For most people, turning their hobby into a business would be a dream come true.
You would never have to spend time and money on the things you hate doing, which is perfect!
However, growing a hobby into a business isn’t an easy process, and it will be different for everyone’s hobby.
Whether you want to make and sell crafts on Etsy or make a career out of stand-up comedy, there are a few things that will apply to everyone.
Here are eight simple steps about growing your hobby into a business. Sound interesting to you? Stick around!
The Difference Between a Hobby and a Business
A hobby is something you choose to do in your free time. In many cases, hobbies and businesses can go hand-in-hand. However, rules and regulations differ from country to country.
To the government, income from a hobby is real income that you need to claim and potentially even pay taxes for.
In Canada, a hobby can be a business if your earnings far outweigh the material costs.
However, you might enter a gray area with the CRA if you have the intention of turning a profit with your hobby.
On the other hand, in the United States, the IRS will consider the history of profit as well as the intention to turn a profit.
If it’s proven that you have profited from your hobby consecutively in the last 3-5 years, it will see your hobby as an intentional business.
This means that they will qualify your activity as a business, and you will experience everything that comes with that like tax write-offs and self-employment taxes.
Upgrading from a hobby to a business has its positives and negatives, but things usually equal out in the end.
As a business owner, you will be able to claim for material costs and even a portion of utilities, among other things. Hobbyists can’t do this.
When it comes to paying taxes, in some instances you don’t need to pay some taxes if you earn below a certain amount.
This is something you should further look into, as it may vary depending on where you are.
Be sure to consult with a tax consultant or a financial expert when it comes to setting up your business!
How To Grow Your Hobby into a Business
Once you’ve determined that your hobby can become a viable business, and you’re creating products for that business, you need to consider the following things.
1. Decide Which Business Model You’re Going to Use
First, decide on a business model. To do this, you will need to consider:
- Will you be the sole owner of the business, or will you have a business partner?
- Should you create an LLC, S-Corp, or a corporation? (talk to your tax advisor or financial consultant)
- Will you run your business from home, lease an office, or rent a warehouse space?
- Are you going to have to outsource or hire others for any processes, or do it all yourself?
- Are your products going to be physical or online?
- Will you sell finished products or not?
Come up with a business plan that outlines all of this, and write it down. It might change as your business evolves, so bear this in mind.
2. Develop A Brand
Next, develop your own brand. You should create a brand that all your services and products can be tied to.
It should define you and the business as a whole, and be one of the first things a customer notices.
You should have a brand voice, story, and great visual guidelines to ensure that everything is seamless.
3. Figure Out How You Will Fund It
Depending on the kind of business you’re going to be starting, funding might be incredibly important.
You might need to invest in your own business, or perhaps you can get others to help you.
Chances are, you already have a lot of the equipment you need, or maybe you need none at all.
However, materials and marketing are crucial elements, and they always cost money. Having investors can give small businesses the step-up they need and help get the ball rolling.
4. Streamline Your Workspace and Processes
Whatever business you’re planning on starting, you need to make sure that you have the space to do it.
That space needs to be set up properly to be efficient and streamlined.
If you have an area in your bedroom set up for your painting hobby (see also ‘How To Start A Paint And Sip Business?‘), then know when it becomes a business that you will need a lot more space.
Not only that, but you should separate these spaces, which we will talk about later.
You might need to move your baking production from your kitchen to a factory. Or move your painting hobby from your bedroom to an office or outside studio.
This will depend entirely on what your products will be, and the space you have available.
5. Decide Where You Will Be Selling
Again, this will depend entirely on what you will be creating and selling for your business.
You can also use social media apps like Instagram and TikTok to sell products.
Social media and on-line sites have become an incredibly popular way of selling products and services of all types, so make use of it!
6. Officially Launch Your Hobby into a Business!
Now that you’ve got this far, it’s time to launch your brand and start marketing.
You will need to promote your brand and business, and hopefully get others like friends and family to help spread the word too.
If you plan on using social media to do this, then you’ll be reaching potential customers around the world for very little investment.
The goal here is to generate buzz and get people talking about you and your products. Before long, they will be visiting your store and sharing, even if it’s just out of curiosity.
7. Set Boundaries and Spaces
As we mentioned earlier, it’s important to separate your spaces. If you have your work time and downtime bleeding into each other, then you will never escape, and this can lead to creative burn-out.
As such, try to set boundaries for where the work can happen, and where it’s not allowed.
Separate your spaces so that you can have a clear head and work area.
Avoid working in your bedroom, or it will quickly become the place you associate stressing out in instead of sleeping and relaxing in.
8. Ensure You Can Scale Up
The most successful businesspeople have goals in mind for future growth. As such, you should make sure that your business has the potential to scale up.
Seek advice from other entrepreneurs as early as you can on how to grow your business.
Try to make a 10-year plan but be aware that things can change. If you have personal business goals to work towards, then you will be more focused on your way to success.
What Will You Be Selling?
Nowadays, you can sell just about anything you can think of. Whatever you sell and build your brand around, it has to be something you love.
While money is important, you need to be passionate about your products. Here are a few ideas:
- Handcrafted items like candles, paintings, macramé, coasters, resin products, or soap
- Online courses for things like cooking, comedy, photography, interior design and more
- Digital downloads like posters, leaflets, cards, and printables
It takes work to start a successful business, but you can turn your hobby into a successful one!
Just make sure that you love your hobby, and that it’s a viable business project.
Now get to work on start making your dreams come true!