If you have a talent, there is a great chance there’s someone out there willing to pay for it.
Whether you knit, bake, or have a knack for teaching kids guitar, your hobby might provide an opportunity to enhance your income or replace your 9 to 5 altogether. Thankfully, we live in a world where entrepreneurship is more accessible than any other time in history.
It’s easier than ever to get your name and reputation in front of your potential customers. Still, making the switch from employee to entrepreneur is a big deal and one that requires a bit of planning. For example, you’ll have to put a price on your skills, and start writing checks to Uncle Sam more than once per year.
Here are a few questions to ask yourself before you begin:
Is your hobby marketable?
Painting and dog training are examples of hobbies that could morph into a sizable income; birdwatching and hiking probably won’t, without a good dose of creativity.
A good way to gauge the marketability of your product or service is to perform a quick Google search. You will quickly see whether or not people are buying what you’re selling. You’ll also be able to determine a reasonable retail price and calculate whether or not you have the potential to be profitable.
Are you emotionally able to put your hobby aside as a passion and do it to someone else’s specifications?
Your hobby fulfills an emotional need and satisfies you; when it becomes a paid gig, you have to do it to your customer’s specification and overcome criticism from the market.
You may be an amazing artist or writer, but when people are paying for a project, they have a vision of what they want and it may not be the same as yours.
Do you want to replace your current income?
If your goal is $50 per month to help pay for supplies, you probably aren’t ready to make it your main gig. However, if you’ve noticed a demand and are willing to work toward replacing your current income, it’s time to begin exploring the world of self-employment.
You can begin by working on your side business part-time and grow your customer base until you are producing a comfortable revenue.
What to do when you’re ready to transform your hobby into a business:
If you answered “yes” to those questions, congratulations—you are ready to take your first steps. Here’s how to do it.
1. Create a business plan
Your business plan, according to Business New Daily, should include information on the purpose and goals of your business. It will help you figure out startup costs and identify potential issues with the product, service, or market.
If you plan to remain a solo entrepreneur, your business plan does not need to be formal—you might consider writing a Lean Plan—but will serve as a general guide to help you stay on track and verify that your idea is marketable. When you plan to seek an investment or try to get a loan, a business plan is required.
2. Get an EIN and business license
Inc. notes that you don’t have to have a federal EIN (employer identification number) if you’re a solo entrepreneur. But if you plan to have employees, a partner, or want to keep your Social Security number private, it’s a must.
You’ll also need a business license and must register your trade name if you’re not operating as yourself. You can learn more about the different ways to set up your business here.
3. Sell your first product/service
Get things started by making your first sale. Since you are already familiar with your product, you don’t have to launch a brand just yet. Making that first sale will help you get your feet wet and ease into the process. It will also give you the confidence to move forward.
You can also look for opportunities to perform unofficial market research by providing free samples of your product to your friends, family, and associates. This, too, will provide an opportunity to make necessary adjustments before going to market full-time. Learn everything you can about what people like and don’t like about your product or service, and use your first few months to test out pricing.
4. Maximize your marketing efforts
Marketing is the act of making your product or service appealing to and getting it in front of your target demographic. Your marketing efforts should start online. Create a website, Facebook, Instagram, and Twitter accounts, and post pictures and informative blog posts about your business.
Forbes also suggests using a matching email address with your business name (ex. You@NewBusiness.com) Get with a designer and develop a brand that includes a memorable logo and marketing materials such as a banner and promotional items, the latter of which is especially important if you plan to attend trade shows or events in the local community.
5. Use your money wisely
Your first payment isn’t an open invitation to splurge, but an opportunity to invest back into your business. Use your money wisely by building an inventory and allocating cash to areas you need a boost. For instance, if your customers regularly request better quality material, spend money on that before taking a fancy vacation.
Choose your vendors carefully and look for those with a reputation for providing a great product at a fair cost; the cheapest isn’t always the best. You’ll need to carefully research business credit cards and other financial products. Many offer rewards that you can turn into a much-needed retreat at the end of the year or provide a no-interest cash flow for the first 12 to 15 months.
6. Consider hiring help
Once you get to a point where you have a steady income, it’s time to consider bringing on an employee. As a small business owner, the person or persons you hire will act as a representative of your company on your behalf.
Don’t go lightly into this decision and be willing to pay a competitive wage. One of the worst things for a small business owner is having a constant stream of changing faces. Your customers will want the opportunity to get know you and your employees and will always remember positive customer service experiences. Take a solid look at roles your company really needs to fill—be honest with yourself about your own skill gaps, so you can hire experts to fill those needs.
It takes time for a new business to become profitable. You may not immediately be able to quit your day job. Even if you’re making money, those initial funds should be used to build your business. Don’t get discouraged, and take the time to ease into prosperity. With smart planning, you can turn your interests into an income and step away from the grind as a small business owner.