You have a hobby already, but can you turn your hobby into a business? Whether it’s salsa dancing, gardening, or even being the go-to person called to paint children’s faces at church bazaars and community events, It’s your hobby, and you love it! And over the years, you’ve gotten good at it.
But it hasn’t gone unnoticed that you’ve backed yourself into a genuine business idea. Others have commented on it, but you’ve noticed it yourself. With a bit of tweaking and a few flyers (and maybe a few business courses), you could make some serious money with your endeavor. If you’ve been diligent about your hobby, you’ve probably already operated as a mini-business, taking up a few hours of your time every week. You may even charge a little, providing you with another source of revenue.
Still, a quick online review has shown you others in your space doing what you’re doing. So, you’re asking yourself, are you daydreaming, or is this something you should give some real thought to? And how difficult is it to make your hobby a full-fledged business?
Weighing the Pros and Cons of your Hobby to Business Idea
First, before making any moves, let’s consider the advantages and disadvantages of converting your hobby into a business.
Seriousness. The adage “serious business” is apt here. Are you serious? Even if you plan to supplement your income by a few hundred or $1000 monthly, turning your hobby into a business is still a considerable decision. For most people, hobbies are a true passion, and engaging with those hobbies means enjoyment and fun. When you take your venture from hobby to business, you’ll focus more on the business part: sales, marketing, new products, etc. You can still have fun, but the business part is first.
Time allocation. Any business that you start is going to require a work schedule. Even more so with your hobby to business idea. Your business will require you to set aside hours to spend (such as 20 a week or 40 if you’ll work it full-time), making it a priority on your schedule. Of course, in the beginning, you may have to spend even more time because your job will be to make things work.
Tax effects. The IRS taxes “hobbies” and “businesses” differently, so it may be advantageous to structure your endeavor as a business depending on how much money you’re making and how much in taxes you’ll be paying. One of the most significant differences here is that almost anything you buy for your business is tax deductible at the end of the year, which means you’ll save significant money on your tax bill when you claim your taxable income.
Profitability. Most hobbies are focused on enjoyment, while businesses are focused on profitability. For most hobbyists, revenue is a secondary consideration; for example, they might enjoy woodworking in their spare time and create only the most “fun” pieces but only sell pieces they don’t feel a particular attachment to. Someone who treats woodworking as a business would specifically create the pieces they researched to be the most popular and the most profitable.
Ongoing Learning. Treating your hobby like a business will make you more committed to refining your skills and investing in new areas. For example, you may have taught yourself how to repair clocks as a hobby. You have a knack for it. Fixing clocks, particularly the large designer ones, was fine when working on your own and with a few neighbors, but now you know there’s a whole world of folks with valuable clocks that need repair. You’ve found a market. But you’ll need to continuously invest in your skills to offer first-class services and repair all kinds of designer clocks. You’ll need to take classes and purchase books on an ongoing basis.
You also need to invest in the marketing side of your business so that you can find and attract the people who possess clocks valued enough to pay to have them repaired. When you treat your business like a business, you’ll be willing to spend more time, money, and energy learning new things.
Investment. Of course, classes, the tools to repair the clocks, and purchasing ads require money. On the other hand, labeling your hobby as a business justifies investing in it. For most, it’s easier to justify spending $1,000 on new equipment for your business than spending that kind of cash for your hobby.
Some business ideas require more investment than others, but all businesses need some investment. It’s hard to get others to invest in you if you’re unwilling to invest in yourself. What would you be able to do if you could hire someone to do freelance projects for your business? What if you had the tools that allowed you to create higher-quality work? You should have plans to accumulate some of this money for yourself.
How to Turn Your Hobby Into a Business
So, what actionable steps can you take to turn your hobby into a business?
I call it the “get serious” moment!
- Get serious about allowing your time for your business. Dedicate more time to your hobby-to-business venture. Schedule your day to spend some of it on business management. Have at least one day per week where you’ve set aside time to do market research, draw up a business plan, etc. Don’t skimp here; the more time you spend, the more results you’ll see.
- Get serious about setting priorities. Speaking of getting serious, you’ll need to think differently, too. Don’t just expect things to happen; if you want to build a business, you need to set clear goals for your business. You’ll need to consider what’s required to make your business work.
- Get serious about setting goals. Businesses are generally more numbers-focused than a hobby, so you’ll need to spend more time making projections. Everything needs to be grounded in research and documented. For example, you might strive to achieve a certain number of customers or work on one aspect of your business. Make sure you set long-term goals, such as how much revenue you want to build after a year, and short-term goals that will help you get there.
- Get serious about structuring your operation. Consider formally restructuring your business. For tax purposes, you can report income you earn from personal projects and solo businesses the same way as self-employed income (if you aren’t claiming it as income from a hobby). However, you may have an advantage if you form it as an LLC. You’ll want to name your business and create documents to help brand your enterprise. Consider your early documents carefully because these are your first steps to creating visibility and customer loyalty.
- Get serious about investing in your business. You have to spend money to make money. If you want people to take you seriously, you must take your business seriously. That means you must start buying and investing in services you need to be more effective and visible. Consider software, branding, ad space, and even help with services like accounting. To help with your business needs, look for local small businesses and independent contractors as a nod to entrepreneurship. If you’ve chosen the right hobby, and it’s a reasonably popular niche that others invest in, too, there’s a good chance they’ll invest with you. So, do due diligence to ensure you have decided upon a hobby in a solid niche and have a business plan to help you make your hobby-to-business idea successful.
Consider the advantages of starting a home-based hobby business, and decide whether you want to jump in. Just make sure whatever you choose to do is right for you.
If you’re turning your hobby into a business, I’d like to know how it’s going. Please leave a message below and let me know about your triumph or the side issues you’re facing.
