Lots of people jump into a business, and believe just because they created a website, and had a great idea, that they have a business. Then, 3 years later, the government thinks you’re a hobby because, guess what, you’ve made no profit. Oh, wait, you didn’t realize you were supposed to make a profit for all those write-offs, so….There is nothing wrong with being the owner of a hobby. In fact, it can be super rewarding, and a great outlet from other work you do, so good for you! But, if you are wanting to have a business, it’s important that you understand some of the core differences between having a hobby and running a business. Here are a few ways to tell whether you are a Hobby-owner or a Business-owner:
Money – “go with the flow” versus money saavy.
A hobby-owner doesn’t pay attention to money. They buy supplies here and there, figure they will pay off credit card debt eventually, and don’t worry about making a profit. In fact, they aren’t even aware of how much money they’ve made because it’s just fun!
A business-owner knows his or her exact financial situation down to the penny. Their profit/loss numbers are not just an approximation, they know how much is in the bank, how much is booked and on the way, and how much debt they have each month. A lot of business owners actually make use of software from companies like Synario to help them predict their profits and losses by using financial models. This helps business owners to make sure they’re prepared for the future. Money is not just a “flow I’m trying to be in,” it’s a core focus of their work.
Sales – “they just happen” versus actively seeking opportunity.
A hobby-owner sits back and lets people show up. They start their business believing that referrals, alone, will pay their bills, and that those referrals will just happen while they sit on the couch and watch TV.
A business-owner employs multiple strategies to get clients, and measures the success of each, and then plans their time out based on the success of each outlet for them.
Time – “I will sleep when I’m dead” versus ensuring you have a life.
A hobby owner has unreliable batches of work, so when it comes in, it’s “work, work, work” and then when there is no work, they get to relax, which gets hard because there might not be any money coming in to allow for relaxation. They say YES to everything that comes in, since they aren’t sure when the next job will show up, and end up getting sick on a regular basis because that’s the only way their body gets a break and some rest.
A business-owner sets expectations first, with THEMSELVES as to how much personal time they need, and how they will nurture themselves. Then they recognize they are creators, and they set forth their working relationships with their clients. They allow for vacation, and self-care within their schedule, and they are able to turn down clients or work that does not align with how they want to live their life.
Vision is about your eyesight versus your future.
A hobby owner doesn’t set any concrete visions because they don’t even think about growing their business, or it’s just an “it would be nice if” kind of thought.
A business owner sets a vision at least once a year, and aligns his or her business activities around bringing that vision into reality. They want to grow their business and constantly review their goals, and direction to head towards that vision.
Are you tired of running your business like a hobby, and ready to create the structures you need to have a profitable business? Set up a BullBusting strategy session now!