Sep 13, 2018
On this episode, Karen and Cadie talk about how to take your hobby to the next level and making it into a sustainable and profitable business. Etsy, Ebay, Amazon and other online selling distribution channels have made it easier than ever to find a market for your passion products and services. Even though technology has made this opportunity easier, you still need to understand and practice basic business, legal, logistics, and marketing principles to create a successful side business, much less a full career change. Is your hobby something that you can turn into a profit center? What should you consider before you launch a side business? When should you consider leaving your day job and putting all your energy and time into your new business? Excitement hides the motivation and pain it takes to start a new business, especially one you start and genuinely love doing. Karen and Cadie advise you on the boring and dreaded business details that sucks the fun out of your new and exciting business startup, how to avoid the typical pitfalls of new business, and how to maintain that motivation to turn your passion into your new career.
Wine of the episode:
Pacific Rim Reisling
Learn more about Karen Simmons & Cadie Gaut
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About Cheers To Business
Cheers To Business is a seriously casual business and entrepreneur podcast that discusses starting, running, refining and growing your company, or excelling at your current job with two or your soon-to-be friends - over a glass of wine. Please subscribe, review and rate Cheers To Business on iTunes, SoundCloud & Overcast. You can contact and stay connected with us by LIKING our Cheers To Business Facebook page. Thanks for listening and as always, CHEERS to you!
Full Show Transcription:
Karen: Hey everybody. Today we'll be talking about the motivation it takes to turn that hobby of yours into a profitable business.
Cadie: What are we drinking today?
Karen: We are drinking Pacific Rim sweet Riesling wine. It is yummy, yummy, yummy. I think, I'm pretty sure because about most of my wine there, is at the Domke Market.
Cadie: I love going there.
Karen: Oh, Brooke and her crew are so great, because I always forget what kind I like.
Cadie: Well, I don't really...I haven't drank that much. So they help me kind of figure out what I like. I kind of...you know, fruity, and they help me find a wine that...
Karen: Yeah, I'm not a real big...I don't know how to pair things, you know.
Cadie: No pun intended.
Karen: No pun intended. Well, today, you know, like I mentioned, we are talking about where do you get the motivation? You have hobbies. Etsy has opened up the world to people. I mean, anything that you do in the privacy of your home and love to do, you can now make a profit at it.
Cadie: Absolutely. I think it kind of takes some work and you can do local festivals. And I mean, even online shops, not even going through Etsy, but taking it to that next level.
Karen: I have a client that actually has done that. And I bought some of her stuff, it's so cute. But it started out she was a teacher, and she started making these cool plaques. And they have home on it, it's Fishtail, I'll throw it out there too, she's fantastic. Fishtail is the name of her company. But she does the festivals and different things and sales on Etsy. And she's taking these pieces of wood, and all of a sudden she's not teaching anymore, and now her husband has quit his day job.
Cadie: Wow, that's a big jump.
Karen: Yeah, it was kind of hard for them in that they kind of fell into it and it grew, which happens a lot of times. We had to kind of backtrack to get hold of the business part of it. And that's, you know, where you and I come in with people sometimes they've already, you know, gone a ways and they need to take a step back just to get their accounting and get their paperwork right.
Cadie: Yeah, and that's not the fun stuff. I mean, when you're first getting started, you're so excited, you're so motivated to get, you know, this new project started and to really launch it. But I think before you need to do that, you kind of need to take the time and get your ducks in a row.
Karen: You know, you said that today, we were talking about businesses and different things. And you said, "Excitement hides the effort it takes." That was brilliant.
Cadie: Obviously, kind of launching a new product, you know, if we're talking about hobbies, specifically, rather than a service, it's easy, you know, you're so excited. You're not thinking about those small details, all the legal paperwork, you know, the business plan, how are you gonna grow, you know, do you even know that your cost of goods sold? Like if I'm selling a blanket for $15, but it cost me $13 to make you know, and not just the product itself, but my time, I mean, you've got to take all of those factors into the equation.
Karen: You know, when we were talking about what we were gonna talk about today, three things that came up with us was when do you make the leap, you know, how do you even start getting this out there?
Cadie: Well, I mean, even the time of the year, you know...
Karen: Right, when?
Cadie: ...are you launching at Christmas time? Can you handle that workload, the increase of sales?
Karen: You want it to grow, but sometimes you might get what you wish for.
Cadie: We had those awkward moments, like, how am I gonna do this?
Karen: There's some big moments. How about...
Cadie: Keep it classy.
Karen: I didn't say the other word.
Cadie: I wanted to, but...
Karen: Me too. Give me another glass of wine.
Cadie: Maya's [SP] my 10-year old daughter. And she told me that she wants to listen to the podcast. I was like, I better watch my language.
Karen: Yeah, yeah, yeah, can't say a bad word. Another thing to take away from this, getting back on target, pan intended, is you know, who is your target market, logistics of getting to places?
Cadie: That was good.
Karen: Thank you.
