Is it a business or a hobby?

Back in 2018, a good friend of mine brought together a team of young entrepreneurs and founded UnderPinned – a software company on a mission to help freelancers excel in their careers.

We raised just over £2m in funding to build a Virtual Office – an online tool designed for freelancers, contractors, and small business owners, enabling them to manage and scale their businesses efficiently.

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When we launched UnderPinned, freelancing had a negative connotation, often seen as a stopgap for those ‘in-between’ jobs. It wasn’t taken seriously, and the concept of a side hustle was almost unheard of. 

Fast forward six years, and the landscape has changed. Today, almost all my friends are balancing side hustles with their jobs or running their own businesses. In fact, there's been an 59% increase in UK businesses since 2000. This growth reflects the rising wave of side hustlers turning their hobbies into successful ventures.

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Business population estimates for the UK and regions 2021, Source: gov.uk

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Is it a business or a hobby?

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It’s easy to confuse the two. But for me, the key difference is scalability:

• A business is an entity with the potential to grow. It doesn’t have to be a huge opportunity or even a big business, but you need to assess whether or not there are enough customers out there who want your product or service. If so, your job is to reach them, keep up with demand, and keep them happy.
• A hobby or a passion project is something you do primarily for enjoyment, not for profit.

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For instance, consider growing an Instagram account to become an influencer:

• Business: This involves actively seeking collaborations, pitching partnerships and brand deals, posting consistently, generating income, and using the platform for lead generation.
• Hobby: This might include regular posting, engaging with followers, the occasional sponsored post, and establishing yourself as a thought leader.

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Or, organising a festival:

• Business: This requires a sales pipeline (pre-sale, early bird, first release, etc.), securing sponsorships, forging brand partnerships, attracting potential investors, having a dedicated team, etc.
• Hobby: This involves organising the event with volunteers, primarily to cover expenses.

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Business Community examples – both of which are very similar and close to my heart:

• Business: Babes on Waves, a membership community
• Hobby: Ok Mentor, a collective of female C-suite executives and founders offering free advice and mentorship to aspiring young women entering the creative industries.

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While the lines between business and hobby can blur, the important thing is to recognise whether your passion aligns more with a business or a hobby. Ask yourself if you’re ready to embrace the challenges of entrepreneurship and if your idea has the potential to scale.