Turning a Hobby into a
Home Based Business
by Peggy Deland
If you have a productive hobby -- and most people do -- you may have an untapped
source of extra income. There are dozens of popular hobbies that can be turned
into a home business; writing, photography, raising animals, gardening, and
crafts of all kinds are just a few examples.
Don't think you have a profitable hobby? Take a closer look. Some of the most
profitable hobbies involve buying things. Even if your favorite hobby is
shopping at yard sales, you can still make extra money. Consider cleaning up
your yard sale finds and selling them at flea markets or online for a profit.
Planning For Your Hobby-Turned-Business
Before you can turn your hobby into a home business, you'll need to do a little
planning. Jumping into any kind of business without making plans is an
almost-guaranteed route to failure.
Size up the competition. Do other businesses already offer the products or
services you would sell? If so, what will make your business a better choice?
Can you offer a reduced price, or include features and extras your competitors
Consider your market. Is there local demand for the products or services you
want to offer? If not, will your idea work as an Internet-based business? Think
long and hard about who your business will appeal to, and write down a profile
of a typical customer. This will prove invaluable when you create and place
advertisements for your business.
Research local, state, and federal laws regarding the type of business you want
to open. If you want to sell food for human consumption, you may have to jump
through quite a few legal hoops to operate your business legally. Some
innocuous-seeming businesses, like selling raw milk, are illegal in certain
areas. Regardless of the type of home business you're starting, find out if
you'll need a business license before you make your first sale.
If you plan on claiming business-related deductions for tax purposes, get ready
to keep detailed records. If your business is to be considered a business (and
not a hobby) by the IRS, you must be able to demonstrate that you're running it
like a business and making an effort to make a profit.
Starting Your New Business
Startup costs for a hobby-turned-business are often quite a lot lower than for
more typical business models. Chances are, you already have most (or all) of the
equipment you'll need. If you plan on selling or re-selling, you'll need to come
up with inventory, but you may already have some on hand.
Think carefully when you set prices. Although you may think that any profit is
acceptable, you're likely to be in for a surprise. Doing what you love quickly
turns into real work when you're practicing your hobby to make money. You may
love making your own candles, but if an order comes in for 100 identical ones,
you're probably not going to be happy to do the job for a few dollars -- or less
-- per hour.
Calculate a decent hourly rate into your prices, but keep in mind that your
prices also need to be competitive. If you can't compete on price, consider
adding value by making your product or service unique.
Advertising is critical. Depending on your market, you may want to advertise in
local newspapers, hobbyist magazines or newsletters, and/or mainstream
publications. You should almost certainly advertise on the Internet, even if
your business is confined to local customers. Internet advertisements can be
targeted at a local or national audience, and are inexpensive compared to print
ads. Many websites that host classified ads will let you advertise for free!
Take your business seriously, and set aside a certain amount of time each day
for it. Even if you don't have orders to fulfill every day, you can use that
time to work on advertisements, brainstorm additional products or services to
add to your lineup, and make plans to improve your business model.
Turning a hobby into a home business can be a lot of work, and it does require
time and dedication to see a substantial profit. But if you stay focused on the
goal and tailor your business to suit your customers, you might just be able to
make a living doing what you love.