Today I am so excited to say that I’ve been interviewed over at the CraftyPod. Sister Diane asked if I would be willing to talk about Etsy and its pro-am culture, and I was more than happy to oblige. It’s a fantastic conversation about the pros and cons of Etsy being a pro-am culture, how to tell which side of that fence you fall on, and what makes a viable business.
You should head over and listen right now. I’ll wait.
Ok, good. You’re back.
Because as a companion to the podcast over at CraftyPod, today I want to talk about the difference between running a business and simply supporting your hobby. With sites like Etsy making entry into the crafts market so easy, the line between business and hobby gets more blurred by the day. And that blurry line can cause a lot of stress for you and your business. So I’m going to examine some of the psychological differences between a business and a hobby, and then share some tips to help you move from grey area to legitimate business.
What is the difference between a business and a hobby?
Before I get into the psychological differences, I want to share a more pragmatic definition. For the purposes of this conversation, my definition looks like this.
A business is structured to make a profit, while the hobbyist sells primarily for other reasons. (Such as social currency or to cover their costs.)
I’m guessing that for most of you reading this post, you view yourselves as running a business. (Or aspiring to run a business.) But are you really? Because in addition to the goal of profitability, there is another important factor in the difference between business and hobby. Perception.
There are three areas where perception comes into play in your business:
- How you view yourself and your business.
- How you present yourself and your business to others.
- How others perceive you and your business.
Let’s look at each of these areas in a little more detail.
How you view yourself and your business.
In some ways, this one seems like the easiest. You tell yourself, “Hey, I run my own business.” You sell your products, so that must be true, right? But as I learned from many of the responses to creating a culture of profit, many of us struggle with the idea of seeing ourselves as running a business. Namely that part about how businesses exist to make a profit and are entitled to do so.
So before you can even begin to scrutinize the other two areas of perception, you need to make sure you are giving yourself credit. You have to get comfortable with the idea that you are a business owner. An entrepreneur. A creative empire builder. And someone who is in it to make a profit.
How you present yourself and your business to others.
Ok, so you’ve come to view yourself as a creative entrepreneur. Fantastic. But do you present yourself as a business owner to those around you?
When someone asks you what you do, how do you respond? Maybe you say, “I make jewelry,” or “I’m a jewelry designer.” But statements like that actually don’t help with the perception that you run a business and not just make jewelry as a hobby. (You can insert whatever product you make for the word jewelry.) Instead, how can you change that response to promote the idea that you own and run a business?
Your actions also go a long way towards projecting your persona as savvy business owner. Do you make your business a priority, or do you try to squeeze it in between the other parts of your life? Do you designate certain hours as “business time” or do you let yourself get interrupted by shopping trips and lunches out?
I used to be totally guilty of this. I would plan my day to work, and then my mother would call and ask me if I wanted to go shopping. I’d usually say yes. Let me tell you, that didn’t communicate the idea that I was serious about running my business to my family. (Especially to my husband, who was frustrated that I was off doing whatever while he was at work.) Now when my mother calls, my response is usually, “I’m working.”
Ultimately, my point is this. If you’re going to talk the talk (“I run my own business”) then you need to walk the walk.
How others perceive you and your business.
This is something Tara and I discuss in yesterday’s video about building our own creative empires. And really, it goes back to the way your present yourself to others in order to have them perceive you in the way you’d like.
I struggle with the way I’m perceived by certain members of my family and people I encounter in my geographic community. But every day I’m working on ways to present myself to change that perception. But it might not be your family. Look around at everyone you interact with. Do your vendors and suppliers view you as running a business? What about your customers?
In order for your business to be successful, it’s important that the people you surround yourself with understand that you are, in fact, running a business.
Moving from hobby to business.
So how do you shift that perception from one of hobbyist to one of business owner? I want to share a few strategies that I’ve been working on to help communicate that I am running a business. (Not to mention that help make my business more successful.)
