Is it a Business or a Hobby?
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“Is it a Business or a Hobby?”
That’s the question I ask contractors that I speak to at workshops, webinars or in teleseminars. I even ask my clients that when we begin our one-to-one work together.
Usually, I want to know that the trade or trades they do are being done by more than one person. Because if only one person can do this work, they need to stop kidding themselves about running a business when they’re really supporting a hobby!
If this sounds like you, ask yourself what would you do if the one person who can do this work gets hurt, quits or worse yet…dies?
It’s only a business when multiple people can do the same set of tasks in a similar manner and get the same consistent positive results.
It’s only a business when you can make money at what you are doing. So, if you continue to lose money over a period of time, you’re not running a business you’re supporting a hobby.
Even our friends at the IRS would tell you that what you’re doing is just supporting a hobby if your company fails to turn a profit year after year. Too many contractors delude themselves by staying afloat by borrowing money or putting in their own money year after year. But it’s only throwing good money after bad until you commit to what it takes to turn your hobby into a business.
Here are 7 steps to move from having a hobby to running a profitable business:
- Know what to charge for each task you do so you make a profit.
- Track your callbacks so you can see if you’re trying to “Fill the profit bathtub with the drain wide open.”
- Make sure you document in writing how you do each of your tasks so it’s objective and repeatable.
- Make sure you cross-train your staff to handle multiple tasks and preferably multiple trades.
- Market yourself based on the value added you bring vs. strictly the low price you can charge.
- Get testimonials from happy customers that validate how good you are so it’s easier to sell to prospective customers.
- Know your financials so you can either get more of the calls you seek, get better at the calls you run or dump the tasks, the trades and the customers that never make you money.
Are you ready for more ways to move from having a hobby and running a real business?
Here are just 3 more steps to reach the next level:
- Create an Organizational Chart that has the boxes [not the titles] it takes to run your company and show your staff that there’s a career path at your business vs. just a dead end job.
- Write up the activities that each position on the Org. Chart is responsible for and make it measurable as to whether they are or aren’t doing what you desire.
- Get the staff to prove to you they can do whatever task is in their box by doing a side-by-side with them and having them either do a “Tell Me” or a “Show Me”.
- Note:
A “Tell Me” is getting them to say something to you that convinces you they
know how to handle a task.
Ex: Give me the first 3 steps you’d follow as a CSR when answering the phone. Then, listen and see if it convinces you they know.
Note: A “Show Me” is getting them to do something in front of you that convinces you they know how to handle a task.
Ex: Have the Accounts Receivable person input an invoice into your computer or have the Accounts Payable person pay a vendor.
Do this well enough and you will graduate from supporting your hobby to owning and loving your profitable business!
