Maybe you make wonderfully fragrant soy candles. Or perhaps you love to spend your free time designing jewelry, taking photographs or carving masterpieces out of wood. Now, people are asking to pay you for what you make. Is it time to turn your hobby into a business?
There are a few telltale signs that you might be ready to take your leisure-time activity to the professional realm, says career coach Caroline Castrillon, also known as the “corporate escape artist.” If there’s demand for what you make and the thought of turning your pastime into a business excites you, your hobby may actually be a good opportunity to dive into business ownership. You also may be ready to go pro if you’re already occasionally selling what you offer and requests are ramping up through word of mouth.
If you’re thinking about turning your hobby or talent into a business, here are nine steps to get started.
1. Stick with your day job (for a while)
It’s usually a good idea to keep your full-time job—at least at first, says certified SCORE mentor Patti Williams. “You cannot run a business if you can’t pay your power bill or you can’t make your car payment,” she says. As you develop your hobby into a business, make sure you have enough money to support your family until your venture gets off the ground.
“Chances are your income stream will be volatile for a while as you make the transition,” Castrillon adds. While a typical “emergency fund” is three to six months’ expenses, you might want to have more of a savings cushion — perhaps a year’s worth of expenses — before you commit to your business full-time, she recommends.
2. Find your market
You don’t have a business until you have someone who’s willing to pay you, says Ross Buhrdorf, CEO of ZenBusiness, a business formation and information website. While it’s a good sign if you’ve had some inquiries about buying your goods, you still need to explore whether there are enough potential customers to make it worthwhile, he says. Look at competing businesses to figure out whether there’s enough opportunity for yours, too, as well as how many sales you would need to make to cover your costs.
3. Mind the legal matters
As you move from pastime to professional, you’ll need to consider matters like the legal structure of your business, insurance, taxes and other issues. Williams suggests starting with an organization like SCORE, which pairs entrepreneurs with mentors to help them answer thorny business questions. You might also consult AARP’s Small Business Resource Center for the 50+ or your local Small Business Development Center (SBDC). Websites like ZenBusiness can also help with legal formation.