Why Hobbies Make for Very Successful Businesses

culled from:http://www.wsj.com
Turning a hobby into a business can really pay off. It just may take a while.
That’s the finding of a recent study that looks at entrepreneurs who start a business based on a personal pastime. In the study, scheduled to be published in the Journal of Business Venturing, these entrepreneurs lagged behind other founders in the first few years when it came to hitting milestones in the development of their ventures.
But continuing at a slow and steady pace, they caught up after 45 months in terms of pace, though they may be a few milestones behind. It’s the old idea of the tortoise versus the hare. In the end, the study found, the leisure-based founders are more likely than others to generate revenue, achieve a profit and have a deep commitment to their business.
The study used data from a survey of 1,100 early-stage U.S. business founders who answered questions annually from 2005 to 2010. The founders were tracked in terms of how quickly they reached business-formation benchmarks such as talking with potential customers, finishing product development and securing an office space.
The Wall Street Journal spoke with two of the study’s authors, Phillip Kim, associate professor of entrepreneurship at Babson College, and Stephen Lippmann, associate professor of sociology at Miami University, about what the tortoises can teach others about overcoming failure and forming a business:

Taking It Slow

WSJ: Why do the leisure-based founders do better in the long run?
MR. LIPPMANN: It may be that some of the activities we think of with developing products, like talking with customers and getting feedback, may be done during leisure time instead of when these people are officially engaged in the entrepreneurial activity. These kinds of activities basically build in a test market. Another reason is perhaps their commitment to the activity or the product they’re interested in developing. They’re not simply interested in exploiting an opportunity in the market, but they’re doing something usually for the love of the activity.
WSJ: Are there still benefits to organizing quickly?
MR. KIM: Of course. That’s the norm. If you’re talking to investors and bankers, many will look for indicators that the business can start rapidly and attract customers. So, any indications of stalling or lack of progress might be something that signals that something is not functioning properly. Our study is a contrast to that paradigm of thinking. We’re not saying that it’s incorrect, we’re just showing that there are some entrepreneurs who persist and manage to create viable businesses.

 

WSJ: Why are the leisure-based founders more likely to overcome failure?
MR. KIM: Since they’re working on businesses that are closely related to their pastimes, sure, they’re going to encounter some difficulties. But what our data are showing is that they’re still making progress at a steady pace. They’re doing something that they enjoy, so it’s not as likely that they’ll give up. And because they’re doing it for reasons not necessarily related to them making a lot of money or growing a big enterprise, the reasons for giving up are not necessarily the same as they might be for conventional entrepreneurs.

The Way Forward

WSJ: So, should a budding entrepreneur find a hobby first, or slow down their activities?
MR. LIPPMANN: I don’t think that slowing it down is necessarily the cause of the higher rates of success, or that people should go out and find a hobby and from there build their entrepreneurial activities. If people have the time and an alternative source of income, then the kinds of things that serious leisure communities build in, such as a social network of support that can give feedback, goal setting and goal achievement, tinkering and developing skills, are things that people should seek out. And often it may take a lot of time to get involved in that sort of community. A slower time towards achieving these goals does not necessarily mean that an idea isn’t worth pursuing.