IN THE MANY DISCUSSIONS I have had with entrepreneurs over the past fifteen years, one of the top ten reasons entrepreneurs give for wanting to start a certain business is that they dream of doing their hobby full time. They love playing golf, collecting figurines, dancing—you name it—and because they enjoy it, they think that their key to career happiness is to pursue something related to their hobby full time.
There are two sides to this issue. First, I am a huge supporter of the theory that you need to be passionate about what you do in order to maximize your success. I do believe that businesses that have upper management and owners who are in the same demographic as their target customer, and who use and enjoy the type of goods or services produced by their company, are better at understanding the customer perspective. This makes for more successful businesses.
On the other hand, part of the reason that we enjoy our hobbies is because they are done in our free time. They are—by definition, leisure—not work. We enjoy our hobbies because we do them at our discretion and control. We don’t have to worry about them producing a paycheck. We can relax when we pursue our hobbies.
What is your favorite food? Maybe it’s ice cream, pizza, chocolate, or steak? Whatever it is, think of that favorite food that brings you joy to eat. Now, what if someone made you eat that food and only that food every day? Pizza for breakfast, lunch, and dinner. Pizza for snacks and for dessert. Pizza when you were sick or healthy, home or out to dinner. That is it, you are 100 percent committed to pizza. Most of you would get sick of pizza after a while. While it may be your favorite food amongst other choices, if you were forced to eat it every day, it would probably lose much of its appeal. This is the same with hobbies. They are great because you aren’t compelled to pursue them. Once a hobby crosses the line to become something you must do to earn a living, your relationship with the hobby changes.
This happened to me when I used to collect toys. I was a very avid collector, and since I pursue everything I do with ridiculous zeal, I amassed several extremely rare collections featuring prototypes and hard-to-find exotic toys. Several years into my “addiction,” I took on my first toy industry client. At first I was thrilled, as now I had a role in the inner workings of something about which I was truly passionate. However, as I got more involved with the client and had access to anything I wanted, the thrill of the hunt (a critical part of the collecting hobby) died down. I learned about how the toys were conceived, and some of the intrigue was lost. The whole experience was sort of like Dorothy and her friends peering behind the curtain to find that the Wizard of Oz was not an awesome, powerful stud but rather some regular little guy. It killed the fantasy and the magic: the mystique of the wizard was gone. This was the same feeling I had as I peered behind the curtain of the magical world of toys. It wasn’t so magical anymore. This was great for my bank account, but not great for my hobby.
My experience with my toy client also gave me additional insight into some other issues relating to the hobby-as-a-business phenomenon. Many hobbyists believe that because they understand a particular hobby (and some know everything there is to know about their hobby from the hobbyist perspective), it would be easy for them to transition into a business focused on the hobby. There is an incredible amount of naïveté regarding how difficult it is to run a business. Just because you understand the product or service of a business doesn’t mean that you can effectively run a business in that industry.
With my various clients, I have seen hobbyist customers who will openly blog or post online about issues such as the companies’ prices being too high. Customers have suggested that the retail price of certain items be revised to a price that is actually lower than my clients’ costs of manufacturing those goods. Also, many of the hobbyists aren’t realistic about the businesses’ ongoing costs and expenses. Sometimes, they don’t grasp the need for companies’ employees to be paid actual competitive wages. They don’t seem to realize that just because it is a hobby to them doesn’t mean that everyone involved wants to work for a reduced rate (or for free). They also believe that if they were in charge, they could circumvent things that are completely outside of a company’s control, such as shipping delays due to containers being caught up in U.S. customs.
Another issue I have seen with hobbyists that want to start hobby-based businesses is that many hobby niches aren’t large enough to support a full business. As Pam Slim notes in Escape from Cubicle Nation, “intense passion for something and a viable business model to turn this passion into a decent living are two totally different things.”
It may be great that you love to knit holders for the heads of your golf clubs in the shapes of cute animals, but that doesn’t mean there is a bona fide business that can be based around it. Using the 10 percent profit proxy for healthy products companies (which will be discussed in further in chapter 25), if you want to make $50,000 a year, you would have to sell about $500,000 worth of knit animal toppers every year. If you sell them for ten dollars wholesale, that is 50,000 pieces that you would have to sell each and every year (which is around 200 each day, assuming a typical business workweek) to make that $50,000 salary. In many hobby niches, this is completely unattainable or at least highly challenging (as I imagine it might be with knit animal toppers for golf clubs).
