Is Your Hobby Your Business or Your Business Your Hobby?
Last week, I had a potential small business CEO ask me a question that I have heard several times in the past couple of months. During these times of layoffs and uncertainty, folks are searching for options that could help their personal income. The question is “I have had this thing that I do as a hobby and I am wondering if I could/should try to turn it into a business?”
Some of these are great ideas, but my answer usually comes down to saying that turning a hobby into a business can be a great way to earn a living while doing what you love. But, before you make the shift from hobbyist to entrepreneur, ask yourself some key questions to ensure your hobby will make a sustainable business.
The dream of earning a living doing what you love is the reason so many business owners enter the world of entrepreneurship. Especially during the start-up phase, passion for and dedication to your product or service and those you serve are the necessary ingredients for a successful venture.
The desire to turn a hobby into a business is one way to grab ahold of that entrepreneurial dream. But, before you quit your day job and jump in headfirst, you need to answer this tough question, “Will my hobby make a sustainable business?” Because turning a hobby into a successful business means a willingness to take your hobby from something that you want to do to something you have to do.
If you want to earn a living doing what you love, you’ll need to shift your mindset and operate your hobby as a serious business. One of the hardest parts of making that shift for a lot of owners is looking at your hobby as something you have to do and no longer something you only do when you feel inspired.
When you are making the business case for a hobby, distance yourself as much as you can from the love of it and think through a few of the realities that come with being a small business owner. Here are a few questions to ask yourself.
- Will you still enjoy your hobby once it becomes your job day-after-day? This means fully dedicating yourself to your passion, even on days when you’d rather be doing something else.
- Are you willing to put yourself out there? This is a big one. Many of our hobbies are reasons for us to escape the world. When your hobby is your business, you need to be shouting about it from the rooftops.
- Is there a market for your product or service? Is the market large enough to support and sustain your business and are there customers out there willing to spend money on what you create?
- Can you and are you willing to become more than just a hobbyist? As a business owner, you’ll also be the accountant, the salesperson, the marketer and fill every other roll during the start-up phase.
If you are ready to shift from hobbyist to small business owner, take the time to develop a well-thought-out business plan.
Like with any start-up, do the work of writing a solid business plan before you launch. Even if you’re not seeking funding, a business plan is invaluable. It’s the best way to prove to yourself that there is, in fact, a strong business case for your hobby.
SCORE mentor Dennis Wright from the Orange County, California chapter suggests assessing the viability of your hobby becoming a business by working through these four important parts of every business plan.
- Identify Your Target Customer
Which types of buyers need your product the most? And, of those, which are willing to pay for it? Identify this target customer and think through their age, gender, where they live, and their other demographic and psychographic attributes. The better you can identify your target, the better you can sell and market to that group.
- Determine the Unique Benefit You’re Providing
What need or want will your product or service provide? Another way to think about this is ‘what is the problem that your product or service solves.’
- Consider How You will Communicate Your Value Proposition
Every business has competitors. How will you prove to your target customers that your product or service will bring greater value to their lives or businesses than any of your competitors?
- Think Through How Much Your Target Customer is Willing to Pay
What is your target customer willing to pay for your product or service? To answer this question, research your competitors and survey potential target customers.
- Do the Math
Think through your costs to bring the product or service to market and whether your anticipated profit margin can support a sustainable business.
“Once you complete your research and have the answers to those basic questions you’ll be ready to start drafting a business plan,” explains Wright. “A written plan is important because it helps identify the time, energy, and money necessary to take your hobby to another level.”
I suggest that before you take your hobby to the next level, connect with a mentor and have a partner through the process. A SCORE mentor will guide you through the business planning process, help you get up and running, and direct you towards resources to create a sustainable business doing what you love.
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