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What You Need To Know to Turn a Hobby Into Money In 3 Years

hobby into profit

I’m not the only one in my circle of friends who had attempted to turn a hobby into something profitable. Currently, I have three pals who earn money from their craft. It’s not just them either: there are real life millionaires who began their entrepreneurial dreams on a dining table.

Megan Duckett, CEO and founder of “Sew What?” transformed her sewing skills into a multi-million dollar idea when she saw a market for entertainment props and décor.

hobby into profit

There’s definitely no question that a hobby can be turned into a business. Most hobbies anyway. The real question is: can you really do it? If so, is three years enough to break even?

Here’s what you need to know before turning your hobby into profit.

How to turn your hobby into a real business in 3 years?

The 5 Essential Questions

Before you get all excited, let’s be honest: the reason why you have that hobby is because you enjoy doing it in your spare time. You love the work and the long hours spent trying to get the perfect outcome. But the minute you turn it into a source of revenue, you’ll be tied to a deadline – whether you want to or not.

Can you handle it? Here are five other questions to think about before taking the plunge:

 

1. Can my hobby be monetized?

This is vital. You need to be realistic and analyze if what you do could indeed, profit from your interest. Before a close friend of mine opened her own custom-jewelry business in 2010, she did an online survey of who would be interested in custom-made clay accessories. Once she saw a potential market, it took her another year before finally opening her door to orders.

If you’re not sure, you could always ask people. FREE online survey services like Survey Monkey is a great resource to would-be entrepreneurs. Try sharing your knowledge on your blog as well. See how the public responds to it. You can also participate in local events to show your works and see how much people would be willing to pay for it.

2. Who is my competition?

If you have a product or service that has no competition yet (or very few), then you’re lucky. But if there are established businesses in your chosen niche, find a way to stand out from your rivals. Here’s where question #3 comes in.

3. What makes my service/product unique?

There are plenty of jewelry makers who offer custom-made clay accessories. But what sets my friend apart is that she only uses metallic colors. Her focus and emphasis in a demanding industry has helped her acquire repeat customers.

An acquaintance of mine on the other hand, sells handcrafted tiny flower ornaments for events. She’s currently in competition with a well-known company that mass-produces events favors, too. What makes her different though, is that her rival business does NOT offer the tiny flower creations.

Before you decide on selling, know your product/service like the back of your hand. Otherwise, you won’t know how to position yourself correctly in the market.

4. Who can help me?

Starting a business isn’t easy. Aside from financial help, you’ll need people who will sustain you and teach you along the way. These could be family, friends, or mentors. Create a support group early on.

5. Will I enjoy doing this every day?

Bplans Managing Editor Candice Landau shares one of the most important things to remember as a hobbyist:

“If you want to turn your hobby into a business because you think it’s going to be as much fun as it was when it was only a hobby, you could be in for a surprise…Are you ready to grapple with the difference between doing something for fun and doing it as a business?”

A business is so much more than doing something you enjoy. Soon enough, it’s going to mean hiring people, meeting tight deadlines, rubbing elbows with other brands, and dealing with customer concerns. Some days, you’re on top of the world. Most days, you might wonder how to make ends meet because you weren’t able to make a sale.

Are you ready for all that?

From Hobby to Money

Once you have grappled with your inner self, it’s time to take the first steps.

Your goal: to turn your passion into a real income-generating source.

The deadline: three years.

Can you do it? Of course! Will it be highly difficult? You bet. To start off, spend your first year planning and learning. Get as much knowledge and skills as you can. Network like crazy. Learn from masters. Develop discipline. People say most businesses fail during their first five years – but that’s mostly because some startup entrepreneurs fail to gain the information they need.

1. Begin with a business plan.

This is where it all begins. Simply put, a business plan will detail WHAT you’re going to do and HOW you will go about it. It will contain how much money you need, how you will market, to whom, as well as future plans for your enterprise. Entrepreneur has plenty of resources to help you start today, as well as forms so you can draw up a good plan ASAP!

2. Find funding.

Finding enough money to turn your hobby into a business is one of the biggest challenges startups face. Aside from loaning from a bank though, you can also crowdsource your idea – as long as it interests the general public. While searching for cash, be wary of spending too much or wasting money on things you don’t need yet. This is one of the common mistakes of first-time entrepreneurs.

As much as possible, have three forms of funds before you can begin your venture. These are: your working capital, an emergency fund, and a household budget. The last thing you want is a headache because you don’t have money to pay for daily expenses.

3. Build a network.

Your business network shouldn’t just involve friends and family. It can also be companies in the same industry as you. Actively seek out mentors who can teach you valuable lessons. You may also team-up with unlikely people who could help you later on (such as journalists, bloggers, social media experts, or local non-profit groups).

On your second year, you should have enough resources to begin your business. This is the exciting part because you will start earning money from your hobby!

There are two things that could happen during this time: the first is that operations may be slow at first; but don’t worry because they should pick up once people are aware of what you’re selling. The second is that, you may be so busy that you can barely catch up on sleep!

During your first year of operations, it’s normal to lose money. Like entrepreneur Daniel Tenner explains in a blog post, you should make back what you spend on your third year in the business. If not, at least you should be breaking even. The first three to five years will always be the hardest because you’re not only building a venture – you’re building yourself. So take it easy!

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