Want Hobby to Be Business? Beware
Turning your hobby into a business sounds like a good way to make money while having fun. But if you’re not careful, you’ll lose your shirt and your interest in what was once your passion.
People who have successfully transformed hobbies into small businesses say no matter how much you love something, you must step back and treat it like a business.
Having a clear vision of the potential market and enough money in hand to last at least a year are essential ingredients for success, according to these entrepreneurs.
“I think it is the dream of most collectors to make their hobby into a business, but most are not successful,” said Larry Whitlow, who began collecting coins and stamps as a child.
At 18, Whitlow paid $35 a month in rent for his first coin shop. He knew a lot about coins and was sure he could make some money buying and selling them. But within three months, he ran out of money and closed the shop.
Whitlow, who now owns Galleria Unique, an elegant coin, fine arts and antique gallery in Oakbrook Terrace, Ill., said his first venture taught him to keep his emotions in check while pursuing objects for his store.
“When you buy something for $100 and sell it for $75, you remember it,” said Whitlow. Over the years, Whitlow said he has learned to separate his passion for collecting beautiful objects from the business aspects of selling them. He has surrounded himself with experts in various fields and sought help in running the business side. This year, he expects sales to reach $10 million.
If you are thinking of creating a business around your hobby, Whitlow recommends finding a job with a company that does something similar so that you can learn as much as possible before going out on your own. Bob Marriott was a real estate developer who learned about the fly-fishing equipment business by hanging around a friend’s store.
With high interest rates thwarting his development projects, Marriott bought the business from his friend in 1983. It has flourished as fly-fishing has gained popularity as an international sport.
Fly-fishermen shun live bait in favor of flies designed to resemble insects and other natural materials. All handmade, the flies are wrapped with brightly colored feathers and other decorative materials.
Marriott and his partner, Larry Alperin, operate three fly-fishing equipment stores in Southern California.
“I got into the business for the business and not for the sport,” said Marriott, who also set up an international mail-order catalogue. “But I knew if I wanted to do some fishing, I had to create enough volume to hire people to keep this going when I’m away.”
Today, the three fly-fishing stores employ about 14 people and host workshops taught by celebrity fishermen.
Marriott’s partner, Alperin, said that although he works hard in the business, he still considers it more of a hobby than a job.
“Most people say don’t turn your hobby into a business because you won’t like it any more,” said Alperin, who sold his commercial printing business a few years ago with the thought of retiring.
While Marriott and Alperin surround themselves with feathers and reels, Jim Bennett spends much of his time surrounded by show horses at the Los Angeles Equestrian Center.
Bennett, who grew up on a farm, moved to California four years ago from Texas. In 1988, he was offered a chance to take over a training stable at the Equestrian Center in Burbank. Soon, his Bennett Farms began to attract a star-studded clientele, including actors Patrick Duffy and William Shatner and singer Stephen Stills.
Despite a barn filled with dozens of glorious horses and loyal clients, Bennett said he lost a tremendous amount of money the first year because he lost control of expenses.
“The business is just now beginning to break even and make a little bit of profit,” said Bennett, who spends about 20 or more hours a week at the barn when he is not working as a clinical director for ASAP Family Inc., a chemical dependency treatment program.
Bennett said his greatest challenge was hiring the right people, especially since he can’t be in the barn all the time. He relies on his trainer, Renee Hammond, to keep track of the horses and clients. Someone else handles the finances.
“At times, it becomes a more of a job and less fun,” admited Bennett. He said he still needs to keep better track of the money because when you are dealing with horses, “it comes in and flows out so quickly.”
Sometimes a hobby spawns an idea for a potentially big business. Two Los Angeles real estate and hotel developers, Bo and Robert Zarnegin, recently opened the Los Angeles Fine Arts & Wine Storage Co. to house their extensive wine and art collection and similar items owned by collectors throughout the region.
“Our own collections of post-Impressionist and contemporary art works began to overflow our ability to display them in our homes and offices,” said Bo Zarnegin, executive vice president of Probity International Corp.
When Zarnegin and his brother couldn’t find a secure, fireproof place for their valuable paintings, they spent about $8 million building a 45,000-square-foot complex.
They think that it will be successful because so many wealthy art and wine collectors live in Southern California. Depending on the size of the room and what is stored inside, monthly rents range from about $20 to $700.
