How to Turn Your Hobby Into a Money-Making Business Idea
If you’re like most people, you have a hobby of some kind – something creative and fulfilling you do simply because you love doing it. You may have even thought about turning your hobby into a business. It’s certainly tempting; after all, who wouldn’t love to get paid to bake cookies or research family histories all day?
But as fun as it sounds, turning your hobby into a profitable business isn’t easy. Let’s look at the pros and cons of starting a hobby-centered business and what you need to do to get started.
Starting any business, whether it’s based on a hobby you love or not, comes with significant risks. And yet as a nation, we keep doing it. Business Insider reports that over 99% of all the businesses in the U.S. are small businesses, defined as a company with 100 employees or less.
Unfortunately, small businesses have a relatively high risk of failure; 20% of them don’t make it past their first year, 34% fold their second year, 50% are closed by their fifth year, and 70% are closed by their 10th year.
Small business owners also face the risk of burnout. You’ll likely need to start your business while working another job to keep the bills paid, and this can be difficult. It means investing a large portion of your time and energy into your day job, then pouring even more time and energy into your new business. These dual priorities can be incredibly taxing and stressful. If you’re not careful, they can quickly lead to burnout.
Another option is to quit your day job and focus exclusively on your new business. This may be appealing if you work at a job you hate and want to get out. It can also help your business flourish faster. But it dramatically increases your risks as it means you’ll be relying solely on your new business to earn an income.
Yes, the risks of starting a hobby-centered business are high. But as journalist Frank Scully quipped in 1950, “Why not go out on a limb? Isn’t that where the fruit is?” If you’re willing to take a leap, you’ll find there are plenty of rewards to being an entrepreneur.
Once you start building your own business, you might be surprised by where you find gratification. You could discover you really love helping your customers solve problems, or find it exhilarating to have complete control over your future. Being an entrepreneur can change your life and give you a deeper sense of purpose – not to mention the potential to earn some serious cash doing what you love.
Consider the experience of U.S. Army vet Nick Palmisciano, who was profiled by Entrepreneur in 2016. Palmisciano volunteered with the ROTC and had a successful career at John Deere after leaving the Army. He started making military t-shirts on the side for some of his ROTC students, and demand for these shirts grew even as he landed promotion after promotion at John Deere. Finally, with another promotion on the line, Palmisciano did some soul-searching and gave his notice at work. His business, Ranger Up, is now worth $20 million.
Tara Jenson, a bread baker in North Carolina, turned her love of natural, wood-fired breads and pies into a successful business, Smoke Signals Bakery, that was featured in Bon Appetite in 2016. She now has a cookbook, a book tour, a thriving bakery, and offers workshops with attendees from all over the country. She did this simply by doing what she loved and sticking to her core values.
These success stories make it easy to feel excited at the prospect of turning your hobby into a business. However, it’s important to realize that a business centered on what you love is still a business. You need to do your research and come up with a plan if you want that business to succeed.
Your first step is to find out why you want to turn your hobby into a business. Do you want to make some extra money on the side while still working your primary job? Are you a stay-at-home-parent or retiree who needs another income stream? Is your goal to create a business that will eventually lead to a full-time income?
Everyone has a different reason for wanting to become an entrepreneur. It’s important to be honest with yourself about why you want to turn your hobby into a business. If you can’t identify your “why,” you could end up feeling unfilled and unhappy because your deepest needs aren’t being met.
For example, are you bored and simply want some excitement and interest in your life? Do you feel like your career is at a dead end and you want to try something new? Do you simply need some extra cash?
Analyze your immediate wants and needs, as well as the potential of this business idea and how it might fit into your life.
That being said, there are a few reasons why it’s not a good idea to start a business. For example, you’re feeling lonely and want to start a business in order to work closely with others in your field. Remember, as a business owner you can’t really be “friends” with your team. You’re the boss, not their buddy.
Another reason why you shouldn’t start a business is if you need money fast. Building a successful business takes time and a lot of hard work. A new business won’t generate immediate cash.
2. Be Prepared to Dislike It Sometimes
Turning your hobby into a business won’t always be fun. Do you love this hobby enough to do it every single day? Will you be able to do it under the pressure of deadlines and financial repercussions, like not being able to pay your electric bill tomorrow if you don’t bake those cupcakes tonight?
