Can you turn your hobby into a successful business? A number of people have done this and put themselves on the path to financial independence. Read on to find out more.
There are a number of hobbies that could be turned into a business, for example woodwork, crafts, computer related areas such as website building or cooking. Some people start selling items on EBay and build that into a full time business. One benefit is that you will have acquired some operational skills through your hobby.
The difference between a hobby and a business is that a business is run in a more organised and methodical way, and for profit. That is, it must have a business plan, financial records and a way of marketing the product, and must produce a financial return.
Before you turn your hobby into a business, consider the following:
- Do you have business skills?A small business means that you need to understand basic accounting, banking, law, marketing, logistics, websites and many of the activities that are done by specialists in a large organisation. If you don’t have these skills, your business may suffer. The good news is that you can learn these skills from small business courses or by asking for help. Don’t be afraid to use professionals for tasks such as bookkeeping.
- Do you have a plan?Every business needs to have a plan. A hobby can only be turned into a business once you have a plan that provides a way for you to profit from it. A business plan must address how you produce your product and how you will get it to your customers and make a profit from it.
- Can you deal with customers?Customers are the lifeblood of any business. At the same time, they can be difficult, and you need to be prepared to handle complaints, lost items, customer emails and phone calls as well as marketing yourself.This is not for everyone but if you can’t handle the stress from dealing with people, you may not find it worthwhile and perhaps another opportunity would be better suited.
- Is the hobby going to be lucrative enough?Whilst a hobby doesn’t have time constraints on it, in business, every hour must be used to make an income. You need to include the time that you need to spend doing government paperwork, marketing your product and sourcing materials and ensure that you will make enough per hour.A business need to provide a reasonable living for you.Some hobbies are difficult to turn into a profitable business because they are minimum wage activities. For example, furniture making may be fun, but unless you are able to produce it at a factory price, it can turn into a fairly low paid business.
- Do you have a place to work?Your home may be OK for your hobby or some types of small businesses, but if you are having people around to your house, or have something that is noisy, you will need separate premises.
- Do you have financial reserves?Any business takes a year or two to take off and show whether it is financially viable. In that time, you will have to have some funds to live on. That may mean either having a part time job or savings or a redundancy payment to tide you over.
A hobby can be the basis of a profitable business, but you need to plan this properly. Your Career Reboot consultant can help you with planning.
Make sure that you can make enough money for the time you put in and that you are prepared to handle customers. If you can do this, a hobby may be able to be carried forward to an interesting new business.