Cadie: We should cheers.
Karen: You know, the third thing that we had listed was the dreaded business details.
Cadie: A business plan.
Karen: Sales tax.
Cadie: Oh, yeah.
Karen: Personal property tax, frivolous tax.
Cadie: That's why I have you. Find a good accountant. It is worth every single I'll say dollar and not pennies, but you get what you pay for, you know. You can pay an accountant and an attorney to formalize those legal documents versus don't go to Legal Zoom. I mean, I'm not publicly bashing them, but...
Karen: But I will say for a fact if you're in Alabama, every state's different, they set every Alabama company up in Birmingham, Jefferson County. Do you know what a pain in the butt it is to be able to transfer that to Mobile County? And people don't realize that.
Cadie: It costs more money to get this corrected than if the professional had done it in the beginning.
Karen: Every single time. Almost every single time. When people try to handle all the details themselves that's not what you know how to do, you know how to do what you do for a living, and you know how to do this craft or hobby that we're even talking about turning into a business.
Cadie: Stay in your circle.
Karen: Drive your lane.
Cadie: Yeah, all those.
Karen: Got another one?
Cadie: No, I don't. I really wanted a crafty one, but I'll think of it. Okay.
Karen: So we talked about when a little bit you know, like you said Christmas. That was a perfect example.
Cadie: Well, I think because that's a big thing is, you know, business is going good. You may do it on the side. And then you realize, oh, I need to dedicate more time. So you know, that's when you do take that step to leave your job. Yes, you may have more hours, but how much more can you grow your inventory with those extra hours?
Karen: Okay. And another one too, is if you quit your job because you need more time to spend on the hobby, you've got to allow time to be able to grow that business where you're making the same money equivalently.
Cadie: Yeah. Well, and I mean, the benefits if you have a current job, I mean...
Karen: Yeah, teachers health insurance, retirement.
Cadie: Retirement, all of that. Even I mean, benefits for your family.
Cadie: It's a huge decision. And I mean, even being realistic with your time. Like, yeah, you may be working from home, but I mean, your family is there. So do you need a space separate from the home to get that stuff done?
Karen: Oh, you're dead on because, you know, it's all these different factors. And I think that is what holds some people back that could be successful. And it's just the fear is a big part of it.
Cadie: So as far as like the target market, finding that out, I think research is super important. So looking at other people in those industries.
Karen: I hate research.
Cadie: I love it.
Karen: Listen to your gut, the G in gut stands for God.
Cadie: I know, but still you need to see what your competitors are charging, you need to see what their website looks like.
Karen: I know you're right, I just don't like doing it. It's so weird for a CPA to say.
Cadie: I go to other payroll companies and submit a fake quote request, because I wanna see like what email I get back, how long is their response time, because I wanna be better than that.
Karen: Perfect. You know, pricing.
Cadie: Yes, exactly.
Karen: Everybody thinks what they have is worth so much money, you know how much a piece of land is worth? Do you?
Cadie: Tell me.
Karen: Whatever somebody else is willing to pay for it, period. So your craft is no different. It may be gorgeous, it may be beautiful, but nobody will ever understand the materials or how many hours it took.
Cadie: And I know we keep like saying hobby meaning like crafts, and we're assuming like you physically make something, but I think this could apply to services. You know, let's take personal trainers, you really don't have any overhead especially if you can get tied in, you know, with the gym or if you're thinking about opening up your own gym, or I know a kind of one thing I just saw girl, I can't remember her name, but she does like on the spot personal training, where she comes to you. I mean, how smart is that?
Karen: I've seen massage therapists do that. I know in the past I've had one in for the staff during tax season, and they all got a 10-minute massage. I was so thankful for her. I need a nail lady to come to my office. If any of you are out there, please.
Cadie: You do on the go nails.
Karen: Terrence does my car, he comes to my office and everybody in that place gets their car done. We're not leaving the office. It makes you more money for somebody to come to you.
Cadie: Time. I mean, you've got...time is everything. I mean, you taught me.
Karen: Yes ma'am.
Cadie: I mean, cleaning your house, it doesn't make you happy.
Karen: I don't clean my own house.
Cadie: Because that two hours it would take you to clean your house, you know, how many tax returns could you do? How many clients could you call and check on? I mean.
Karen: Exactly, travel time. Travel time is a waste. I want somebody just to drive me around. I really do.
Cadie: Miss Daisy.
Karen: I'm not gonna sit in the back. No, I want my Surface Pro on my lap. You bought me that...she did buy me a handy dandy lap thing for my computer to sit on in the car. I get more work done. I needed an Uber to pick me up every day.
Cadie: A permanent Uber with a standing appointment?
Karen: Yes. Can I pick him out? This wine is really good.
Cadie: It is good. Thank you, Domke. Thank you, Brooke.
Karen: Trending business details, nobody wants to talk about them.
Cadie: No, they dread it. No, no, people have to talk about them or you should talk about them.
