12 September 2014
Many people dream of starting a business from their hobby and giving up their day job, but how do you know whether you can make a viable business?
Do you dream of making money from your hobby? For many, the idea of starting a business from their hobby is a tempting prospect. Here’s how to work out whether you can make the leap from hobby to a viable business.
Whether you’re an amateur photographer or a soap maker, an obvious benefit of monetising your hobby is that you’d be doing work that you already enjoy. You’d also be able to rely on your existing knowledge or expertise. There are many perks of working for yourself and while self-employed workers generally earn less, they’re also happier and most wouldn’t consider returning to become an employee.
However, it’s important not to get carried away and be realistic about what setting up your own business entails. It’s not just as simple as starting to sell your products or services. You need to consider any legislation that will apply to your business, taxes you have to pay, how much time it will take to set up and develop your business and how you’re going to market your products or services, for example.
Your hobby is just that – something you do for enjoyment, fun or relaxation. Will you still have the same passion for it when you’re doing it full time or if you attach a monetary value to what you produce and the time you devote to it?
One of the main things to establish is whether there is sufficient demand for your product or service. You’ll need to do some market research to discover who your competitors will be, what kind of customers buy these products or use their services, plus what price customers are prepared to pay. Can you build up a profile of what your ideal customer would be like? The more you can narrow it down, the easier it will be to market your items or expertise and make sure they’re what your customers want.
2. Unique selling point
How will your offering be unique compared to your competitors’? Does your product solve a problem or address a particular need? Why would customers buy from you rather than one of your competitors? Your product doesn’t have to be original, but it does need to have something that sets it apart – a unique selling point. If your hobby is popular, the market may already be saturated, making it harder for your business to be a success.
If you’re offering something slightly different or focusing on a niche market, you might have fewer potential customers overall, but you’ll have less competition and can tailor your product better for your customers.
You’ll need to work out what your product costs to produce and what price customers are prepared to buy it at or what rate you’ll sell your services for. Don’t forget to include indirect overheads such as travel, the cost of marketing and any services you may need to purchase, e.g. hiring an accountant or taxes you need to pay. Here are some tips on how you can save money.
Will you generate a profit? How much of a profit would be acceptable to you/would you need? If you’re planning to start the business part-time and build it up, you may be happier with a smaller profit at first. But how much will you have to earn to make it a viable business?
4. Success indicators
This links in with point number three. How many products would you have to sell or how much money would you have to make to consider your business a success? You need to have goals that you can measure, with realistic targets.
5. Do you have the time and skills for it?
If you’re planning to start the business as a side-line to your existing job, you may find you only have a certain amount of time to devote to it. What will you do if the business starts taking off?
Alternatively, while you may be enthusiastic about your hobby, you may find that your expertise doesn’t match those of your competitors just yet. Or perhaps, you have the skills for your hobby, but need to learn skills the enable you to run and market your business successfully.
Many of our customers have turned their pastimes into successful businesses. Here are just a few to give you some inspiration.