Do people rave about your baking? Do your drone videos regularly rack up thousands of views on YouTube? Now imagine making your living while enjoying your hobby full time. If people have started taking an interest in your hobby, it may be time to turn that hobby into a business.
Making the leap from hobbyist to small-business owner can be an exciting and challenging endeavor. It takes an entrepreneurial mindset, along with a lot of determination, passion and hard work to succeed. But, with the right strategies in place, it is possible to make your hobby a thriving, profitable business. In this blog post, we will discuss what you’ll want to consider before turning your hobby into a business, the benefits it offers, and some challenges you may face along the way.
Define your market
Before you dive into the deep end and open your hobby-based small business, you’ll want to know if there’s a market big enough to allow you to succeed. When friends and family start inquiring about buying the end product of your hobby, ask them questions and try to gain as much information as you can about who your potential customers are. Then use that data to inform how you proceed.
Choose your business model
Consider how your customers will consume your product before choosing a business model. For example, if you’re selling drone photography services, customers will most likely want to hire you on a per-project basis, so a subscription model may not be right for you.
On the other hand, if you’re selling artisanal soaps, customers will want to repurchase when their supply runs out, so a subscription model may be worth exploring. A subscription model offers the added benefit of providing recurring income, even during slow periods.
Create your brand
Chances are, you’ll find other people are providing similar products or services as you plan to. The fact is, you won’t be the first to market scented candles. So why should people choose yours? That’s where branding can help you differentiate you from your competitors.
When creating your brand, consider your:
- Purpose — why are you establishing this company?
- Core values — what ideals will guide how you conduct your business?
Then, use those to help you create your company’s:
- Name
- Logo
- Primary message
- Color palette
- Voice
- Graphics
Create a business plan
A solid business plan can be a huge help when the time comes to apply for a business loan or other funding. It doesn’t have to be extensive, but it should contain key information about how you’ll monetize your hobby, source raw materials, fulfill orders, keep track of your finances and more.
Decide where to set up shop
Is the best way to reach your potential customers online, brick and mortar, or a combination? If you are selling scented candles, for example, you’ll want a physical location where people can experience the scents firsthand. However, return customers already familiar with your candles may want the convenience of online ordering.
However, if you’re selling drone-photography services, a web site lets you showcase examples of your previous work and also lets people book your services with online convenience.
Record all business-related transactions
Turning your hobby into a business comes with significant responsibilities. The good news is, many of the supplies you previously purchased for your hobby will now be deductible as business expenses. On the other hand, you’ll also have to pay taxes. Keeping complete and clear records of your business transactions is key, so you’ll want to either hire an accountant or invest in accounting software. Also, consider applying for a business credit card to simplify recordkeeping.
After all that, what’s in it for you?
If you’re like many people, earning a living doing something you love is worth all the hard work it takes to get started. It allows you to share your interests publicly — and profitably. That, in the process, can reduce your stress levels and make the days pass more quickly.
Some things to be prepared for
Once your hobby becomes a business, you’ll have new tax responsibilities. Also, it is possible that you might find the market for your product or service isn’t as large as you believed it was, at least at first. That’s why it’s a good idea to set aside enough money to cover a year’s worth of expenses before you commit to the business.