Do you have something that you love to do as a hobby and think there is some potential that you could turn it into a money-making business?
You are in the right place!
I will share (5) tips for turning your hobby into a business and how to know when the time is right.
Let’s begin by discussing when the time is right to turn your hobby into a business.
Side-Hustle vs. A Business
I think it’s essential to start by saying that there is a significant difference between having a hobby, turning that hobby into a side hustle, and making it an actual (official) business.
According to Source, 45% of working Americans report having a side hustle. That’s roughly 70 million people!
There are a lot of reasons why people are side hustling:
- Some people need extra money to make ends meet
- Some are looking to use the money to save
- Some want extra cash for a vacation or additional disposable income
Regardless of the reason, you may want to earn extra income; there’s no shame in turning your hobby into a side hustle first.
Turning your business into a business, on the other hand, will have a completely different set of goals and require more focus and planning.
Most people who are looking to turn a hobby into a business do it with the intention of:
- Quitting their day job
- Replacing their income
- Pursuing their passion on a much bigger scale
The good news is whether you are planning on turning your hobby into a side hustle or an official business, this article will help guide you in getting started.
Risks Of Starting a Hide Hustle or Business
As a new entrepreneur, it’s normal to hesitate about starting a new side hustle or business. There are some risks associated with the beginning of either venture. Here are some risks to consider:
1. Time Risk
There’s no question that if you are working a full-time job, starting a side hustle or business will require that you work additional hours.
You need to be honest about how many hours you can make available for your new venture. To do this, I recommend sitting down and visually mapping out all of your commitments on a calendar. Be sure to include the time you need for your full-time job, family activities, keeping strong relationships, and the time that you plan to work on your new venture.
Keep in mind that while it may seem overwhelming as you create your calendar, millions of people have been able to start new businesses and side-hustles with the same responsibilities. If your venture is important enough, you will find a way to make things happen, and you’ll be surprised at how much your passion will fuel your energy!
2. Investment Risk
All startups have costs – including side hustles. Having a job gives you the ability to start your new venture while having a steady income source. Be sure to sit down and calculate what investment you will need to make to start your side hustle or business. Include things such as:
- Materials (if you are selling a physical product)
- Professional Email
- Technology (CRM, QuickBooks, Etc.)
The cost of starting a side hustle or business will depend on what you are planning to offer. Take out a notebook or create a spreadsheet to estimate your costs, and be sure to keep your expenses to a minimum until you’ve started selling your products/services/advice – you can always invest more as you start generating cash.
3. Potential Failure
You may have heard the statistic that 50% of startups fail in the first five years. Don’t let that deter you from taking action if you’ve determined it’s the right thing to do. Also, keep in mind that if you keep your day job, the potential of loss can be mitigated.
My recommendation is to start small and invest in your business as you grow. Determine your initial investment to start your side hustle or business and come to grips that you could lose that initial investment in the worst-case scenario.
For many entrepreneurs, the biggest risk isn’t the money investment – it’s the cost of their ego. Fear of failure stops them from trying. Don’t fall into this trap! The only way to reap the rewards of entrepreneurship is to take a chance. Be open to letting your lessons guide you during this journey.
How To Know The Time Is Right
Another concern for new entrepreneurs is knowing when it is right to start their new side hustle or business. Here are (4) key indicators to determine if your hobby has the potential to be more and you might be ready to take the plunge:
1) Do you have family, friends, and colleagues suggest that you consider selling your products/services/advice?
2) Do you find yourself more excited about your hobby than your day job, and you often find it challenging to give your day job your full attention?
3) Are you ready and willing to accept the risks that starting your side hustle will demand?
4) Are other people already successfully selling your products/services/advice? Although this isn’t required, knowing that other people are having success can help you quickly determine if your business idea is viable. Blazing a new path that no one has traveled before can be done, but you’ll have to prepare yourself for the work that it will require.
(4) Simple Steps To Start Your New Business
Since you are still reading this, I’m guessing that you are ready to start your new business.
First of all, congratulations!
Deciding to pursue a passion and turn it into a business is not for the faint of heart. To be an entrepreneur, you have to have the determination and git that not everyone possesses.
Let’s dive into what it takes to turn your hobby into a legal business.
STEP 1 – Research and Validation
Ask yourself the following questions:
- Who is your competition? What do they offer? How much do they get paid?