There’s a real possibility your hobby-turned-business won’t be nearly as relaxing as it is right now when you’re just doing it in your spare time. After months or even years of doing it every day, you might not even enjoy it anymore. Are you willing to take that chance?
Everyone has a different idea of what “success” looks like for them. For one person, it might be creating a business that earns a six-figure income. For someone else, it might be having a business that allows them to do what they love and have the flexibility to spend more time with their family.
Take some time to define what success means to you. What would make you feel like your business is a success? What would a successful day look like?
Defining your idea of success will help you stay grounded when working on the more tedious aspects of your business. It will also help you keep in mind what you’re ultimately working toward.
You need to take an honest look at your financial situation for a few reasons.
First, every business requires at least some startup capital. You may already have many of the materials you need since this is your hobby and you’ve likely been doing it for years. But chances are you don’t have everything you need to scale that hobby up into an income-producing business.
You’ll also face additional costs you don’t have right now, like marketing expenses. So it’s essential to have enough money in your savings account to invest in this business idea.
If your goal is to quit your day job and jump into your hobby business full-time, make sure you have at least six months of living expenses saved up. A year’s worth is even better. It will take time for your business to become profitable, and you don’t want to have to worry about making your mortgage payments until then.
If you don’t have enough padding in your savings account right now, put all your energy into building this up first. Learn how to save money at the grocery store, how to save money on utility bills, and how to save money on gas. Try to negotiate a lower rent, stop going out to eat, and find ways to cut your commuting costs. If you have a lot of debt, pay off your debts first and then focus on saving money. Save enough to live on for six to 12 months.
While you’re building your saving account, you can still start working on your business. Use this time to write a business plan, conduct market research, and acquire the skills you’ll need as a business owner. Take some free online classes on entrepreneurship from Coursera, Udemy, or MIT. Listen to the Side Hustle Nation podcast, which has been nominated the best podcast for small business owners and is full of tips and tactics for entrepreneurs.
Use this time to research which accounting and invoicing software is right for your business. Keeping track of revenue and expenses is an important part of owning a business, and accurate data will ensure you make the best decisions. Once you pick your software, learn how to use it before you officially launch your business.
Before you invest money in your business idea, you need to find out if there’s even a market for what you want to offer. Business Insider reports that 40% of small businesses fail because there’s no market for their products or services.
Conducting market research means answering some critical questions:
Learn what you’re about to get into by reading trade publications for the industry or field you’re entering. For example, if you want to start a bakery that focuses on elaborately decorated cakes, read “American Cake Decorating.” You can find a complete list of industry trade publications in the Encyclopedia of Associations, which is likely available at your local library.
Your library might also have a copy of the State and Metropolitan Area Data Book 2017, which can be a valuable source of information on population shifts, housing trends, and income and education levels in your area.
You’ll also want to check the U.S. Census Bureau’s County Business Patterns, which provides a list of new and existing businesses by zip code, county, and metro area. It’s an excellent way to discover potential competitors and determine if the market is saturated or if there’s room for you.
Your local chamber of commerce or Small Business Administration (SBA) office can also help you compile demographic information, usually free of charge. The SBA has a comprehensive list of resources that will help you conduct market research. They also have an online tool called Sizeup, which allows you to find out how your potential business will stack up against current competitors in your city.
Last, consider using MarketResearch.com to find in-depth market reports. This site has everything you need for market research all in one place, no matter what industry you want to get into, and it’s updated daily. You’ll have to pay for this convenience, and many of the reports cost a few hundred dollars; however, they can give you a comprehensive look at the current state of your industry and help you determine if your business will remain viable in your region. This could save you a lot of money in the long term, especially if it helps you avoid making a bad decision.
Many new entrepreneurs are overly optimistic and think they can start earning a profit within the first month or two. In reality, it can take six months or longer to become cash-positive. Could you and your business survive that long without making a profit? Without proper planning, the answer is likely “no.”
A break-even analysis helps you estimate your startup costs, as well as your regular operating costs, and compare them to your expected revenue so you can see how long it will take you to “break even” in your business. Inc.com has a great tutorial on how to do this.
