Is what you’re working on a job, a hobby, or a business?
The word entrepreneur gets thrown around often and has different meanings to different people. I’m less concerned with what people call themselves and more concerned with helping them understand the work they’re doing. If you truly understand what you’re doing, you can make better decisions about that work and feel better about how you’re spending your time.
Most work can be broken into 3 buckets: jobs, hobbies, and businesses. There are other kinds of work (charity, household, caregiving, civic, etc.) but for this post, I’m focusing on more traditional forms of productivity, specifically income generation and asset creation. Let’s dive in.
A job is work where you’re paid directly for your time and labor. This includes working for another company, freelance work, and being a “solopreneur”. It’s tempting to think that working for yourself is not a job, but it has all the trappings of a normal job: you do a certain amount and type of work and you make a certain amount of money. Flexible hours and flexible compensation amounts are becoming staples of W2 jobs just as they have been for freelance designers, photographers, or lawyers.
Jobs are great for several reasons. They tend to pay better and more quickly than hobbies and businesses. They tend to have less uncertainty. But they also have their downsides. You usually have a limited income upside. You can only work so many hours and charge so much money. When you don’t work, you don’t make any income. Other people can “fire” you more easily. Jobs can be more repetitive and more structured than your personality prefers.
Hobbies are work you do for fun. This includes making music, crafting, playing pickleball, and mowing your lawn. While it’s extremely rewarding and healthy to have one or more hobbies, many would-be entrepreneurs currently have a hobby that they think is a job or a business. If the work you’re doing doesn’t make more money than it costs to do and it requires you to do all of the work, it’s a hobby. Recognizing that your business is a hobby is a very humbling experience. Trust me.
A business, as differentiated from jobs and hobbies, is an asset that’s a combination of systems, intellectual property, repeatable products and services, and jobs for other people that should (eventually) make money. The key phrase in that sentence is “other people”. Until you’re able to rely on someone else who isn’t an owner to earn income for the business, it’s not a business. It’s a job or a hobby. Until your customers can buy something from you other than your time, you have a job.
Businesses are really hard to create. The vast majority of small “businesses” have only 1 employee–the owner. Making the leap from 0 employees to 1 actual employee is harder than making the leap from 100 to 200 employees. When you hire someone else, new problems arise like overhead, profit margins, insurance, payroll taxes, sick days, training, and turnover. The complexity of your job grows exponentially when it becomes a business.
The upside of businesses is that they can create wealth. Not just for the owners, but for the employees, and even the customers. Systems that consistently create value for people are a net gain society. Good businesses can last for generations long after the “entrepreneur” has passed away.
I currently have all 3. My hobby is music creation/concert promotion, my job is advising/consulting, and my business is a karaoke bar. I may one day decide to turn music into a job or consulting into a business. I may not do that at all. And that’s okay. Most of our heartache as people comes from the delta between expectations and reality. My key to maintaining sanity is that I know the difference between them and set my expectations and goals accordingly.
I’d like to challenge you to ask yourself, “Is the thing I’m working on a hobby, a job, or a business?” Try hard to be honest. Then ask yourself, “Is that what I want it to be, or do I want it to be something else?” That perspective should help you set better goals, make better decisions, and feel better about your work.
If you need help figuring out which it is or how to change a hobby into a job or a job into a business, reach out to me and we’ll talk it through. That’s my job, and I’m great at it.