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2019-06-25 16:07:32Advice for EntrepreneursEnglishTransforming your favourite past-time into a full-time job full might sound like the secret to a happy and fulfilled life—both...https://quickbooks.intuit.com/au/resources/au_qrc/uploads/2019/06/The_unfiltered_truth_about_turning_a_hobby_into_a_job_featured.jpghttps://quickbooks.intuit.com/au/resources/advice-for-entrepreneurs/from-hobby-to-business-the-unfiltered-truth-and-how-to-get-ready/From Hobby To Business: How To Get Ready | QuickBooks Australia

From hobby to business: The unfiltered truth and how to get ready

7 min read

You want to turn your hobby into a business. That’s the dream.

Or is it?

Transforming your favourite past-time into a full-time job full might sound like the secret to a happy and fulfilled life—both professionally and personally. However, despite the upsides, many people are surprised by unexpected drawbacks associated with the switch.

Let’s uncover the pros and cons involved with building a small business based on your passion.

You’ll turn your passion into a full-time income

Forget the days spent clocking in and out just to earn a pay check. One of the most obvious benefits of transforming your hobby into a bonafide business is that you’ll be undoubtedly passionate about what you do each day. It’s one of the leading motivations for self-employed business owners.

That’s worth a lot, especially when a sense of meaning and purpose has gained increased focus in the world of work.

In fact, according to research from BetterUp, more than nine out of 10 people would trade a percentage of their lifetime earnings for more meaning at work. Yet, Gallup reports that a whopping 71% of Australian’s aren’t engaged at work.

Turning an existing passion into a career means you’re one of the lucky few who’s actually enthusiastic about working each day (well, at least, most days).

But, you might not love it anymore

Hobbies let you pursue your passion, express yourself, and relax from the drudgery of your day job. As such, hobbies are inherently selfish:

  • My passion
  • Express myself
  • Relieve my stress

There’s nothing wrong with your hobby serving your needs. Until you turn it into a business.

Once you start a business, self-satisfaction takes a backseat to the needs of customers. Your hobby must carry the weight of business expectations. Expectations bring stress and present the potential for disappointment.

The fact that you love the work you do doesn’t mean you will love the day-to-day operations.

To make things even more frustrating, when you turn your favourite hobby into a business, you lose that hobby. You’ll need to find alternative options to relieve stress.

Your days will be filled doing what you love

The fact that the majority of working adults are lacking passion is only the tip of the iceberg—a huge percentage of them actively dislike what they do for a living. One well-known Gallup poll found that only 14% of Australians are engaged at work.

There’s a myriad of reasons for that widespread distaste for our career choices, but one of the most likely root causes is that people were never all that excited about that path to begin with.

Maybe they went into marketing because it seemed like a broad enough career field. Perhaps they became a healthcare professional because they liked the job security it offered. They prioritised practicality over passion, and now they spend at least 40 hours per week doing something that doesn’t necessarily set their heart on fire.

There’s something to be said for that (real world concerns carry weight, of course). But if taking your hobby to the next level career-wise is a realistic option, it’s a great way to spend your working hours doing something that you really do love.

But, your time to do it will be limited

Nobody seems to know who said it, but we’ve all heard it: “Find a job you love and you’ll never work a day in your life.”

The world’s richest man, Jeff Bezos, advocates a similar approach: “If you’re doing something you love, the day is going to be so fun.”

But, is each and everyday fun? No.

Even Bezos, who turned his passion into one of the most valuable companies in history, admits that passion won’t eliminate the difficulty. In his annual letter to shareholders, Bezos states:

“It’s not easy to work here (when I interview people I tell them, “You can work long, hard, or smart, but at Amazon.com you can’t choose two out of three”), but we are working to build something important, something that matters to our customers, something that we can all tell our grandchildren about. Such things aren’t meant to be easy.”

When your hobby was just a hobby, time was on your side. The more time you spent with your hobby, the more you personally benefited.

