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How to Turn Your Hobby into Business: A 10-step guide

How to Turn Your Hobby into Business: A 10-step guide
Making money while doing something you enjoy is everybody’s dream. Which is why starting a hobby business makes good sense since you already know how to do the job and well you already love what you do. Nowadays, an increasing number of people are turning their passion projects into hugely successful businesses.
 
Even though not every hobby has the potential to be turned into a business, the ones that do should be explored and evaluated. With the right mind set and the right plan, you would be amazed what your hobby could earn you as a business.
 
In this article, we walk you through the ways that could help you turn your hobby into a business.
 

How to Turn a Hobby into a Business?

 

  1. Set your goal

    Every important planning starts with setting a goal. You can't wake up one day and turn your hobby into a business. First, you need to understand how far your passion can carry you in your entrepreneurial endeavours. Make a list of questions you want to ask yourself.
    • Can I start this business along with my job?
    • Is it the right time for me to quit my job?
    • How long will it carry me to make as much money as I make now?
    • What goal should I set for my business for the next five years?
     
    Having clear answers to the above questions allows you to focus on your next move.
     

  2. Conduct Market Research

    A lack of research and analysis is the most common reason for start-up failure. Many people turn their pastime into a business without realising the potential. Analyse your competition, investigate the market size, and determine whether the product you intend to sell has a market demand; if it does not, how will you make people aware of your product? To create your product/brand awareness, take a route to social media platforms. You may also use this platform to understand the consumers' preferences.
     

  3. Identify a Business Model

    Now that you have a good idea of the market, the next step is to identify the business model. Here you will have to decide on your product pricing. You will need to figure out how much your customer is willing to pay for your goods and services. You will also have to understand several ways you can charge your customer. For example, you can raise the bill in instalments or on a subscription basis. Though, the pricing method is entirely dependent on the type of product you are selling. 
     
    You must also decide whether you want to sell your services online via a mobile app, website, or social media or open a physical location. Remember, your business model has a direct impact on your costing.
     

  4. Test your Concept

    It is preferable to test your concept before launching a full-fledged firm. Begin at the bottom and with a few products to see if anyone is interested in buying your stuff. You may also consider accepting pre orders. You will need to execute a short campaign to raise awareness of your company for this. Pre orders are the best approach to test your ideas because you don't have to worry about what will happen if you invest in a product that never sells.
     
    In this step, make sure you are asking your customers for feedback. It will help you identify how you can improve your product.
     

  5. Develop your Plan

    Formulating a plan is very much identical to a business model. Prepare a strategy for the next step if you are confident that your hobby has promise. You will need to combine all of the previous four points here. Use your market research data to decide on what should be the ideal production level. Use concept testing as a reference for product improvement. Also, check for the list of necessary licences and documents. Understand the compliances and laws that apply to your industry.
     

  6. Prepare your Budget

    This one is the crucial step. Business budgeting is a tedious and ever-changing process. Include operational expenditures, licence and registration fees, inventory costs, utility prices, and more when creating a budget. Once you have done the calculations, see how much cash you have in savings. If your finances are insufficient, consider other options. For example, you may raise money through a business loan, angel investors, or crowdfunding.
     
    Many financial institutions avoid funding new businesses. If you choose equity financing, make sure you understand the profit share per cent and other factors. If none of the financing choices is available, you might look into government business loan schemes.
     
Also Read: Funding Options for Small Businesses and Start Ups

 

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  1. Have a Marketing Plan

    Now it’s the time to create a marketing plan for your business. The main questions you need to resolve are –
     
    • How will people know about my products and services?
    • How will I reach the right audience?
    • How will I create brand awareness?
    • Should I market online or offline?
    • Should I outsource marketing or do I have the required skills to market my business?
     
    Marketing your business is extremely important since it helps you attract customers to your sales funnel and convert your target audience into buyers. Every business finally needs buyers or sales. For that you need to build your brand and attract audience to your website. Start by building a good website and marketing it through SEO, social media and content. Create a plan on who is your target audience, which marketing channels can you use to reach them, and how much paid and organic growth are you looking at. Also, if you are a local business, do not forget to set up your Google My Business listing and get reviews from your customers. If you are not sure of how to do it all by yourself, seek the help of an online marketing agency which can help you create a marketing plan and execute it.
     

  2. Hire your team and set up an office space

    It’s now time to start building your team. If you are starting from home, you will need people to assist you. If you do not have the budget to hire full-time employees, start with part-timers or freelancers. Before starting the hiring process, determine how many people you will need to handle the main departments - marketing, sales, and finance. Fix the minimum and maximum salary package for each post beforehand and create a JD. Hire people who are passionate about the job and have the right attitude. Finding the right team is extremely important for the success of your small business.
     
     

  3. Have a Financial Plan

    Regardless of whether you are a start-up or an established company, financial planning is critical. It assists you in keeping track of your company's cash flows, interpreting various business ratios, and analysing how your balance sheet and profit and loss statement have evolved over time. It further helps you in managing your growing liabilities and dealing with useless underlying inventories. These tasks, however, are extremely tough if you do not have a deep knowledge of finance. So, what are your choices in this situation? The answer is hiring a qualified accountant.
     

  4. Prepare yourself for the post-start-up challenges 

    All the previous steps are crucial to successfully pass the nascent phase of your business. However, you should  also prepare for the post start-up problems. For example, you will need to think about how you will deal with the increasing demand, how you will plan your expansion, and how you will pay off the debts you took out at a high-interest rate when you first started your business. You should also be aware of what your competitors are doing, including where they are raising funds and how they are generating quality leads. You can use competitor analysis to lay the groundwork for unforeseen issues. Most of all, do not go to do everything yourself. You will burn yourself out. So have a plan on how you will manage once the business starts growing and how you will handle day to day activities.
 
Also Read: Financial Tips To Set Up A New Business
 

To Conclude

 
The above steps will successfully help you turn your hobby into a profit-making venture. Remember, that monetizing your hobby will take a lot of effort. But once it gets going, there might be no looking back. Make sure you review your goals every year and have a clear vision of where you want to reach. Also, make sure you know whether you in business for the love of your hobby, or for money. It is perfectly alright for a business to stay small in size and pay for itself or generate some extra income. Hence the goals of running a business are extremely important.
 


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Did You Know

Disbursement

The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.

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