It’s one of those things that seem intuitive: If you have a hobby you love, you could—and maybe even should—turn it into a business. Of course, you say. It just makes sense.
But hang on. Experts say it’s not that clear-cut. There are all kinds of variables to consider and questions you should ask before you venture down the hobby-into-a-business founder/owner path.
Entrepreneur.com raises important questions in five big areas. If you see yourself in these, you could be ready to go for it! But if not, all isn’t lost. You might just want to take a step back and consider some reinforcements, like a business partner.
Commitment. Some people dabble in hobbies; others are deeply committed. But the level of unwavering commitment and focus needed to start a business is something else entirely. Where are you on the commitment continuum?
Optimism. Generally speaking, entrepreneurs are glass-half-full kinds of people. Some feel that a healthy dose of pessimism can actually help business owners spot and tackle problems. But here we’re talking about what’s at the core of your nature—and especially, do you have reserves of optimism you can call on when the going gets tough?
Decision-making. A lot of us shy away from making them. But when you start a business, virtually everything is a decision—real ones, with real impact on your finances and future. Can you rise to the occasion (and even enjoy the ride)—or will a steady stream of decisions drain your energy and commitment?
Money. It has to be addressed sooner rather than later: Who and what are your sources of capital? These need to be identified—and on board—before you begin to execute against your business plan. All businesses need money along the way, and it’s common to underestimate just how much.
Selling. Like decision making, selling isn’t exactly something everybody welcomes with open arms. But as an entrepreneur, you’ll be selling all the time, not just your products or services but your vision and yourself, too! Does the thought of doing this energize you—or make you want to head for the hills?
A post on Tax Act’s blog takes on the hobby-to-business issue from an interesting and somewhat different perspective. It suggests that to discover the answers to the question of if you have what it takes to turn your hobby into a business, you need to get busy exploring several others first:
What makes a good business? Your business is going to need a number of components to survive, from offering a product or service that’s in demand to developing a solid business plan to making sure you have an adequate profit margin. Have you thought these through?
Are you the right person for this business? All of sudden, you’re wearing many hats, doing very little that’s directly related to the hobby that brought you here. And you’re spending 60-80 hours a week doing it. Are you up for this?
Avoid/minimize common mistakes. There’s a lot of information out there from those who’ve preceded you down this path. Do your homework and learn from them—about things like test marketing, partnerships and getting the necessary licenses or permits.
You may be at the point where you’ve done your exploration and soul searching. If you decide you’re ready to go ahead, wsj.com offers 10 tips for transitioning your hobby into a business:
Evaluate your “joy factor.” Will you still love it when you’re doing it day and night?
Evaluate the market. Don’t rely only comments from family and friends – analyze the market and competition.
Name your price. What’s it worth? and Will people pay it? are two tough but critical questions to address early in the process.
Try it out. Is there a way to gradually ease in while keeping your day job?
Do the math. It’s common to underestimate the capital needed. Be generous in your estimates.
Make it real. Stop thinking “hobby” from the get-go. Get an accountant, set up business accounts, etc.
Choose a name. The name is a linchpin of your brand. Think easy, memorable, and clever. Try it out on others.
Decide on distribution. There are lots of ways to sell – from online channels to flea markets to home-based parties. Map it out (and test) upfront.
Create a web presence. Having a web site is pretty much the standard cost of entry.
Build a marketing strategy. You don’t need big bucks—social media and other channels have made marketing possible for next to nothing. But you do need a plan.
Image courtesy of KROMKRATHOG / FreeDigitalPhotos.net
Have you ever turned a hobby into an actual business?