Entrepreneurs often take something they dream about or something they enjoy doing and turn it into a business. When you enjoy what you do and are good at it, chances are, you can make money from it. Even if you are simply operating a consultancy program regarding an industry you truly love turns your hobby into a business.
When you enjoy what you do and are good at it, chances are, you can make money from it. Even if you are simply operating a consultancy program regarding an industry you truly love turns your hobby into a business.
Having a Direction for Development
You may love painting, cooking, baking or helping friends build stock portfolios, but that does not mean that you’re cut out to make your hobby a business. There are many factors to consider, including the longevity of your hobby. You have to be able to answer the question, “Can my hobby evolve with technology?” with a clear yes before you can proceed. Brands like Walt Disney and Mrs. Fields Cookies started out as hobbies and showed adaptability as technology evolved. Adaptability and long-term need are two major factors that should be considered when creating your direction for hobby development into career status.
Determining Local Need or Desire
Rather than having to move to make your hobby a business, survey the local area first. Create a local survey with other local business owners and publications. Determine the desire or your product based upon those results.
An example of this would be taking the time you spend volunteering to grocery shop for homebound residents, as there is already a demand and you enjoy spending your spare time with people. This hobby would make a very lucrative local business. If you enjoy fixing bicycles or off-road vehicles, consider turning that hobby into a mobile-repair business. These services would be needed and wanted in your local area.
Already Earned Profits
The IRS classifies a hobby as a business if it has earned a profit for 3 out of the last 5 tax years. These numbers also include the current tax year. The amount of profit reported is also taken into consideration. The benefit here is that hobbyists can deduct some expenses having to do with the hobby to offset the possibility of showing any type of profit. If you have already been benefitting from your hobby financially and have profited from it, it is already a business and must be legally classified as such.
Act When the Idea Is Fresh
Don’t sit on an idea too long. When you are unhappy with your current career, it is ideal to explore your options. Something you enjoy – a hobby, may be just the thing to earn you a comfortable lifestyle and provide you with some flexibility. Your idea has to have a purpose; it has to have a goal. Without a goal there is nothing to achieve, so the hobby remains a hobby. Act on your ideas when you have them and factor in what it takes to run a business.
Attend Business Classes
If you have never operated a business, taking some business courses is an ideal option. You can love a hobby and make it part of every aspect of your life, but to make it a business you have to know how one operates. Becoming properly educated is a necessary step in order to make your hobby a successful and lucrative business.
Proving the Hobby can be a Business
Even if your hobby has not turned a profit, you can still make it a business. Marketing a hobby is a bit different as it is just an activity that you participate in. Once you start receiving inquiries for expert opinions or assistance developing a product for someone else’s hobby, it is a good indication that your hobby and dedication to it make it a good business idea.
Proving that your hobby can become a business is a little different. When filing taxes, ensure that your business has credentials such as business cards, a dedicated telephone line and online presence. Hobbies such as crafting, for example, require a seller’s permit and payment of state sales taxes. If you are paying these fees, your hobby is already a business.
Hobbies can become some of the greatest business empires. A successful business based upon a hobby has to be able to show that it is a product/service that consumers will need for decades to come. It also needs to show that it can adapt, change and evolve as society and technology change to still be relevant more than 5 years down the road. Turning a hobby into a business is ideal when a clear business plan is put forth and there is a genuine need/demand for what you have to offer.
About the Author
I am a regular writer for Forbes, Inc., Huffington Post, Entrepreneur Media (among others), as well as CEO and Chairman of Alumnify Inc. Proud alum from 500 Startups and The University of San Diego. Follow me on Twitter @ajalumnify