Hobbyist vs. Entrepreneur

Question

The pursuit of money; what separates the hobbyist and the entrepreneur. Though, sometimes there doesn't seem to be an apparent difference in capital raised between the two, but that is another story. Which side would you align yourself? In this economy, it's hard for anyone to spend large amounts of time and resources towards a project without a payoff of some sort. However, I see a new, pro bono, effort by an engineer every day. For example, a friend of mine is making a garage parking distance calculator for his car, so he never hits a wall. He has already spent $200+ on the project and countless hours. He just wants to make something to use. Sometimes people, seemingly, create and build for the sole purpose of completing a difficult task. To design and give away, is it just for the bragging rights or clout? If so, I don't think that is a worthwhile reason for all the time. As for me, I want to make money with every effort I take. For example, I'm currently working with PICs for the purpose of making my own stepper drivers, to sell. And I have a few other parallel developments going on for the same exact purpose. In my financial pursuits, I've taught myself many skills and learn much more than I have anywhere else. More times than not, my projects sold. But, am I selfish, should I be freely contributing to the overall body of knowledge? Can any of us really spare the time? Cabe

Former Member · Answer

This is a topic I can contribute to... I spent the first 10+ years working for large corporations developing technology. It was depressing, as the effort and passion I put into my work was often misdirected by management and customers that didn't understand what they actually wanted. At the same time, I had my own hobby interests. One of the gadgets i made attracted a lot of interest from an associated club I was with. It pushed me into considering it as a money earner. I'd already made and sold a few electronic parts, but to take this next step was big. When you have to spend $20k just on the tooling alone, the hobby component transforms into a serious business venture.

That one product established itself and my own company took off... and I eventually quit my full time job and worked for myself. I found this to be the best scenario, as I'II turned my hobby into a business. I'm in control of my own content and where I want to put my design effort. But it's not always quite that straight forward.

I one very important thing to consider is the bottom line. The business case. I've had several products go no-where and it's cost me dearly, but have also had some good success. If you are starting out with your own products, you best look for niche markets. I've build my own stepper control interface board for one of my CNC's, so a stepper motor controller is something I'm quite familiar with. It's unfortunately a very competitive market. There is SO much stuff coming from China, and a lot of rubbish, but it's cheap. Competing in a market like that is very tough, particularly if you are in Australia - shipping costs will significantly limit your export potential and your growth figures. You would literally need to provide something that is unique and desired to the market in order to attract interest.

Niche products are those where you have a better chance of making a reasonable buck. If it's not niche, you're in the competitive market where you need to sell volume (big risk, big capital investment). If it's not niche but isn't on the market, but it's potentially a big seller, then you either have to have the big bucks to protect the IP and hit the market hard... before a big company rips off you product and sells cheaper than you can even manufacturer it. If however it's a niche market part, it's too small a volume for the big companies to bother with it, and the market will pay more for the product because they can't get it anywhere else. So you can fund a smaller production run, lower risk, higher profit for your efforts... and hopefully have the right receipe for success.

For continued success, you have to go with the market, chose what you make next carefully. Don't design just anything you can, but chose the product that is going to generate the most profit. That said... don't loose sight of the hobby side. The more self interest and passion you put into the product, the more likely the effort is going to show in the quality. Getting paid for your hobby rocks. Having your own company support your hobby rocks. Having to do the business side sucks, but at least it's related to supporting your hobby :-)

