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Hobby or business?

Content provided by the Connecticut Small Business Development Center


Many of us have side hobbies and fun projects that we enjoy but wonder if they could become more. Can we really make the leap from a part-time hobby to full-time venture? How would we even identify whether our passion could turn into a profitable business? Understanding and answering these questions can help you get started.

Making the transition from fun to profit can be tricky, and the lines between what you want and what you can actually deliver are delicate. First, it’s important to know the differences between a hobby and a small business. A couple of differentiators are:


  • A Hobby

    o Usually done outside of your regular work hours
    o Most likely it’s fun, affordable, and may or may not create revenue
    o Done occasionally, whenever you have time
    o Generally focused on personal growth and enrichment
    o Deductions are limited to the income take in
    o All income is reported as personal income
    o Can itemize deductions in excess of 2% of adjusted gross income (AGI)


  • A Small Business

    o A part of an occupation, trade or profession
    o You can make a living off of the revenue
    o It’s a serious activity without disruption
    o You will most likely have customers, employees, service providers, supply and distribution
    o You will probably be working a full-time job AT THE SAME TIME you start and grow your side hustle/job. This could mean 60 hours or more of work each week
    o You will be more focused, measure productivity, establish goals
    o All income is reported but can be offset by various business expenses
    o If profitable, can shelter income tax-deductible basis (retirement)


It’s important to know the difference so that you can really start to understand if making the move from a part-time side hustle or hobby to a full-time venture is right for you. Why does knowing the difference matter?


  • Ramping up hobby activities to provide a viable revenue stream takes a lot of energy and staying power. Some hobbyists may not want to mess that up if their hobby provides an outlet for relaxing or social activity.


  • Building a business requires a lot of patience and an ability to work under pressure, meet deadlines and demand customer expectations. This requires a great deal more planning and opens more stressors for a small business than a hobbyist.


  • Finding and keeping the right customers will take a lot of time to research and deliver the product or service. Therefore, building a viable business requires a higher degree of dedication time and energy to this than a hobby. Be realistic about what you do (and don’t) want. But no matter your decision – enjoy what you do!


Here are a few things to consider BEFORE the transition:

  1. Will you still enjoy it after working 60 hours a week?
  2.  Are you as good as you think?
  3.  Do I have a business plan model that proves to be viable?
  4. Do I have a business mindset, or can I form a team to help me?
  5.  Will this be my sole source of income, and if so, am I ok with the time and effort business might entail?
  6.  What do I know about marketing, advertising, networking? Would I be willing to run it myself or should I hire someone to help me?
  7. How do I create a brand that will set the business apart from my competition, generate referrals and let customers know what to expect?
  8.  What does it take to get and keep my customers?
  9. Are my finances in order? Do I have enough in savings to carry me and the business for 6 months or more while I have no income and potentially no revenue? What other assets will I need to build and sustain the business?


Making this kind of decision can be tough, but here are some next steps to get you started.

• Do a self-assessment to figure out what direction is right for you. There are lots of free resources available to help you determine your strengths, weaknesses, opportunities, and threats (SWOT). Know these BEFORE you begin the journey.

• Build a roadmap by putting together a business model, canvas or pitch deck. Many free tools for business plans and pitch decks can be found at http://www.ctsbdc.com. Educate yourself by learning how to strategically plan and develop good practice from the start.

• Start small as a side hustle. This will lower risks and prove that your business can work. It will also help demonstrate you have traction and customer loyalty – both are valuable to banks and investors you may need to grow the business.

• Nurture your network. Maintaining and increasing your network by planning and mapping activities is a high priority. It will help you meet new customers, competitors and potential stakeholders.

• Do your research. It can help you understand the primary motive of why customers will buy from you.

• Use low cost and no-cost business resources

The Connecticut Small Business Development Center (CTSBDC) is here to help you once you’re ready to move forward with your business! We provide business advising to small business owners and entrepreneurs to start, grow and thrive in Connecticut. Our Business Advisors offer professional, confidential, and expert business advice for owners to overcome challenges and reach their goals. We have free resources, tools, and online training to support business owners. We also provide geographic-based demographics, consumer spending data, market research, financial projections, industry reports and so much more! We are committed to enhance Connecticut’s economic wellbeing and build thriving communities. Contact us today at http://www.ctsbdc.com for more information, or to sign up for our free services click on the “Request Business Advising” button on the top right of the page. Written by Denise Whitford, Connecticut Small Business Development Center Business Advisor.


Written by Denise Whitford, Connecticut Small Business Development CenterBusiness Advisor.

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