Hobby or Business?

Written by Pam Lefkowitz on August 4, 2022

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As many of you know, I spend a lot of my non-work time with fiber (not fibre) – I enjoy knitting, crocheting, and sewing. And I’d like to think I’m reasonably adept at them. These hobbies provide me a way to be productive, stay mentally flexible, and work a different part of my brain than my daily work does. Also, they’re pretty relaxing!

After seeing my handmade items, friends and family are generous with their compliments and I am most appreciative. And their comments are, quite often, followed up with: “you should sell your stuff, you could make a lot of money from your hobby”. Let’s do the quick math on that first, k? 

Take a pair of handknit socks. 

Yarn: $25 (yes, good yarn is expensive)

Time: 15 hours (this is probably low, I’ve never actually timed myself)

Minimum wage: $12/hour

Who the heck is going to pay $180 for a pair of socks????

But – what if they would pay that?

I guess some people might pay that kind of money for handknit socks. At that point I would need to decide if I should turn my hobby into a business and why (or why not) that would be a good decision. 

The answer for me has always been “nope”. 

What criteria goes into making that decision? Is it a business decision or a personal decision? 

Decisions Decisions

We make dozens, maybe hundreds of decisions every day – what to wear, what to have for breakfast, whether to change the bedding in the morning or at night…that kind of thing. Thankfully, most choices are not very dramatic. But then there are some choices that definitely  change the course of our lives in epic ways – marriage, children, education, and career, to name a few. As you have surely surmised, we’re going to talk about work.

Each situation requires a different set of criteria to formulate a decision. When it comes to determining if you should make your hobby your business, hopefully you aren’t just printing up business cards without investigating and evaluating a variety of factors..

What should you think about when deciding whether or not to convert your hobby into a business? Should you jump right in, or take some time to assess the situation?

Considerations For Turning a Hobby Into a Business

I have been in a position twice in my life to make this choice. Most recently with my knitting hobby, but most profitably, with my computer-hobby-turned-consultancy-turned-MSP. Here’s how I came to my decisions and the things I considered – and, more importantly, the things I didn’t consider but should have.

Do you enjoy this hobby enough that you won’t get bored of it after 6 months/1 year/2 years of doing it daily?

Obviously it’s impossible to predict how you’ll feel in a year or two, but this is a great time to do some serious soul-searching and ask yourself the hard questions. Even if your answer is no, you don’t enjoy the hobby enough to do it all the time, it’s not the end. You can always work for someone else and have your hobby as a side hustle.

I have the benefit of experience and, so, I have repeatedly decided NOT to turn my fiber hobby into a business. Basically, I don’t want to do piecework. I want to create what I want on my timeline for my own use and delight. For me, creativity is a very personal thing. I would likely grow to hate the hobby if I was required to be creative all the time. Also, people are fickle when it comes to artsy things, and the customers who are attracted to piecework are hard to please. That is simply way more stress than I’m willing to live with at this point of my life, so I stick to my day job and work with fiber for myself, on my own time, to my own liking.

Does the hobby have the potential to create financial health?

If you look at the math at the top of the article, you’ll see that I’d have to work on a project for less than minimum wage for it to be customer-affordable. That kind of money doesn’t make any sense for me (for anyone really, but right now I’m talking about me). 

So with these two questions alone, I know that I am not going to turn another hobby into a business.

If you still want to move forward after answering these first two questions, you’ll want to assess some other aspects of business ownership that will help you build your business plan. And you should have a business plan.

What kind of market would your hobby serve?

You’ll want to decide whether your hobby/business will serve a B2B or B2C clientele. If it’s a B2B, then you’ll want to consider if there’s a vertical market you’re interested in or knowledgeable about. 

How will you get your clients?

Your friends will always love you. They will be your biggest cheerleaders in talking about your new business. But that’s not enough.

It is wishful thinking to assume that you can just decide to start your own business and there will be an immediate steady influx of customers. You will, almost certainly, have to do some marketing to drive business. If you don’t have the knowledge to do this, you’ll need to get that knowledge or hire someone who has it. Further, you will have to keep track of how much clients spend with you (and other accounting-related functions that you may or may not have the skills to handle). Word of warning: while having large clients is a delight, it is a short term delight. None of your clients should supply you with more than 20% of your income. 