Karen: Usually, you know, you can do anything you want till you get caught, and then it's really hard to backtrack, to be able to make it right. And then there's penalties and interest and everything else, because everybody wants a piece of a business, everybody, city, county, state, you name it. You need to find out the paperwork. You know, don't do that. We just said, I don't like to clean my own house.
Cadie: That's why I found the industry with no sales tax. I don't wanna deal with that.
Karen: In this state, in our state.
Cadie: Well, that's why I'm not going into another state that has sales tax on services. So as far as does someone need a business plan, I hear it a lot like a growth plan, a business plan, I've never created a growth plan or anything like that. Goal setting is something that's hard for me. But as far as, like, let's say I have a photography business and I really want to take it to the next level, like what do you recommend for new...you do a lot more with newer businesses.
Karen: For somebody like that, I don't think they should pay a CPA to do that. I think they ought to go out to south for the free services, for the SBA. The SBA is wonderful. They're free.
Cadie: There's a few places. The SBA is the Small Business Administration, and they're super great about helping businesses. There's also the Women's Business Center and, what is it, The Grind?
Karen: The Grind, and then "Sherm" [SP]. Sherm is a group of professionals that volunteer to help people out with things like this because...
Cadie: I thought that was the Society for Human Resource Management?
Karen: There is but there's another one where retired business people volunteer.
Cadie: Clarify, not the human resource SHRM?
Karen: I don't know, but I know what you're talking about. Anyway, there are people that will volunteer and to help you and the SBA is probably your first source. One, it's free. If you look at formal business plans, they can be an inch thick, and people get into so much details that you have no idea what you're gonna do. And then if a bank...they want you to make projections, so it just can get real complicated real fast and keep it simple, KISS, keep it simple, stupid. I'm not calling you stupid.
Karen: I've never called you stupid. I called you goofy one time. But don't overcomplicate this stuff. Find somebody is used to taking care of business. I said one time, I wanna put up a billboard that says, you know, "Just let me take care of all your crap." They won't let me do that, but I really want to, because that's what it is in a nutshell.
Cadie: Yeah, I think having that person that has your back. I mean, I call you all the time. Like I pull up my P&L, profit and loss, and I'm like, "What the heck do these numbers mean?" I mean, I'm able to see the trends now that we've been in business. you know, we're on our fourth year, so I can compare things to what it was last year, but as far as just pulling up one for the current year, I'm like. "What do these numbers mean?"
Karen: I'm very thankful you do my payroll, I don't ever wanna do a payroll again, but to my financial statements you know, I love percentages. If you look at gross profit margin or what's your cost of goods sold, you know, basically if you can run something with percentages you're looking at for every $100 that comes in the door, where does your money go? And you need to know that, so if one jumps you need to go and find out why.
Cadie: So like if I've got 33% going to staff, that means $33 out of $100 is going towards the staff?
Karen: Don't forget payroll taxes.
Cadie: Yep. So getting back kind of where this conversation started, motivation. I mean, it's easy to get in a funk, even when you've been in business for a while, but especially starting off. And I think when that motivation starts to fade, that's when kind of that comment I made about, "Excitement hides the effort it takes," when that motivation can fade off that's when it seems like your effort is having to be so much greater, but it's simply because that motivation is fading.
Karen: You're just noticing it more.
Cadie: You're noticing it more. It's not harder, you can still get through it. You've got to acknowledge that, "Okay, my motivation is low. However, I still have the determination and the dedication to get this done."
Karen: And I think it happens too when the expectations are that you're gonna go and you're gonna be this overnight success, and it doesn't happen.
Cadie: I watch my Facebook business page, everybody come like it, and then you sit and wait and nothing happens. No, you've got to promote it. You've got to share it. You've got to get out there, like you've got to...you are that brand at that particular moment.
Karen: Hanging a shingle does not give you instant success.
Cadie: Build it and they will come is not true.
Karen: Yeah, it is kinda.
Cadie: Unless you're really good restaurant.
Karen: If you work it. If you work it.
Cadie: Yeah, if you work it. So to really wrap this up, I mean, the motivation to take your hobby to the next level to become a profitable business, you've really got to know when is a good time to make that happen. I mean, really it's like having a baby, there's never a right time, but when is the smartest time to make that move? Know your target market, do your research of other people in the industry, and take the time to sort through those dreaded business details and find the people who have your back to lead you to that end success goal.
Karen: You know, don't forget logistics, and by logistics it's where do you have to ship to? If it's services, how do you get people to you? Where do you go? Location, location, location.
Cadie: Absolutely. So I had fun today.
Karen: I did too.
Cadie: I didn't realize we almost made it through the whole bottle.
Karen: I know we should have brought two.
Cadie: All right, Brooke, Domke Market, next time make us buy two bottles.
Karen: Shout out.
Cadie: All right, so thank you for listening today. Domke Market, thank you for the wine. Next time we'll have to buy two. Thank you everybody for listening.
Karen: And here's cheers to you for turning your hobby into a money maker.