This is a valuable analysis to run before you invest any money in your business as it can help you determine if the business is worth pursuing right now. You can also use this information to adjust your strategy and increase your chance of success. For example, if you determine it will take six to eight months to break even, you might decide to stay at your job longer to build your savings while you start your business on the side.
An MVP, or “minimum viable product,” is a bare-bones version of your product or service that has one goal: to test the waters and get feedback directly from your earliest customers. MVPs are fairly common in the business world; Forbes reports that Uber, Zappos, and Dropbox all started with MVPs.
Here’s a simple example of how an MVP might work. Imagine you want to develop a new video game. Instead of spending months (or years) creating your “dream game,” you develop a simpler game based on your core concept. This simpler game might have the same characters or goals, but while it’s still fun to play, it’s not nearly as involved as your end product will be. You release the game for free or for a reduced rate so that gamers can play it and give you feedback on what they liked, what they disliked, and what they want to see in later versions.
An MVP can lessen your risk and help you save money since you won’t have to invest as much into your initial offering. It allows you to get valuable feedback early on so that you can change your approach if you need to or come up with a product or service that better meets the needs of your future customers.
Releasing an MVP can also help uncover problems or glitches you weren’t aware of. It’s far better to find and fix these problems when your product is in the hands of a few customers rather than a few thousand.
While an MVP is a simpler version of your product, that doesn’t mean it’s makeshift or unrefined. It still needs to meet your customers’ needs and enable them to have a good experience; it just requires fewer features or options than your final product.
Remember, it will take time for your business to start earning a profit, so you need to think about different ways you can increase revenue. The more income streams you have, the more you increase your chance of success. There are several ways to do this when you start a hobby-centered business.
Let’s say you want to turn your love of gardening into a business. Your primary business will be as a consultant helping other people start and maintain an organic garden. But how else could you make money from this business idea? You could:
Whether you decide to release an MVP or start off selling your full product or service, positive word of mouth will help you gain traction. This means that in the beginning, you might need to offer your product or service for free in exchange for some honest reviews on Google, Yelp, Facebook, or Amazon.
To generate buzz around your business, identify potential influencers in your target market. These are the people who are active on social media and have a blog or website others trust as a source of reliable information. If you can get your product or service in an influencer’s hands, they can do a lot to generate positive word of mouth.
According to a Zendesk survey, 88% of people said that a positive online review impacts their buying decisions. So you also need to make it as easy as possible for your customers to leave reviews.
Create social media accounts on Facebook, Instagram, Twitter, and Pinterest so people can share what they love about your product. Make sure you’re registered with Google so people can find you on Google Maps and leave pictures and reviews of your business. You can learn more about how to register with Google here.
Once your social media accounts are active, ask every customer to leave you a review online. Explain that you’re a new business and their feedback is a valuable tool to help you improve. You might be surprised how many people will leave a review if you ask.
I’ve been an entrepreneur for almost 18 years, and I’ve started a fair share of hobby-centered businesses. Some of them have been really successful, while others were a spectacular failure.
My first hobby-centered business was, and still is, my most successful. I started freelance writing in college to earn some extra money and gain experience for a journalism degree, and over the years it’s turned into a lucrative and fulfilling career.
While I’ve learned some valuable lessons from my successes, I’ve learned even more from my failures. And the best piece of advice I can offer is this: if you want to start a business around something you love to do, make sure you truly love it. Starting a business seems exciting at first, and it is. But it’s also really hard, and there will be days when this hobby you love feels more like a job than you ever imagined. If you don’t truly love doing it, you’ll probably give it up when the going gets tough.
Have you ever considered earning money from one of your hobbies? If so, what’s your hobby? How could you turn it into an income stream?
If you already have a hobby-centered business, what advice do you have for others who are considering turning their hobby into a business?
Categories: Small Business
Heather Levin is a writer with over 15 years experience covering personal finance, natural health, parenting, and green living. She lives in the mountains of Western North Carolina with her husband and two young sons, where they’re often wandering on frequent picnics to find feathers and wildflowers.
How to Turn Your Hobby Into a Money-Making Business Idea
Research & References of How to Turn Your Hobby Into a Money-Making Business Idea|A&C Accounting And Tax Services