What kind of price can the market bear?

Consider the type of pricing model you’ll have and what services you’ll be providing. Will you sell products or services or both? Consider how you’ll charge: hourly? Monthly? Blocks of time? Is parking and travel included? 

Do you have the knowledge or know people with the knowledge to handle the other business tasks (insurance, legal, accounting, web development, etc)?

More time and/or money to be spent here. You can’t simply hang out the shingle unprepared. I mean, you can, but you leave yourself open to a lot of risk by doing that. We are no longer in the world where you can go into someone’s home or office, unencumbered by contracts or IRS regulations. We are a litigious society. You need to protect yourself with contracts and you need to make sure your financial books are solid. The last thing you want is to become a target of the IRS. What a way to ruin a day!

Most likely, your hobby is a very small part of the skillset you’d need for a fully functioning business. Do you have the knowledge or do you have plans to get the knowledge for those other skills?

At least until you develop your service reputation, you’ll need to be able to show you know your stuff. Certifications are the easiest way to accomplish proof of a base level of technical knowledge. You have to be able to show a reason why your future clients should pay you real money instead of paying some “hobbyist” or neighbor’s kid down the block half the price.

Do you have the financial wherewithal to fund the new business and how long will it take for you to be in the black?

You definitely need to have funds of some sort to 1) support yourself while ramping up, 2) purchase the tools you’ll need for the business, 3) get educated or certified if necessary, and 4) pay for services the business will need. Assume that you won’t be making real money for a while, and make sure you can financially handle this.

Have you connected with a network of people who have similar businesses? 

When creating our business from a hobby, many of us operate alone. That’s fine for a while, but operating independently can lead to burnout and loneliness. Industry peer groups are invaluable for mitigating those things. Great peers can help you fill in knowledge gaps, can help you meet great vendors (or warn you off the bad ones), can act as mentors, can help you find conferences, and can generally help you feel like you’re part of something instead of going it alone. 

Have you connected with a network of people who can help you run a successful business?

Business peer groups are different from industry peer groups. One type of group that falls into this category is a Mastermind group. This is usually a group of people from many different industries who get together to talk about the business of business. Some communities have built Slack channels dedicated to talking about the business of consulting.

How long do you hope to be in business?

This isn’t a super important thing to know up front, but it is a good thing to think about regularly. When I started my MSP business my children were very young. I was sure that I was building something that would become a generational business. But when they were choosing their paths, they did not want any part of tech or business ownership. By the time they finished school I was already feeling the burnout of doing everything for everyone. Yes, I had professionals to do the heavy business lifting but it was still my business and my reputation every hour of every day. 

I was the responsible party and, honestly, it made the whole tech part (which was the hobby part that I had a talent for and really liked) into a daily slog. I came to dislike even talking about tech, let alone working deep in the trenches. 

Separate Your Work and Your Hobbies for the Best Work-Life Balance 

I did not do much research before opening my company. I learned everything on my own. With that experience, were I to be asked if I would make my hobby into a business today, the answer would be a resounding no. A hobby is something you enjoy, you do to relax, or you use to engage in a proper work/life balance. Once your hobby becomes your work, it ceases to be fun anymore. It’s not an escape if you’re living it all the time. 

Conversely, I thoroughly enjoy the work I do now. It was never my hobby; it was my education and is, now, my job. I have a good time doing it, I get to talk about things I like (and even things I don’t like), and I get to work with incredible people (something I really missed being in business for myself). It’s my job but it’s not work (even when I work hard). And my creative hobby outside of work helps me be open to new ideas at work – it is a symbiotic relationship for sure.

But the biggest thing about keeping work and hobbies separate is that I have a work/life balance. When work is done, it is done. I sleep at night. And I don’t have to feel like my hobby is a job. I get to spend my time off doing the things I want to do – things that enrich my life and make me a better person. 

Curious if you should convert your hobby to a business? Come talk it over with us in the Community. Looking to find a way to increase your personal time? Sign up for a free trial and see how JumpCloud Makes Work Happen.

Pam Lefkowitz

Pam is an IT Columnist at JumpCloud where she uses her experience as a consultant and MSP to write about IT admin life and tech. Outside of (remote) work hours, she spends her time with her dog, visiting her kids across the country, and being creative with fiber.

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