However, for most of us, it is not easy to turn something we simply enjoy in our spare time in to something we can make a comfortable living from. Especially if the hobby is something craft-based or making items to sell – from carpentry to knitting via painting, writing or design.
But there are a number of steps that can be taken to help transform your own hobby into a profitable business…
#1 Establish your goals
Before anything else, you need to determine what expectations you have. If you want to turn your hobby into a successful business that replaces your full-time job, you will need to be extremely thorough when planning the business.
If you only want to make a few pounds on the side by selling your product or setting up whatever business you have in mind, your only real focus will be to ensure that the money you charge or earn through other means – e.g. advertising on a blog – exceeds your costs.
#2 Is there demand for your product or service?
The first step in creating your business is to establish if there is demand for your product. Perhaps your friends have told you that your unique jewellery-making hobby could turn into a full-time business.
They might love what you create, but you must establish if there is strong demand for your product in the real-world marketplace, where potential customers are complete strangers.
This can be done in a number of ways, but the quickest way in this example would be to set up a stall at local events like craft fairs or markets.
Place an provisional price on your products and see if they sell. Talk to potential buyers and ask them what they would be willing to pay for your product. Make some notes about each potential customer – how old are they, how interested are they, what are they willing to pay.
Another great way to gather this kind of information is by using surveys. You can incorporate images of your products and ask people what they would be willing to pay.
Many people who have turned their hobbies into businesses sell their products online. Websites like eBay and Etsy can also be a great way to market-test your product. Do a small production run and see how quickly they sell at different price points.
#3 Will it generate enough profit?
Once you have established what the market is willing to pay for your product, determine the potential profitability of your hobby.
Draw up a simple spreadsheet to calculate the costs of running the business. Contrast that figure with the expected profit per sale, to determine how many items you will need to sell to make your hobby a profitable business.
You should look at the time it takes you to create each item and consider how much time you can devote to the business each week.
If it takes you three hours to create one piece of jewellery that will only sell for £12, it may not operate as a profitable business and should remain a hobby.
Make sure you don’t underestimate the time it takes to make each product. Calculate the costs of all materials used while making the product.
If you want to make the business a full-time job, spend a full day making the products to determine how long you can work. Chart your productivity: you may get a lot less done in the afternoon when you are doing a nine-hour day.
While these are early figures, if the profitability does not exist, your hobby is unlikely to create a viable business.
#4 Can you perform to a deadline?
While you might enjoy your hobby for a few hours every day, you may not enjoy doing it for many hours and to a deadline.
Think of me stuck at my dining table every night, trying desperately to get all my gifts finished before Christmas, when all I want to be doing is pouring a glass of wine and watching Elf!
Deadlines can be stressful and businesses can involve working for long periods. There may be mental or physical limitations on how long you can perform your hobby.
Can you happily sit at a table making jewellery for ten hours? Can you quickly make it if there is a deadline involved? Will it still be an enjoyable hobby once financial pressure is involved?
A hobby that was once enjoyable can quickly turn into hard work and stress. If you intend on making this a full-time job, make sure you can happily put the required hours in.
#5 Are you happy promoting yourself?
Some people feel uncomfortable with promoting themselves. Unfortunately, it is difficult to create a successful business these days, unless you put yourself out there, especially online.
You will need to talk about yourself, make connections with others in your niche, talk about your business and promote your product in the marketplace.
Some people are happy to sell to friends and family, but struggle to really sell their product to strangers. Make sure you are comfortable with self-promotion.
#6 Get some help
If this is the first time you have established a business, it is usually a good idea to get some help.
With a new business, I know that anyone aiming to sell online can benefit hugely to a subscription to this very eletter’s sister newsletter, in which we print detailed guidance on everything from how to make a website professional, attractive and work, to advice on social media marketing, apps and plugins you can use to make tasks easier to undertake – and lots of motivational advice too.
If you don’t already receive that you can sign up for a risk-free trial here.
The more planning you do, the more likely it is that your business will be successful. Take your time and don’t jump into a new business until you have determined that it has great potential.