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Your Hobby as a Business

Posted on 8/6/2013 by Ray Lamboy in Small Business Planning

Many people wonder if it is possible to convert hobby time into business time. Turning the wrong hobby into a business could leave you unemployed and in a great deal of debt. Here are some tips for turning your personal hobby into a bona fide business or avoiding that first big misstep.

Consider the fact that it may not be fun anymore.
If you really want to turn your hobby into a business, you must consider this possibility. According to the experts, the world is filled with people who started restaurants because cooking was fun, only to discover the enormous distance between entertaining and amusing your friends and pleasing sometimes difficult customers.
One way to determine whether you will be successful running your hobby as a business is to get a job in a similar business. Then if you still like it, proceed, but cautiously. Working in the kitchen of a restaurant may convince you to keep cooking as just your hobby!
Is there a market for your idea?
Are you honestly attuned to the fickle taste of the public? Or are you merely attuned to your own  fickle tastes? It is important that you remain emotionally detached. Most successes that occur in unusual fields of business are about people who manage to recognize a new trend, ride it through its  popularity and sell out at the peak.
Find out as much as you can.
Perhaps you have a great idea. Then you wonder, “If this is so great, why hasn’t anyone thought of it before?” It’s a classic entrepreneur’s dilemma. 
It is important to try to find out whether somebody else already thought of the idea and discovered it was unworkable or tried it and failed. 
At the risk of exposing your idea to potential competitors, you probably should call people in similar businesses. Ask why they don’t provide the product or service you have in mind.
Evaluate the competition.
Before contacting competitors, exhaust the resources of your local library, get annual reports of companies in the same field, run your idea by a group of friends, and then by a group of non-friends. Perhaps find someone doing the same thing in another part of the country (where you may never compete) and pay them a visit.
Test the waters.
Until you have proven to yourself and the bank that there is a market for your idea, it is important to maintain your job and income. Many successful hobbyists turned entrepreneurs ran businesses during their free time until they were so overwhelmed by demand that they had to go to work full time in the “hobby business.”
Trust your instincts.
Like other entrepreneurs, people who turn hobbies into businesses often have an unusual vision that allows them to see hidden opportunities. One successful entrepreneur credits his success to “beginner’s mind” which enabled him to take a fresh look at the industry and the business he was entering.
Make financial calculations.
Look at how much capital you need, how much time you need to put in and what your return will be. How much does it come out to on an annual basis? You must now make the decision. “Are you willing to work for that amount?”
Develop a business plan.
A formal business plan is a valuable exercise in determining the potential for your business. It also tests your commitment, since to produce a plan is no minor task. However, if you are considering giving up a job and benefits you should consider the LONG TERM future of your hobby as a business. Since you will probably be committing additional capital to the expansion you will want to be assured of success. The best (if not the only) way to be sure of success is to produce a business plan. If you will need outside capital it will be required.
Source: www.mltapthefuture.com/assets/pdf/Your_Hobby_as_a_Business.pdf