Making money is a hobby that will complement any other hobbies you have, beautifully. ~ Scott Alexander
I am often surprised at the people I talk to who claim they have a business – yet they’re not willing to invest any money into it, and not much time either. Often times I will ask the question, “Do you have a business, or a hobby?”
What’s the difference? Well, the first one is attitude. Business is serious. If you are truly a business, you have your licenses and permits in place, your books are kept up to date, you know what your return on investment (ROI) is on your advertising and marketing plans, you have things like business cards, brochures, and a brand.
Business owners are serious about their business. They take their work seriously. They find out what their customer base wants (no matter what you do, it’s only a hobby if you don’t have customers). They meet deadlines, they hire employees, they invest their time and energy into becoming better and better at what they do. They succeed, because they plan to succeed. And they don’t make excuses – they get results.
According to the IRS, a business can be expected to show a profit for 3 out of 5 years. If it doesn’t meet that test, it will likely be reclassified as a hobby, and not a business.
Business owners understand the difference between an unnecessary expense and an investment. It is true, you have to spend money to make money. You need staff, an office (even if it’s in your home, a dedicated space to doing business), a telephone, and so forth. Even if you’re bootstrapping, you do still have to spend money to make money. If you’re not willing to deal with the expenses, then ask yourself again – is this a business, or a hobby?