- Who is your Target Market? (aka Ideal Client to work with.)
- What would make you stand out from your competition? How would you be unique?
- What would you charge for the products/service/advice you would offer? Is it comparable to the market?
STEP 2 – Create A Business Plan
Now that you’ve researched and validated your new business idea, it (might be) a good idea to create a simple business plan to guide you through some critical decisions for your business.
The reason why I say “might be” is that I don’t typically recommend all of my clients to do a plan. Here’s why. In the industry, businesses plans are used when startups are looking to get financing, whether through getting a loan or investors. The reality is many startups bootstrap their way to launching and growing. And that’s perfectly ok.
I do, however, like the process of creating a business plan so that you can get clear on what you want to accomplish in your business and create much-needed structure when you are starting out to be successful. And, because of that, I am recommending here that you take the time to go through these steps to get clear.
There’s no right or wrong way to write a business plan. You must create a clear business plan that meets your specific objectives. Your plan will likely include things such as:
- An Executive Summary (an outline of the companies purpose, goals, and plans)
- Company Description (what your company does & who you are to the business)
- Market Analysis (which you should have completed in Step 1 above)
- The Vision For Your Organization and Management (how you see it all working)
- Your Product/Service/Advice (what will people be buying from you)
- Marketing and Sales Strategy (how will you announce it and get new clients)
- Financial Projections (what and where all the money goes and comes from)
STEP 3 – Legal Aspects to Consider
There are also a few legal aspects to consider, such as:
- What kind of business would you want to start? Sole Proprietorship, Limited Liability, Partnership or Corporate C or S?
- What do you need to be legal? Are there any licenses, certifications, or governmental requirements you will need to run your business and meet legal requirements?
- Do you need business insurance? How much insurance do you need? What kind of insurance? Discuss the general liability, umbrella policies, or anything to keep you, your family, and your assets protected with an insurance provider.
STEP 4 – Get A Mentor Or Coach
Starting a new business can be scary, but you don’t have to do it alone. There will be friends and family that will likely want to help you in your new venture. While it is comforting to know you have people supporting you, they are not the best people to take advice from (unless they own a successful business themselves).
You need someone who has built a successful business and can coach or mentor you and share their experience and insights on building a business – a business coach.
Why do you need a business coach? Here are a few things that you should consider:
- A coach can help you avoid some (highly) expensive errors.
- A coach can help you take “shortcuts” to achieving your goals by helping you navigate areas they have experienced themselves.
- A coach can help you make key decisions in your business.
- A coach can encourage you when you feel down and motivate you to stay focused.
- A coach can help you stay on track to achieving your goals.
A Personal Story
My husband had a hobby called dirt-bike riding. My husband started riding when he was five years old and wanted our children to participate in something that he was excited about so it could become a family affair.
If you know anything about dirt-bike riding you may be aware of the costs of buying the bikes, helmets, chest protectors, boots, and all the other safety gear necessary to operate heavy machinery. The investment for our family was quite considerable with four children!
So, my husband and I sat down and talked about how we could start writing all that gear and travel off on our taxes and decided that we were going to turn our family hobby into a new business.
That’s when “Family Off-Road Adventures” was officially created.
Our family spent many years exploring Yosemite Valley, so it was easy for us to offer GPS-guided tours to other dirt-bike lovers as the service we would provide as “Family Off-Road Adventures.”
We would offer a two-day riding event to hundreds of other riders twice a year as our service. We would share our favorite trails during the event, provide lunch off-road in the valley, and wrap up with a dinner where our group could share their experiences and love for the sport.
While “Family Off-Road Adventures” was never a huge money-maker for us, it did allow us to share our passion with others, reduce our taxes, and cover our expenses at the same time – which is exactly what we wanted from our little side hustle. The bigger reward was with all our children involved they learn many skills in the business that they have been able to utilize as they became employees and young entrepreneurs.
Whether you are starting a side hustle for extra money or a business to replace your full-time job, the key to achieving your goal is to be clear on what you want and treat it like a business. Be sure to keep track of your income and expenses and file it on your taxes. If you have a vision for building a successful business and need help from a coach, I’d love to help! I’ve spent the last 30+ years building and running a multi-million dollar service-based business along with my husband. I started “Be a Legacy” to share my insights and lessons learned and help other businesswomen create a life and business they love and a legacy they can be proud to have built.