Another problem is that hobbies are all about your likes and wants, and businesses are all about your customers’ likes and wants. This is an especially hard transition for a lot of creative hobbyists to make. You may love designing classy fashion and are appalled at tacky outfits. As a hobbyist, if someone wants you to make a pair of orange and purple polka-dotted, bell-bottom jeans, you can easily say no. But if you are a business owner, passing on the job may cost you a customer, which you may not be able to afford. As a business owner, what matters most is what your customers want because they are the ones paying you.
As mentioned in previous chapters, when you start a business, you actually spend a small portion of the time doing what it is you love to do. If you love teaching dance and want to open a dance studio, you don’t get to teach dance all day. You have to find customers, collect payment, find other employees, manage paperwork, take daily phone calls from Joey’s mom during which you continually explain that her son is not the next Mikhail Baryshnikov, keep the studio clean, do your accounting, and a whole host of other things. If you are really convinced that you love your hobby and want to do something related to it each and every day, you may be better served getting a job in the same industry. This way, you can entertain your passion without the risk of having to create a sustainable business yourself.
When hobbyists want to make money from their hobby, often they end up with what I call a “jobbie.” A jobbie is a hobby disguised as a business or a career. This happens because, as noted, someone decides to make a product or offer a service associated with a hobby. Or, they have a pursuit in an area that they love that doesn’t really make them a full salary. My litmus test is that if you are pursuing the endeavor full time and are not making in profit—not sales—the minimum wage (currently $7.25 per hour at the federal level, higher in some states) on an hourly basis and have no real, credible plans to do so, you have a jobbie. Additionally, if you are not pursuing your endeavor on a full-time basis, and are rather dabbling and making some cash on the side, you also have a jobbie.
Jobbies tend to disproportionately affect certain groups, such as stay-at-home moms, creative types, recent college graduates, and good-old dreamers. There is nothing wrong with a jobbie inherently. It is actually great if you can make a bit of extra money from your hobby or can support your hobby, instead of having a hobby that just sucks up your money with nothing to show for it except for some fond memories. Just be realistic about it and know what it is. Make sure that you are not dependent on the jobbie as a source of income. You are not going to do yourself any favors by pretending that you are starting a business that ultimately goes nowhere because it didn’t have the foundation to be a business. Also, when you have a jobbie, you can sucker yourself into buying crazy amounts of inventory, spending an outrageous sum on a high-end website, and costing yourself a lot of money with delusions about your jobbie’s potential. Jobbyists sometimes dream that they will make huge sums of money from their side business. If you think that you are going to make a ton of money, create a real business plan, complete with financial statements and reasonable assumptions, and then evaluate whether it is a bona fide business opportunity or a jobbie.
You can also delay making real money by kidding yourself that this jobbie is actually going to become a full-blown business. Sometimes that is the point of a jobbie—a crutch to fall on so that you don’t have to get a real job. Just be honest with yourself, even if you aren’t with those around you.
That being said, a jobbie may actually be a perfect alternative to starting a real business. If you can pursue your passion and make a bit of side money, you may be able to satisfy your personal wants and needs without taking on an inordinate amount of risk (again, assuming you are cognizant that you are starting a jobbie and not investing at the same levels that you would for a bona fide business).
A jobbie can also be a good stepping stone for you if you are evaluating a business down the road. It will allow you to test out interest in your products and services on a small scale and see if you can maintain your passion for the opportunity (and your customers) before you quit your day job. You just need to make sure that if you are going to move your jobbie into a bona fide business, that you evaluate the scope of that undertaking with a thorough and honest assessment.
I urge you to be very cautious about assuming that you can turn your leisure-time passion into a true business that will provide an ample reward to be worth the risk. In most cases, the risk/reward balance won’t be there. If it isn’t, don’t quit your day job; just look forward to your free time where you can pursue your hobby and feel fortunate that you have the balance in your life to have free time to pursue a passion. If you can make a jobbie out of your hobby, then more power to you, but don’t get delusions of grandeur and think that a windfall is around the corner without some additional in-depth evaluation.
If wanting to pursue one of your hobbies for a living is one of your motivating factors, write down the answers to the following questions:
Evaluate these answers to decide: (a) if you want to pursue any money-making strategy from your hobby at all and (b) if yes, whether you would be better served with a jobbie than a true business?