Imagine leaving your job as vice president at a college to start a magazine with your wife, or quitting the investment business to raise alpacas. Two couples did just that to pursue their most passionate interests as both hobbies and vocations. Whether you’re interested in starting a business or just building a special collection, you may be able to channel your passions into real investments.
For the birds
Elsa Thompson still remembers the brilliant scarlet tanager that sparked her interest in bird watching. The spectacular bird, with its striking red and black plumage, would change Thompson’s life — and help focus her love of bird-watching into a family business.
Together with husband Bill Jr., former vice president of development at Marietta College, Elsa launched Bird Watcher’s Digest, now a popular bimonthly magazine, with a successful website and Internet business. After working nonstop on a manual typewriter to complete the debut issue from their living room, the Thompsons mailed out 34,000 free copies in September 1978. They received a handful of subscriptions in response.
The magazine now counts 78,000 subscribers in addition to newsstand sales, and the company publishes books and a bimonthly newsletter focused on backyard birding. Daughter Laura and sons Bill and Andy work for Bird Watcher’s Digest as circulation director, editor and publisher, respectively.
Starting a magazine is just one of many possibilities for aspiring entrepreneurs. Whether your passion is classic cars, fine art, great wine or something less conventional, there’s usually a way for a devotee to turn a part-time interest into an investment.
An animal farm of your own
Sixteen years ago, Jim King of Elkins, N.H., bought his first alpaca. Today, King operates Skyeview Alpacas, a 140-acre farm that breeds alpacas (similar to llamas). For King and wife Sue, alpaca farming was the perfect fit; he was looking to transition from a job in the investment business, and she was passionate about knitting and spinning the alpaca fiber, similar to sheep’s wool. Plus, they both love these docile animals.
You may not want to go as far as the Kings and the Thompsons have with full-scale businesses, but the point is to invest your time and money in what you most enjoy. Of course, you still need to plan well, just as you would for any other investment or endeavor. But by asking yourself just a handful of questions, you too can invest in what you love.
Is your passion enough? What you should ask to find out:
Have you done your homework? You wouldn’t start out on a long trip without a map, so don’t forget to pack one as you embark on your journey. Devise a detailed business plan. Stick to that plan no matter what.
How hard do you want to work? Elsa Thompson said that it’s a good thing she didn’t know how much work was involved when she and her husband started Bird Watcher’s Digest. “If we knew what was required, we might not have done it,” she said. Thirty years later, Thompson has no regrets, but advises new entrepreneurs to be prepared to roll up their sleeves — and to keep them rolled up for a long time.
How much can you afford to invest — and lose? Clearly, some enterprises are more capital-intensive than others. Starting a winery would almost certainly require an investment well into six figures, while stocking a high-end wine cellar could be done for as little as a few thousand dollars. Another key financial consideration is how much you would lose if your business never took off. Though that harsh reality shouldn’t stop you from pursuing what you love, you will want to know the financial facts before you invest.
Do you want to take on partners? In some cases, it makes sense to bring investors into the enterprise. You’d have less of your own money at risk and could benefit from their business acumen. This may not be an attractive option for some people, given the personal nature of passion investing.
How much of a profit do you need? In some cases, just breaking even or turning a small profit will suffice. But you may need your business to have a strong positive cash flow and show underlying growth to make it worthwhile.
Despite the potential hardships, don’t be discouraged from nurturing your passion. It may prove to be a lot of work, but it could be fulfilling. Plus, like the tanager’s signature colors, your passion may start in the red and end in the black.
This article was written by Wells Fargo Advisors and provided courtesy of Boucher Investment Group of Wells Fargo Advisors in Burlington. Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company. ©2013 Wells Fargo Advisors, LLC. All rights reserved. (For informational purposes only. Not intended to provide specific advice or recommendations for any individual.)