James and Megan are continuing their series about how to start a business. On the last show they discussed how to build a business around what you’re currently doing as a job. Today they explore another option.
Today’s Kryptonite: From Hobby to Business!
Why should you turn your hobby into a business?:
- You already have the skills and enjoy the work.
- You may already have finished goods available for sale.
- With a little research you can understand the market more quickly than entering into something new.
- There’s a low risk of violating a non-compete or dealing with other conflicts of interest.
- MLM opportunities may or may not fit what we’re talking about.
- If you like hosting parties at your house for your for your friends and family, have fun.
- But if you want to be an MLM rockstar, it’s lots of work and a real business.
- Use this information and our other shows as applicable.
What are the pitfalls I need to avoid?:
- The number one pitfall people fall into is not treating their new business like a business.
- Not charging enough
- Just working hobby hours
- Doing work for free for family and friends
- Is there enough of a market to support your definition of success?
- How well do you understand that industry? Just because you can do something or have an interest, it doesn’t mean you know the industry well enough to turn it into a profitable business.
- If it’s really a hobby there is passion for it…don’t just jump into something.
- Will going full-time take all of the fun and enjoyment out of your hobby? Would part-time?
How do I set myself up for success?:
- Ground yourself and gain true perspective. Don’t do this on a whim. Think it through and be intentional.
- Run your new business as a business:
- Marketing and Branding
- Benchmark pricing in the marketplace and decide where to position yourself
- Understand the legal requirements (licensing, taxes, etc.)
- Develop your plan and execute
- Develop a basic business plan (if this takes the fun out of your hobby, it probably isn’t a business for you).
- Develop a financial plan (can you make a profit and is there a viable market?).
- Run it like a business (get your licenses, set up your systems and processes).
- Execute your plan!