An out of state friend and I decided to get together after not seeing each other for over a year. While enjoying New Haven pizza, he began to tell me a tale of woe related to his Father’s business. According to my friend’s story, the father has been developing a real love for nature and the outdoors after having worked an office job for over 30 years. So strong is this interest, that the Father has visited national parks, studied rock formations, botany, history, and is now rather expert in certain areas of the country. The Father blogs frequently about his insights, and has developed a following among others with the same interests.
But is it a Business?
While many business owners enjoy their job, think of their customers as friends, have fun doing what they do, and do not consider what they do to be work – few successful entrepreneurs would call it a hobby. A hobby is defined as, “an activity engaged in for pleasure and relaxation during spare time,” according to the Encarta Dictionary. There are two conditions that separate a hobby from a business:
1. Pleasure and relaxation – the business may be enjoyable and the work may even be relaxing for the entrepreneur, but the primary reason for the business is not to provide pleasure and relaxation. If that is what the business owner seeks, then the chances of a business failing because the other important components are not being met is high (those other components are; serving customers, making a profit, managing costs, etc.).
2. Spare time – a hobby is what is done AFTER work or business. This is a small point, but does point out the priority of focusing on business and addressing hobbies in non-work or committed time.
Where the Trouble Entered
My friend’s Dad decided that since he was often approached by others he had encountered through his hobby to offer his insight, experience, and wisdom in choosing what historical sites to visit, what time of the day to take photos, which tours to go on and which to avoid, etc.; he would open his own tour guide business. He decided that since he was likely to re-visit many of the sites others wanted his insights about anyway, he would charge a nominal fee and have them pay his expenses and even pocket some additional money for his efforts.
Problem 1: – Corporate identity – he chose to refer to the business as something akin to “Cheap as Air Tours.” With a name like that, the sense of receiving value for the cost was clearly on the low end. The prospect interested in a premium experience would be turned off and the importance of fees or cost became a real prominent determinant in the decision to use his services. Rather than focus on the tourist’s experience, uniqueness of activities, or some other differentiator, cost became the reason to choose the business.
Problem 2: Profit – having backed the business into a pricing competition with other tour companies, the proprietor was now forced to be less expensive than others or fail to live up to the company’s promise or pledge as communicated by the company name. So, the balancing act now became how to provide the service of being a tour guide at the least possible cost in order to still make profit, or to provide a larger or better experience and risk doing so on a smaller margin or even at a loss (something no business would ever do, but a hobbyist interested in sharing the experience with others might consider doing as a way of experiencing the joy of the hobby with others).
Problem 3: Marketing and Sales – while the blogs and various sites that the Father contributed to did create some initial interest among fellow hobbyists, the sustaining of a pipeline of prospects would require more aggressive marketing and sales efforts. To do so though, would require investment into website development, printed materials like brochures, advertising, etc. Unfortunately, the business is not currently able to spend on marketing and sales in a consistent and fully committed way as the profits generated to date have not been sufficient to afford that kind of expenditure. Of course, it is a conundrum in that if the investment is not made, then the profits will not ever be there.
Running a business requires rigor, discipline, management, and oversight based on creating a profit-producing entity. A hobby is a pursuit that one derives pleasure from and enjoys as part of one’s downtime or relaxation activities. While it is not impossible to create a business from one’s hobby, the skills one uses and applies are very different and require a perspective that is focused on metrics and measurements that most hobbyists do not consider when pursuing their passion.