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Carroll Business Path: Hobby, side-gig or business?

Is it a hobby, a side-gig or a business? Sometimes it can be hard to tell the difference. Sometimes it begins as one thing and then turns into something else.

In an entrepreneurial context, I define hobby as something you do for fun or relaxation that produces some revenue, but has little or no potential to produce a significant profit. I know someone who restores cars. He buys a beaten down classic, turns it into something spectacular and then sells it. He may or may not make a few bucks. He certainly doesn't make enough to justify the time he spends working on the car. When he does make a few dollars, he buys some tools or puts the money toward the next project. He's clear about his intent. He likes working on cars, and the money he makes is used to fund that activity. He's not trying to produce income. I suspect the moment he did try to produce income working on cars would no longer be fun for him. He's a hobbyist and he knows it.

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In the same context, I define side-gig as something one does to earn extra money in addition to a job. Hopefully, it's something you enjoy doing, but it doesn't have to be. The goal includes income. Maybe it's cash to make ends meet, or maybe it's to buy the extra things you want. Either way, the intent is to create a model that turns a profit. However, you're not looking to quit your day job. A side-gig is not an exit strategy. You're a side-gigger and you know it.

In this context, I define business as something you create with the intent to make it your full-time endeavor. You plan to make a living from the activity. If you're going to work at it full time, I strongly suggest it be something you really enjoy doing.

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Sometimes hobbies turn into side-gigs. Hey, turns out I can make some money doing this. Sometimes side-gigs turn into businesses. Hey, I think I can make a living doing this. Occasionally, hobbies turn into businesses. Hey, who knew people would pay me enough to do this to make a living? All of that is great, but if you want your endeavor to succeed the transformation should be intentional and planned.

A hobby doesn't require a business plan. (Although a budget to ensure the hobby doesn't wreak havoc with the family finances and tick off your spouse is a really good idea.) A side-gig doesn't require a transition plan from employment to entrepreneurship, but you should prepare at least a basic business plan. That'll improve the odds you'll actually earn a profit. Of course, a business needs a business plan. That plan should include a transition strategy if you are not ready to immediately strike out on your own. If you recognize the difference between a hobby, a side-gig and a business and know which suits you, you're on the right path.

Jon Weetman is Administrator, Operations & Small Business Development for Carroll County Economic Development. email him at jweetman@carrollbiz.org.

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