Not everyone is ready to jump headfirst into a full blown business. Sometimes it’s better to keep the stability and income of a ‘day job’ while setting up and understanding the risks associated with your dreams and hobbies.
Hobbies are pastimes individuals engage in primarily for fun, relaxation and
to enjoy their free time, doing something they are passionate about, some people have multiple hobbies.
Hobbies can range from relatively quiet pursuits like stamp collecting and writing, to physical activities like restoring old motor cars or, volunteering to help build homes for disadvantaged families in the community. The list is endless.
Hobbyists can turn their hobbies into a profitable business that they can work at full time. This is often by choice, may be because they no longer want to work for someone else, or because they need to earn some extra money.
Hobbies can become serious businesses
There are plenty of opportunities to make extra income in today’s global economy, fuelled by new technologies. But how do you know if your hobbies can be turned into a good business?
Follow your passion and strengths from hobbies to serious businesses. Depending on the experience and the qualifications you have acquired with your hobbies, you can make money from them in a number of ways by commercialising products and services associated with them. You can consult with other people interested in the same hobbies, maybe write about it, or run workshops just for starters.
When your new hobby loses too much money it is time to be concerned. It is a sure sign that you need to start a serious business, to do some serious planning and to seek advice on setting up the business properly. It is important to get the foundations right at the start. Seeking the correct knowledge will unlock your potential, http://goo.gl/v6JkFP.
For example, you design a solar powered car to sell which puts you in the red after you factor in all your expenses. The Taxation Department will let you deduct the loss of this activity from your other income as long as the activity is considered a legitimate business. For some people, this can be a great way to lower their overall tax payments while they get the business off the ground.
The tax department needs to see evidence that you are involved with the hobbies with the expectation of making money. If so, you can deduct the expenses directly from your income as well as deduct any business losses from your total income. Always check with your accountant.
Hobbies start with loving what you do
If you have a hobby outside your ‘real job” and it is your true passion, then why not consider making it your career? After all, you probably want to love your work, especially if you’re going to spend most of your life doing it.
Think long and hard before making your hobby a business. As for how you relate to your hobby, it will change fundamentally when it becomes a business. Hopefully for the good. Ask yourself, “If this doesn’t work out as a business, could I live with not ever doing it again because I won’t ever feel the same about it?” If the answer’s no, save yourself the heartache and choose another way to make a living. Not to be able to enjoy something that used to bring so much pleasure and satisfaction would be very disappointing.
Once you have decided which of your hobbies to convert to a business, take the time to research its profit potential and the risks involved. Consult with practical business advisors with experience in starting a business. As a first step write a business plan. Here are some ideas about a one-page business plan, http://goo.gl/ZgmXfQ.
Things to consider when turning a hobby into a full-time business
- Have you registered a name for your hobby as it becomes a real business?
- Do you have a business structure to work within as things become serious?
- Have you protected your intellectual property? http://www.ipaustralia.gov.au/
- Do you keep financial records and have a bank account for your business?
- How will you cope when the going gets tough and success is slipping away?
- Do you have the necessary business licenses and permits?
- Do you have sufficient funds to enable you to develop your hobby into a business?
- Have you done the necessary research?
- Do you have a business model and business plan to follow?
- Who is going to help you and how will you get them excited about helping you?
- Once your hobby becomes a real business will you continue to enjoy it?
- Most important, is you family behind you?
Are you inspired by the challenge?
Starting up a business can be tough, especially if it is your first business. You will be wearing a lot of hats for a while; inventor, product developer, marketer, financier, planner, relationships, manager and so on. This additional pressure can take its toll on your family, friends and your health. You need to be sure that it is your passion and you are able to match your strengths to making the business work well all day, every day.
The challenge of commercialising hobbies can be lessened if they can be started up in a home office or back shed. Over recent years the number of home-based businesses has risen to more that 50% of new business start-ups. Hobbyists are more likely than others to generate revenue and achieve a profit because they have a passion and have developed their strengths around their hobbies.
If travel is your hobby, why not get paid for some outback adventures for other travel enthusiasts?
To determine whether hobbies can become a good business proposition, you need to ask yourself this important question. “Do you have a great product, or service and can you demonstrate and prove it will solve people’s frustrations, problems, wants or needs”? This question is often overlooked in the excitement of wanting to start a business.
Moving from a hobby to a business can be hard
This doesn’t mean you should rush out and get a partner or two. As the business starts to grow and the money flows is when partners start to argue and fall out. Turning hobbies into businesses can really pay off, but it may take a while and a little patience. Slow and methodical progress will generally get you to where you want to go, faster and safer.
It is a far better proposition to:
- Ensure you have enough working capital to get your new business to profitability.
- Outsource the activities you are not good at or don’t like doing.
- Find Joint-Venture partnerships with organisations who can help you, maybe your suppliers, marketers, or organisations who can provide you with access to additional resources and levels of expertise.
Not everyone is going to wind up with a great business by following their hobby into a such a competitive world. However, if you follow your passion and work to your strengths, you give yourself the very best chance to grow into a successful business. As an aside it will also ensure that you have more days doing what you love doing.
“Learn how to be happy with what you have while you pursue all that you want”. Jim Rohn
“There is no passion for being found playing small. In settling for a life that is less than the one you are capable of living”. Nelson Mandela