Building a Business doesn’t necessarily require a business degree. Sometimes a unique product idea or a strong desire to offer particular services is enough to get started.
Quite often, people start a side business whilst still working their full-time job. This is to gauge interest and minimise some of the risks involved, before going all in on their business. To do this, they usually offer their products/services to friends and/or family and online to establish if they can attract customers.
New business owners frequently launch their business without a firm plan in place
If this is you, how do you know if you are building a business or an expensive hobby?
Generally speaking, a hobby is an activity that brings you pleasure. Something that you do in your spare time. such as sports, reading, crafts, etc.
A business, on the other hand, is defined as making money by providing a product or service for the customers. A successful business is reliable and strives to make a profit in order to stay in business.
Here’s 5 questions to help you determine if you are building a business or an expensive hobby…
#1 Do You Have Regular Working Hours?
Do you have set working hours or are you working random hours as and when you can fit them in around your other commitments allow?
Whilst there’s nothing wrong with working around other commitments, such as your family or full-time job, you still need to set aside the time to work on your business. This could be a few hours every night when the children go to bed or an hour or two every morning before work.
It’s not important when you work, it’s much more important that you are committed to working on a regular basis.
To build a successful business you will need to give it the time and dedication it requires. Only working on your business when you have a little spare time sounds very much like a hobby.
Building a successful business requires commitment
#2 Do You Have a Working Schedule?
Do you make the most of your business hours or work time, working as efficiently as possible, or do you get distracted with social media or other behind-the-scenes tasks?
When you are building a business, a working schedule is crucial to ensure you get the most out your time and don’t let the essential tasks fall through the cracks. Identify the most important tasks and set aside time to complete them on a regular basis.
Creating your working schedule, such as when you will write a blog post, when you will complete client work or when you will focus on production can help you to become more efficient within your business.
Remember that a hobby is defined as something we do for pleasure in our spare time. By its very essence a hobby doesn’t need to be efficient, or have a schedule because it’s main purpose is fun and enjoyment without any commitment.
We all have a limited amount of time everyday
#3 Do You Have a Business Plan?
Do you have a business and financial plan or are you just playing it by ear?
Every business, no matter how large or small, new our established, needs to have a business plan. Some businesses have multiple business plans. They could include a long-term, maybe 10-year, plan as well as a short term plan for the next week/month or anything in between.
Your business plan should, amongst other things, include a section on expected profits. Naturally, this would include forecasts for income, expenses and profit.
With a hobby there is no focus on making a profit, no financial expectations or obligations. As a result, many hobbyists are more likely to ‘wing it’ hoping that they will earn enough income to cover their expenses and have some profit left over to pay themselves.
Every business needs a business plan
#4 Do You Look For Opportunities?
Do you look for the opportunities around you or do you wait for them to come to you?
Building a business often requires stepping outside of our comfort zone. This means trying something new, taking a risk and sometimes taking a leap of faith.
Unsurprisingly, opportunities rarely appear within our comfort zone. We need to be pro-active in generating them for ourselves.
The good news is that each time we stray outside of our comfort zone we learn, we develop and we progress. All of these are opportunities that may not have presented themselves had we stayed firmly within our zone of comfort.
You’ve probably heard the phrase, ‘being in the right place at the right time‘. Despite what you may have heard, it’s not an accident, it’s not fate and it’s not because the stars suddenly lined up.
You don’t need luck to create opportunities, you simply need to pay attention and recognise them when they arise.
What opportunities are available to you, right now?
#5 Do You Re-invest in Your Business?
Do you have a defined pay and reinvestment structure within your business?
Every business needs investment in some form or other. You may need to purchase materials, equipment, software and other necessary tools.
For a hobbyist the financial investment usually ends there. A true business requires more investment, particularly as it grows and expands overtime.
Taking this into account, consider how you handle your business earnings:
- Do you withdraw every penny from your account? Either when a customer pays or at the end of each week or month.
- Or do you pay yourself based on a defined pay structure and reinvest some of your profits back into your business?
Smart business owners reinvest a portion of their profits into making the business more efficient, improving particular skills and increasing their knowledge. You may also want to hire help such as a virtual assistant or business coach. All of these are wise business investments.
Building a business requires more than an investment of your time
By now, you should have a good idea whether you’re truly building a business or creating an expensive hobby.
If you are serious about building a successful business the first thing you’ll need to create is a business plan. Your plan should be tailored to your business, what you want to achieve and how you intend to achieve it.
Register for this FREE masterclass recording, where I share the secrets to successful business planning.
Including how you can get better results for your efforts, how to create your personalised plan and how to implement strategies that will increase your income.
We'll also take a look at how you can use the planning process to improve your productivity.