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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 don't offer?

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.
Related Articles:
Tips for Building a Photography Business
Start a Backyard Garden Nursery

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.