize most of your hobbies in some way (maybe you host guided hikes on the weekends or play the guitar at a local club or for tips), but would the gains be worth your time and effort?

Ask yourself, “Can I grow it into a business that would work without me?”

For example, let's say your passion is crafting, and you want to sell your crafts on Etsy. That's a great idea, but your business will only operate when you're working, keeping you on the left side of the CASHFLOW quadrant as an S, or self-employed.

Remember, a real business owner (B) creates businesses that can run without them. Selling your crafts or services on the side and investing the profits is a great way to boost your passive income, but it's not a true business until it can run without you.

Think creatively

If you're not sure how to turn your hobby into a business, maybe it's time to start thinking outside the box.

That's what Robert did when he was a boy working for his rich dad in one of his grocery stores. With no pay, Robert had to think creatively to spot new business opportunities.

One day, the answer came to him. Robert loved comic books, so when he saw the storeowner throwing out the old comics that no one bought, he had the idea to start a comic book library for his neighborhood. He charged a fee for entry and was able to make a good bit of money for a 9-year-old.

But if he hadn't been looking for that opportunity, he would have missed it.

When you're examining the hobbies and passions in your life, be on the lookout for unexpected opportunities. Don't follow the traditional path, but be innovative and look for needs that must be met. If you've pursued this passion for a while, you should know better than anyone where the need is and how to meet it creatively.

Hobbies are fun, business isn't

Starting a business is not relaxing, and oftentimes, it's not fun. In fact, it can be downright stressful, time-consuming, exhausting, and frustrating.

A lot of people find that while they have a great idea for how to turn their hobby into a business, the reality is a lot harder because they don't want to lose the simple pleasure they get from the hobby.

For example, if you love photography because you find it relaxes you and is a creative outlet for your moments of inspiration, turning it into a business could take the magic out of creating your art. Suddenly, you're working on a deadline, meeting your customers' needs. You don't have time to stop and enjoy the work you're doing, because you have other business needs that take priority.

I'm not trying to dissuade you from pursuing your hobby as a business, but you have to be realistic about how business will change your passion. If you aren't ready to let go of the hobby that relaxes you, it might be best to look somewhere else for a business idea and accept that fact that there’s a big different between a hobby and a business.

Be serious

If you turn your hobby into a business, you have to treat it like a business. That means getting serious about your work and your plan for growth.

It requires a change in mindset. You can't approach your business the same way you would a hobby — in your spare time, lazily, when inspiration strikes, and hoping to have a little fun.

You have to devote all your time and energy to it, going over the details, making plans, thinking strategically, growing it so it can run without you. Again, it might be stressful and frustrating, it might even take some of the initial passion you had for the hobby away — which is why you should think long and hard before you start down this path.

But, it can also be wonderful, and you, like many others, could find a way to profit from doing something you love.

The final verdict: hobby versus business

An important tool in helping you think through the work it takes to start a successful business is called the B-I Triangle. This handy chart is what Robert’s rich dad taught him about building a business. First and foremost, you must have a mission, a team, and leadership. Then, there’s the product (what you’re selling), legal, systems (such as accounting and distribution), communications (marketing and sales) and finally cash flow— these are the fundamentals every entrepreneur needs to grow their business. If even one of these eight pieces are missing, the business will have less cash flow (and be more apt to fail).

Study this B-I Triangle and then get real with yourself — will having to worry about all of this detract from the joy your hobby brings you? Maybe the answer is yes. Maybe it’s no. But I believe it’s always best to know exactly what you’re getting yourself into before you make the leap. And if you’re unsure, I highly recommend keeping your day job and starting your hobby-based business on a part-time basis. Then, you can truly assess how you feel about it with far less risk.

Where does your passion come from?

We all want to be passionate about the work we're doing. We all want to be fired up in the morning, excited to get to work. Where your passion comes from is unique to you. Turning that passion into a business is a lot of work, but can be incredibly rewarding.

My passion comes from a sense of a greater purpose — helping elevate the financial well-being of others. With a lot of hard work, Robert and I were able to build a successful business out of that passion, and help thousands of people worldwide in the process.

Every day people turn their passions into successful businesses, and you're no different. With creativity, determination, passion, and following the B-I Triangle, you can find success in doing the things you love.