Have you been thinking about turning your hobby into a lucrative business? Here are six tips to help you earn money doing what you love.
Perform a Market Analysis
A successful business needs more than your closest family and friends to keep it afloat. By examining the local market you can determine whether or not your business can build the long-term customer support needed to keep it profitable. Check out the local competition. Do you have something unique and marketable to offer customers? If not, keep brainstorming. You’re not quite there yet.
Set Your Price
When turning a hobby into a business, pricing can be tricky. Many hopeful entrepreneurs discover their hobby is so time-intensive that it doesn’t even make for a lucrative side businesses, let alone a full-fledged startup. You have to charge enough for your product or service to make a reasonable profit after expenses without pricing yourself out of the market.
Here’s what I mean: not long ago a knitter friend of mine did the math. By the time she calculated the cost of goods and determined her hourly rate, she decided she’d have to charge a couple hundred dollars for a simple sweater — even if she only paid herself minimum wage. She knew the market couldn’t support her business, so she decided to only knit gifts for family and friends.
Try a Test Run
Many businesses built on personal hobbies can operate on a part-time basis to start. If you like freelance writing or catering or photography, for instance, you can start small, working weekends or just a few days a week to test the waters. If you’re able to build a solid client base and find yourself with more money-making opportunities than you have time, that’s a good sign your business will make it on a full-time basis.
Stop Calling It a Hobby
If you’re serious about turning a hobby into a real business, now is the time to start treating it like one. Dedicate regular hours to your business. Track your expenses and revenue. And separate your professional and personal finances. Talk to a financial or legal professional about the type of business structure that’s best for you and file the necessary paperwork.
Choose Your Business Name
From a marketing standpoint, choosing the right name for your business is absolutely essential. The best business name will be memorable and explain what it is you do.
Launch a Website
It used to be that all you needed to start a business was a storefront sign and a listing in the phonebook. Today, a web presence is an absolute must. Not only does it help you find potential customers, but a business website builds your credibility when you have a home on the web. Your website should — at the very minimum — have your business name in the URL, describe your business, list your hours of operation, and provide contact information for reaching you by phone and email. If you have a brick-and-mortar store, your website should also provide your physical address.
Have you recently turned a hobby or talent into a business? What tips would you add to this list?