But before I do, let me clarify another point. You may not actually be moving from hobby to business. Perhaps, like me, you studied your craft or design process in school, and have always viewed it as a career. Regardless of your background, I think many craft and design businesses (especially those based out of the home) struggle with the perception of what you do as a glorified hobby. So even if this was never your hobby, I think it’s still worth exploring how to make it clear to everyone that you are running a business.
So what do you need to do to go from hobby to business?
You need to get serious.
And I don’t mean serious in suit and tie kind of way. And I don’t mean that you should never have fun. (Far from it. I want you to enjoy what you’re doing.) What I mean by get serious is that you need to make a commitment to doing those things that make your business into, well, a business.
- You need to get serious about the numbers.
- You need to get serious about your time.
- You need to get serious about the realities of running a business.
Get serious about the numbers
If you truly want to run a successful business, you need to get serious about the numbers. Numbers give you so much information – your income versus expenses tells you profit, sales data tells you what’s working and what isn’t, and cash flow projections tell you if you’re going to have any money in the bank next month.
If you aren’t tracking your numbers (or are only paying attention to say, the number of sales or the number in your bank account), it’s probably for one of two reasons:
The first is that you legitimately don’t know how. If that’s the case, there’s never been a better time to learn. Sign up for an account on outright.com. Check out Holly’s suggestions for tracking your profit. Use the business growth planner to see where you’ve been and where you’re going. (And if you aren’t sure what all those number mean, you can always hire me to help.)
The second reason you might not be tracking your numbers is that ignorance is bliss. If you don’t know how much money your business isn’t making (that’s a twisted way of saying you might be losing money) you can pretend it’s not true. While you may be able to get away with this in the short term (especially if you are relying on income from another job or partner) this lack of strategy will eventually be the downfall of your business.
When it comes down to it, the cold hard truth is that businesses track their profits. (And at least a few other numbers.) Until you do, you really aren’t running a business.
Get serious about your time.
I’ve got a new mantra. I’m trying to stop saying “I didn’t have time for something,” and switch to “I didn’t make it a priority.” Because often, lack of time is really lack of prioritization.
In order to run a successful business, you need to carve out time to run your business. And if that means you need to set a schedule for business hours, then by all means do so.
Tara shared with me how when she started having her husband watch their daughter in the evening so she could focus on work, her business took off. Because she was able to commit time to her business.
Running a successful business takes either time or money. If you have one, you can make do without the other. But you can’t run a successful business without investing significant amounts of one of those two things.
The next time you find yourself bemoaning your lack of time to run your business, ask yourself how you can reorder priorities to have time for your business. Can you watch less TV? Have your spouse help with kids or housework? Cut out needless shopping trips? Can you take a week off from your day job to focus on taking your business to the next level?
If you never carve out some serious time for your business, you’ll find it hard to convince others (and eventually yourself) that you’re actually running a business.
Get serious about the realities of running a business.
Running a business is hard. Sometimes you lose money. Sometimes clients don’t pay on time. Sometimes you want to bang your head against the wall. Sometimes you’re filled with an overwhelming sense of panic about how you’ll pay your bills this month. Sometimes you’ll stress over whether or not you’re making the right choices or heading in the right direction.
And in order to run a business, you have to understand and accept all of this. You have to accept that some days it might not be fun. Some days you will have to do tasks you don’t really want to do. (Or figure out ways to delegate those tasks to others. But either way, they have to get done.)
It’s much happier to pretend all that stuff doesn’t exist. To just make and try to sell your products. But ignoring the fact that running a business is hard doesn’t make that reality go away. It just means that you aren’t really running a business.
But there is an upside to this. Once you accept that reality that running a business is hard you open yourself up to the possibility that running a business can also be really, really great. You give yourself a chance to create something bigger than yourself. Something that can provide a great life for you and your family.
But only if you commit to the fact that running a business is not the same as a pursuing a hobby. It’s much more work.
But it has the potential to be so much more rewarding.
Are you interested in learning more about the nuts and bolts of running your own business? There’s still room in Monday’s Business 101 workshop.