Business, Charity, or Hobby?

Why do I ask this question? What does this have to do with your decision about what to do for a business?

Well, I’m going to tell you: A business makes money for you, the owner. A charity does not. A hobby costs you, the owner, money.

You want to have a business. You need to choose something that at least has a reasonable potential to have money left for you when it is all said and done. Some concepts for a business sound fun and quaint and cute and neat and cool, but they CANNOT make money. PURSUING SOMETHING LIKE THIS IS ASKING FOR HEARTACHE. Going broke is no fun, not quaint, cute, neat, nor cool.

Can you know for sure that a business idea will make you money? No, not a chance. But you can know if it has a reasonable chance, and you certainly can know if it has NO chance.

Let me give you an example. Say you want to have a service business where the work is performed at the client’s business and find that the going rate paid for that service is $14 per man-hour. You cannot find employees for under $9.00/hour in your town. At first glance, that sounds like you can make money. But there are other payroll related expenses to consider. FICA taxes, unemployment taxes, workers’ comp taxes, and any benefits are just a few. Then, you have general liability insurance which is a percentage of payroll. Add to that, there are expenses for travel, uniforms and supplies. Then, there is advertising, utilities, office supplies and the like. When it is all said and done, it costs you $22 per hour to produce an hour of work. That means that doing this kind of work in your town is a HOBBY–you are paying $8.00 per hour for the honor of doing the work. Hope you like it.

Food for thought.

Mike

Advertisements

About Mike Wilson

I have owned my own business since 1999. I am interested in helping others start their own business and survive it and move on to thriving. I do this through my blog, books, seminars, public speaking, and consulting.
This entry was posted in Finding Your Niche. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s