Should You Turn Your Hobby Into a Business?
So you have a hobby, and you are thinking of converting it into a business. Almost all hobbies can be spun into some sort of business. But, does your hobby have the potential to become a profitable business?
Deciding whether to turn your hobby into a business can be challenging. You can calculate the possibilities in two phases.
Phase One- Ask yourself the right three questions
A business built around a hobby is completely different from enjoying your hobby. It will require a potential market to sell to, an opportunity to fill that market, and feedback from the market.
Hobby and business are two different worlds! There are three key questions to ask yourself to steer your decision if you are sitting between these two worlds.
Question #1: Is your hobby a marketable skill?
Will people spend money on your skill? Most hobbies can be reframed in a way you can make money. People might pay you for your woodworking, computer programming, graphic designing, or writing talents, but will it be profitable. A better question may be, how do you make it worthwhile.
Question #2: Secondly, if you can foresee the profit potential, ask yourself, are you willing to risk some fulfillment you find in your hobby for the market's judgment?
You might love woodworking in your workshop or painting near the lake, but are you willing to have someone give his opinion on how much he's ready to pay for it?
Question #3: If you have made it through the first two, it's time to consider this business's purpose. Are you striving to earn a few hundred dollars on the side, or are you aiming to make a living?
Are you expecting to replace your income and eventually scale to a much larger business? Is this business meant to provide extra income? Are you looking to save to be ready to invest in real estate or some other business pursuit.
Building wealth is about creating a plan and strategy for a healthy financial future. It is seldom a singular lucky break. It is about problem-solving and strategic thinking. Understand what you want out of your business and what it might take to get there.
If you don't get to question 3, then move on and enjoy your hobby for the pleasure it brings you. If you did get to question 3, it's time to start thinking like a business owner and move to phase two.
Phase Two- Take Three Right Actions
How to flip the switch from hobby to business?
Thinking like a business owner requires a bit more planning than doing your hobby when you feel like it. To determine how to price your product or service, you must first determine your cost. Find dedicated work time, track your expenses, track your hours, and find your hourly rate.
Action #1 Determine Cost
Keep track of your expenses and determine your cost product by product or project by project. Charge for your time. Sometimes, when we do something we love doing, we lose track of time because it doesn't feel like work. Time is valuable; it's life. You can't bargain for more of it. Charge for your time, or it is still a hobby.
Action #2 Market Research
Now that you have done some initial research to determine what you need to charge to make your hobby profitable, you must now discover if the market is willing to pay what you require.
Action #3 Decision
If the answer is no, then you have some decisions to make. Can you add more value? Can you increase your skill so that you can get more done in less time? Or is it time to abandon the idea, enjoy your hobby for you, and consider a different business idea?
