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Avoid Starting a Faux Business

Remember that the purpose of a business is to make a profit.

This is true even of enlightened businesses that seek to promote their creative or activist or other values in the marketplace.

If you are not making a profit, you are not in business. You may feel like you’re in business, and look like you’re in business, and act like you’re in business, but you are not in business. What you’ve got is an expensive hobby or (worse) headache--and, whichever it is, it's probably not sustainable.

I call an entity that looks like a business from the outside, but really isn’t one, a “faux” business.

In my work with businesses, I’ve identified two main types of Faux Businesses:

“The Donut”: a business that looks good on the surface but has a big hole in the center: it doesn’t pay its owner a salary commensurate with his or her efforts.

saddonut“The Wobbler”: wavers between profit and loss over a long period of time, in contrast to true businesses, which maintain steady profitability. Wobblers always seem as if they are on the verge of success, but never quite get there. A wobbler is a real heartbreaker, and often hard to diagnose.

You can give every appearance of being in business and still not be in business. You can have a studio, teach classes, have business cards, do the rounds of galleries, send out mailings, hire an accountant, and all the other myriad activities business owners do. You could work fifteen hours a day, seven days a week. You could even be making a lot of sales. It doesn’t matter. If you are not making a profit, you are not in business.

Please don’t set up a faux business. It will break your heart and maybe ruin your dream.

There’s a real business in you waiting to come out: be true to that dream by being hard-headed about profit.

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