You see it all the time. A person expresses interest in “getting out of the rat race,” so they start up a small venture on the side. They choose to keep their regular day job in the meantime while this “side business” grows and develops. However, you have to wonder if this side venture is really a business or if it is little more than a hobby.
This kind of scenario presents itself time and time again on shows like Dragons’ Den and Shark Tank. Someone makes little booties for kittens and says that they want to take their business to the next level. Then, one of the dragons or sharks says that it’s just a hobby and it’s not a business where they want to invest. A big part of this isn’t necessarily to do with the nature of the business, but rather the perspective of the business owner.
If you want to be taken seriously as a small business owner, then you have to take your small business seriously and treat it as a business. It’s not a hobby. A hobby is something that you do on the side for fun. That’s not to say that your small business, whether it’s freelancing or selling craft items on Etsy, can’t be fun. It does, however, have to make money.
Treat it like a business. Do you have marketing efforts? Are you keeping accurate financial records? Do you have a business plan? Have you considered the profitability and viability of such a business? Will people pay for what you have to offer? Or is this “business” simply to satisfy yourself?
There’s nothing wrong with having a hobby. We should all have hobbies, but you have to understand there is a distinct difference between simply having a hobby and running a business. You have to declare your income in both instances, but the way you go about making that income and the steps you take to maintain or grow that income are entirely different.