Yep, it
should be obvious right?..Well not always, especially if you're trying to start a new business, or part-time business.
Let's start with the basics:
A Job -> You make money
A Hobby -> Costs you money
Makes sense right?
Here's what happens when someone tries to start their own business for the first time (ie: it happens to me and I'm sure I'm not alone)
You have an idea - it's a great idea, you're motiviated to work on it, and your all gung-ho so you start working hours on end, you put your blood sweat and tears into it - hopeing, waiting for others to pick it up and for it to be the huge success that you just know it's going to be.
The problem -- In this heightened state of "busy-ness", you don't really think about measuring the effectivness of your work. In particular, you spend what you think you need, probably go over your initial budget, and you have yet to actually get any earnings.
In this initial state - you simply have an
expensive hobby - until you start actually making money
(profit) it is not a business. Perhaps you have loans, and investors, perhaps it's not your money that you are spending, never-the-less, if you not making money it's a hobby. Most (if not all startups) begin simply as hobbies.
This is not too big a deal, except when several years have gone by and you have convinced yourself you have a
good business but you are still not making any money at it. You caontinue to justify all of you hard work as "fruitfull" and "valuable", you take time away from family in friends and convince yourself that it is because you are working at trying to make some money, all the while you are really just working on your
hobby.
So am I suggesting that
you quit when you reach a dip in the road? - Not at all - but I do have a few suggestions to keep you on the right track and learning the
right thing to quit and keep from getting trapped/confused during this process.
1) Set your Goals Upfront ->Be honest with yourself about what you are trying to do, and actively plan where you would like to be in the future.
Set Metrics/Mesurables that you can compare to and be sure your keeping yourself on track
2) Watch your Spending ->It can be easy to get trapped in (I'll buy everything now, and get paid back later when the money rolls in). Especially if you have some angel startup investor giving your the intial capital to get yourself rolling. But, it's better to invest only what you need and add funds slowely while keeping in the black (or at least close to it), and continuing to re-invest your profits into biulding your business, otherwise you can find yourself in a mountain of debt and worrying about this could ultimately lead to the demise of your business
3) Decide your "end-point-if" and re-evaluate as necessary ->
Are you willing to loose hundreds of thousands of dollars year after year, on your business? If so, you've simply picked a really expensive hobby. If your already a millionaire then you can probably even afford this hobby.
Ask yourself - at what point will I admit to myself that it's just a hobby and not a business. If you don't think about this upfront, you may continually tell yourself that "it's going to get better, it's going to get better". But unlike the movies, you can't just click your heals three times and everything will turn out alright!
Good Luck !
