Until you have a client your business is just a hobby

A great quote for many first time entrepreneurs to listen to when first starting out is “Until you have a client your business is just a hobby”. What this means is that when your first starting a new venture the 3 most important things are revenue, revenue and revenue.

Many people start with and get bogged down on things such as what color business cards to make, should they form a S Corp or LLC or what is the best way to reduce tax exposure at the end of the year. Don’t get me wrong, all of these things are very important but not until your business is producing some significant revenue. Without that revenue it is basically a hobby that you have very nice business cards for.

Many first time entrepreneurs typical do know realize that they can only mentally go so far with an unprofitable business. Eventually if a business is not going anywhere it will run out of steam and fade away.

Revenue changes all of this… You will then have the cash you need to hire people such as an accountant, lawyer, designer, etc to figure this all out for you. Also this will give you the critical push you need to keep building your business.

The most common defensive I hear about this is “What about companies that went for a very long time without revenue such as Google, Yahoo and many others”. The two objections here are that a lot of these companies were started by very senior entrepreneurs who have been through it before. Secondly many of these companies were hobbies/school projects to begin with and eventually morphed into companies when they started to become profitable.

I am not saying that this is the only way to do it… I am just saying that it just massively raises your odds of success.

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  • http://twitter.com/jasontugman Jason

    I agree with everything you said. Ironically, this seems to be the topic of the weekend for me so it is random that this would be the first post I read on your website. I just read GaryVee’s Crush It and he mentions this as does Jason Fried in ‘Getting Real’ which I also re-read just today.

    Execution is everything. I also agree that you should socialize your project. I never really ‘hold in’ what I am working on, that said (and maybe this is because I worked in entertainment for so long) I never give the secret sauce away. Yes, I am working on XYZ but beyond execution your secret sauce is what makes your product unique in a world, as you point out, that has done, seen and created everything atleast once.

  • http://twitter.com/jasontugman Jason

    I agree with everything you said. Ironically, this seems to be the topic of the weekend for me so it is random that this would be the first post I read on your website. I just read GaryVee’s Crush It and he mentions this as does Jason Fried in ‘Getting Real’ which I also re-read just today.

    Execution is everything. I also agree that you should socialize your project. I never really ‘hold in’ what I am working on, that said (and maybe this is because I worked in entertainment for so long) I never give the secret sauce away. Yes, I am working on XYZ but beyond execution your secret sauce is what makes your product unique in a world, as you point out, that has done, seen and created everything atleast once.

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