What’s the major difference between a business and a hobby? While you may be equally passionate about a business or a hobby, there’s one important difference that should inform your planning and decisions: a business needs to make money. If there’s no profit margin, there’s no business.
While many businesses occasionally run into the red, this should not be the norm. In order to succeed, your business must have a reasonable profit margin. In other words, are you selling your product or service for more than it costs you to make or provide it? If you can’t answer that question right away, then you should make an effort to find out, and soon! The answer to this question will immediately show you if you’re running a business or a hobby.
What’s wrong with running a hobby? Nothing, as long as you’re aware and are consciously making that choice. If you’ve found yourself unexpectedly running a hobby, then you need to make some changes towards getting things back on track. To obtain a positive profit margin, you’ll either need to lower costs or raise prices, or even pursue a different business plan altogether. For this to work, you’ll need the help of a seasoned business coach and a solid financial team. Through hard work and strategic adjustments, you can work towards growing your business and making a profit.
Need help getting your business back on track? Learn more about turning a profit and business success by reading StratIQ’s free ebook, The Magic Number: Creating a Personal Algorithm for Success.