When your hobby becomes a career, time will haunt you. Each day is limited to 24 hours, and you must use those hours as effectively as possible.

The days of leisurely approaching your hobby with a carefree attitude are gone. Your hobby is now accountable to your business instead of your self-satisfaction. You have metrics to track and production goals to meet. Sooner rather than later, your hobby needs to become profitable by way of job costing.

You will love the product you create

Do you know that feeling when you toil away on something and, at the end of it all, you’re just undeniably proud of how it turned out?

Whether it’s that coffee table with the beveled edges and the perfect stain colour or that ceramic dish set with the gorgeous glaze, there’s nothing like stepping back to look at something you created with your own two hands and basking in that sense of accomplishment.

Unfortunately, that feeling isn’t as common at work as you’d like to think it is. In many workplaces, employees feel as if they’re just another cog in a wheel. The churn through their tasks, without any sense of achievement or understanding of how their contribution impacts the greater good. That’s likely why 79% of people who quit jobs, do so due to lack of recognition.

But, that’s a non-issue when you’ve created a business out of something you’re passionate about. After all of your hard work, you get to see the tangible results of your efforts and feel incredibly satisfied with what you produced.

But, you can’t work on something to perfection

A hobby is a labor of love. You have the freedom to build and tweak, then build and tweak again. You can leave a project alone until you feel inspired again, or until you have higher quality tools and materials.

These luxuries disappear in the business world. Instead of perfection, your business goal is efficiency. You can’t afford to be sloppy, but quality is only one element to the overall goal of efficiency.

Poor quality leads to returned products and decreased demand. Both decrease efficiency. But, you can’t pamper each product with endless attention, because this too kills your efficiency.

Efficiency helps you find the correct balance of input to output to the greatest benefit of your company. Luckily for business owners, many metrics exist to measure your business efficiency: average cost of goods sold (COGS), inventory management, accounts receivable turnover ratio, accounts payable turnover ratio, cash conversion cycle, etc.

Tracking efficiency seems like the perfect way to measure the business potential of your hobby. That’s true, but nothing takes the joy out of a hobby like measuring its success via balance sheets.

Sacrifices are inevitable. Some meaningful aspects of your hobby will likely vanish.

In order to successfully turn your hobby into a career, efficiency must take priority.

You’ll be justified in sinking more money into your hobby

Whether you’re a home brewer or an avid crocheter, hobbies can be costly.

If you actually added up the expenses related to your favourite interest, you might be surprised by just how much you’ve invested into that passion of yours.

Those price tags can be tough to justify when they’re only for a side project or a weekend pastime.

However, when you turn that interest into a business, it’s far easier to rationalise investing some cash into equipment and supplies that you might have previously passed on. Plus, you have the added benefit of being able to take almost all of those expenses as tax deductions.

You love the finished product your hobby produces. But, that doesn’t mean everyone else will.

But, now your hobby needs to return that investment

Reports indicate that 42% of startups fail due to lack of market demand.

Remember, this research is based on startups in general. These startups were founded by entrepreneurs who thought their idea made absolute business sense.

In the case of your hobby, you initially had no idea whether it made business sense. The factor likely driving your business decision is the ability to spend more time doing what you love. Accordingly, the odds for a market fit for your hobby business are probably worse than the research indicates.

You can start a business on passion. You can’t sustain a business without capital.

Hobbies pay dividends through leisure and creative expression. It is only recently that businesses have started attempting to measure employee happiness. And while happiness metrics continue to develop, 4 out of the top 5 reasons startups fail revolve around a business’ inability to make money.

Going from hobby to business is work, but you can still love it

When you’re considering starting a business, turning to your passion is a great place to start.

However, it’s important to recognise that transforming your favourite hobby into your career isn’t always easy or gratifying.

If you prepare yourself, turning a hobby into a job can bring the fulfilment you dreamed of.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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