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7 Things to Consider When Turning a Hobby Into a Business

John Nelligan


Research shows that entrepreneurs achieve the best results when they are doing something that they really love and do well. So, moving from hobby to business should be no problem? Yes and no.

Passion is a good starting point, and even better if you have achieved a significant level of mastery pursuing this activity. However, this alone is not enough for success. So how do you know if your passion would work as a business and when is the right time to hand in your resignation letter?

1. Why? – get clear on your goals

The first question you should ask yourself is “Why?” Why do you want to do it? When talking about a hobby, it is probably, pleasure and relaxation or, perhaps, excitement, challenge or interest. There is a big difference, though, between interest and commitment.

For a business to be successful, you need to be fully committed to keep you going no matter what. So, first of all, you need to be clear on your goals – what you want your business to achieve and why? What is your personal motivation for doing it?

2. Values – what’s really important to you?

Serious business is a commitment, you can’t just do it when it suits you or when you have free time. When resources are limited, you need to set your priorities right.

What are you prepared to sacrifice and what can’t you live without? Would your hobby as a business pass a resilience test? What is important to you in this venture – money, independence, power, knowledge, creativity, relationships, making life better for others? Is your business aligned with your core values?

Knowing the answers to these questions is essential to enable you to determine if the new business idea will work or not. It will also play a central role in all your business relationships and will reflect in the messages you convey to your team and your customers.

3. Will it make money? – get your numbers right

Business is business. The aim is to provide products or services to other people at a profit. After you have established whether you possess the commitment required to start and manage a new business, it is time to sit down with the calculator and check if your business model is viable. There is no way around it, you need a solid business plan.

There are some common mistakes that novice entrepreneurs make. One of them is confusing sales with profits. Yes, it is important how much you can sell and at what price, but have you considered ALL your costs? It is never a plain difference between the buying and selling price.

Another “cost” which is often overlooked is time. Time is money – it’s important to remember this when you are creating a budget for your business.

If you are not savvy with numbers, by all means recruit some professional help. When looking for an accountant, make sure they are willing to sit down with you and explain everything that goes into the calculations.

4. Will it still work if I need to grow bigger? – estimate your future costs

Another important issue to consider when turning your hobby into a profitable business is its growth potential. Would it still be feasible if you start employing people?

If you do want to grow your business do some calculations first before rushing into employing others. Can you afford the minimum wage? If not, try and have friends, family and volunteers help you.

5. Is it as good as I think? – research, research, research

We’re understandably biased about how good our offering is, so thorough research is absolutely necessary. The good news is that you don’t need to run expensive customer surveys and collect primary market data yourself. All essential information can often be found by studying reports prepared by someone else in your industry, analysing what your competitors are doing and brainstorming specific questions in small focus groups. You can also tap into social media to do this.

Once you have done your research and know exactly where you stand, you can test your model. The secret is to do it on a smaller scale and BEFORE you make a big investment.

If you manage to spot a gap in your local market start taking measures to cash in. Don’t do anything too big or brash, just slowly start working your way into the niche. It is much easier to make adjustments on a small scale and you can experiment and hone your proposition without killing your business.

6. Is my business secure? – protect yourself

Business is never about you – it is about other people and you are responsible for what happens along the way.

When you are doing something for fun, it is never an issue if something happens to you. Continuity needs to be embraced when transitioning from recreational activity to a business.

What happens to my business if I get ill?

What if I lose my favourite supplier or my biggest customer stops buying from me (clue – never rely on just one big contract)?

Competition – what if someone offers the same thing on better terms (don’t compete on price, protect your IP)?

Get your technology secure – can you afford to lose sales if your web site goes down or your customer database gets hacked?

Cash flow – how much money do I need? As a rule of thumb, always have enough funds to cover your personal expenses for 3-6 months and your business operational expenses for 6-12 months. It sounds like a lot of money but you need your business to be robust if something goes wrong.

7. Don’t let business pressures overwhelm you – have fun!

Last but not least – why are you thinking of making your hobby a bigger part of your life? Because it brings you joy!

It is so easy to forget this when you are let down and stressed by any difficulties and the hard work involved in running a business. There is no point waiting till you “get there” in order to enjoy being an entrepreneur. Be happy now and you will be successful

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