Former Member · Answer

Thanks Cabe ;-) My website is www.ecliptech.com.au The next product is the Twinlight Driver3, which is a modification for motorbikes. It's a headlight upgrade, but not HIDs. Provides a direct path for current, less power lost than in the bikes harness, therefore more power to the bulb (30% increase in brightness). It also has daytime running light and modulator options. The third generation of the product is planned to be released next week. Only the info on the second generation is up there at the moment. The new content isn't released. I have a few other products, but not everything is on the website. Some of the gear is simply out of stock (not listed). Some products I sell through motorbike forums and even ebay - which is a good format for a bit advertising. Market research is extremely important. You have to know your craft and must have a solid background with the target application/customers. I ride motorbikes, done a lot of track work and been a long term member in a club. I have written a lot of technical DIY maintenance articles and posted many reference articles for the club, mostly electrical related. The reputation I've built puts me in daily contact with riders. Often they are seeking advise on solving something that has failed. In some cases, they will be looking for a product or way to solve a problem, or simply bouncing an idea off me - hoping I might make something. Ultimately I get to keep in touch with their problems. What doesn't work well, what has failed, what they'd like to have etc... This gives me a solid background as well as some confidence with assessing any opportunities. If I consider designing a niche product, one that I have confidence the market will be interested in (by talking to them), then I work on price first. If there is anything similar on the market, that's a starting point. Otherwise, I pick a good price that I think the majority of people will be willing pay for the benefit. Don't think about how much is costs in parts and labour, only what they'll pay for it - including postage (particularly if heavy). It's always a sliding scale, too high and you might not sell many at all. Once you have a price target, then work on the design to see what you can make it for - with profit margin. This gets much harder when you "distribute" to other retailers, as often they will make more money from the sale than you do. But it's important to get the receipe correct at this stage, as if you've spent a couple of months and a lot of money, you don't want to figure out such details and fall short in the later stages. Importantly, it's easier to drop an idea if there isn't enough profit for you to manufacture it. It's about picking the opportunities to take, rather than taking the opportunities because it's there. Some areas, you just shouldn't touch. I've been asked many times to make some proper LED indicators. I could do a really good job for motorbikes, but people aren't likely to pay what they are worth. There is so much crap coming from China, the customers can't tell the difference between a $20 pair with an over exposed picture making them look bright vs a real set that is actually bright in the daylight and compliant with regulations. One set cost $20, the other $100. Not worth competing in that market, despite providing good indicators would be a niche market. A lot of the ideas for products have actually come from others. Retailers have asked for various modifications for motorbikes/cars and even put me in contact with others that need electronic input. I've picked up several jobs just being business. For example, I built a prototype mechanism for trial testing for one of my suppliers. Not only paid work, but I got a discount on my order and also gained a supplier contact through him. Also got two bottles of red :-) Also helped out another supplier that was in a bind... made a production jig that solved a major problem, saving them time and a lot of money. But importantly, added some contacts. I'm hopeless when it coming to building a proper portfolio of products... one on the same theme, based on a proper product line. I'm perhaps still a little too hobby focused. Money itself didn't make me happy, only reckless with finances. I'm happy to make a good comfortable income with financial stability. I see my business as the path to funding my interests and hobbies. CNC machines are a big hobby (I have two), which became a very important component/tool to my business. Both with production, prototyping and tooling. But the hobby has also brought in business. My current big project (probably the biggest), is actually a musical instrument. Just being active in the CNC club, people could see examples of my work, such as my custom build CNC controller. After a few meetups, you find some interesting people with interesting backgrounds and businesses. Only takes one person to ask you if you could possible design something to start a discussion. The latest project is far from my core expertise, never done audio, however there are several people involved which collectively have the expertise. I wouldn't even consider it unless this was satisfied. Consider this... if you have an idea and write a PC program for it, what stops another software writer doing the same thing? Not much. If it's a niche market, there it's less likely to get copied. If it's not a niche market, then not only bigger companies with more resources will rip your idea off, but anyone else that can program will also try to earn a buck. However, if it requires a specific talent or cross-disicipline expertise, then you have an advantage that limits the competition. For example, if you know someone that welds aluminium and another that manufactures servo motors, then you could all get together and design an all weather RFID automatic gate controller, where you supply the electronics specific to the automation requirements. You have a bigger scope with design if you find the right people. Do I still have time for hobbies... hell yes! They constantly get in the way of real work and the company is constantly paying the bill for the parts. But the hobbies revolve around business activities anyway, and another I work on tends to increase my skill set and tools.