When a hobby begins to turn into a business
Is this is a hobby or a business?
This is one of the most interesting questions we come across in dealing with potential entrepreneurs.
It usually starts with what Nolan Bushnell said:
“Anyone who has taken a shower has had an idea. It’s the person who gets out, dries themselves off and does something about it that makes a difference.”
And our ideas are usually about something we like, so when we dry ourselves off and start doing something about it, we tend to gravitate toward the things we like the fun parts.
But then as we get into it, we find out there are also parts that require a lot of work and they’re not always fun. And therein lies the rub.
Some years ago, my late wife asked me to make her a rack for holding her ribbons and wrapping paper. I like designing consumer products, and one of my hobbies is woodworking and building fine specialty furniture. So after procrastinating a bit, I designed a rack she almost liked. I took her suggested changes and designed and built a newer and better one which she really liked.
So far all is well the rack is built, she’s using it, and I feel good about the design. But, my son ,who was a partner in a company selling art products through retail stores, saw it and said “Dad, let’s take that to market.” I’ve brought hundreds of products to market successfully, both in companies I worked for early in my career and for my own companies later on. After some thought and rough calculations of how many we could sell, pricing, etc. I said “OK, let’s do it.”
Early in my career as a product engineer designing consumer products for a medium size company, if I wanted a prototype, I drew it up and our model shop made the metal parts and I assembled them. Later when I had my own company, my engineers designed products, we had prototypes built by an outside contractor and then we went to market.
But now I’m semi-retired and I’m going to bring a really simple ribbon and wrapping paper rack made of wood to market. First the design. I couldn’t just use the design of the one I did for my wife because it had no tolerance provisions and the like. And, the one I made for her cost me about $70 in materials to produce (not counting my labor) and we wanted these to retail for under $20.
We figured we needed about 20 prototypes to show to the various retailers and catalog companies and use for production quotes. I set out to build the 20 units so I could develop fixtures and tolerances, etc. It took me more than two months to complete the 20 pieces. It’s amazing how long these things take when only one person is doing it. After the first two weeks it wasn’t as much fun – just plain hard work!
In fact, building the first 20 and getting into business phase was 95 percent hard work and 5 percent fun. It’s easy to see why most product ideas never see the light of day and never come to fruition. However, we persevered and ended up with a really cool product. We had it produced in China in order to hit our cost target, which would allow a selling price of under $20. We ended up selling thousands, first on QVC and then through a number of home specialty catalogs. Overall a rewarding venture that I’m glad I did.
Let’s look at another scenario. Suppose you like target shooting as a sport. You like all parts of it, even cleaning your guns when you get back from the range. You like working with precision equipment and you’re good at it. So you decide to start a gun-cleaning business. Your buddy Jeff asks you to clean his gun and you do. His buddy Tom asks you to clean his gun and you do. The next time you’re out shooting, they both ask you to clean their guns, but you have plans to take the kids to Disneyland for a few days so you say you’ll do it when you get back. While you were gone, Jeff took his wife out shooting so he brings her gun for you to clean and also one of her friend’s guns that they need cleaned so they can go shooting again tomorrow.
But you had plans to watch the ball game the day you got back.
So now what started out as a fun hobby where you could also make a few bucks is turning out to be a pain in the neck with responsibilities and demands from your friends (now customers) to get their guns cleaned. So now you have some decisions to make. Which is more important, continuing to operate and build a business or go back to enjoying your hobby and your free time? Unfortunately many of us get sucked into a situation like this and maybe worse we become dependent on the additional income and wish we’d never started the business.
And now, back to our question: Is it a hobby or a business? Either answer is OK, but it needs to be the right answer for you. If you have a hobby doing something you really love and turning it into a business makes it work and not fun anymore, maybe you need to re-think it. Or, if you start doing something for money, but only when it’s convenient for you, maybe you should call it a “paying hobby” so you don’t feel pressured to turn it into a real business with all the attendant headaches, responsibilities, etc.
It’s important to remember that once we say we have a business or are in business, we also take on all the responsibilities of a business at the same level of responsibility we would in a “real job,” only more so, because when you’re in business, the buck stops here with you.
Rod Hosilyk is chairman of Entrepreneurship Nevada, managing director of Startup Growth Strategies, and a serial entrepreneur who is starting yet another company to develop and manufacture products based on one of his hobbies. Contact him through http://www.sgs101.com.
Initial claims for unemployment in Nevada have remained relatively flat for more than two months and totaled 8,158 in the week ending Oct. 31.