Turning Your Passion into Profit

Evaluate the market demand for your hobby-related products or services. Sure, what you make is really cool but is there a demand for it? If there isn't, and you still want to proceed, you will need to educate your audience on the importance of your product or service.

Ideally, you will begin selling in your spare time at makers' markets, festivals, events and online. This should give you some insights into what works and what doesn't before you officially launch as an "all or nothing" business. A trail like this helps with research and development for your  business, marketing, and sales plans, which we'll address in a little bit.

Consider the competition and identify your unique selling proposition (USP). What makes you different - and don't say "good customer service." That's an expectation for your customers, not a USP.

Consider the time commitment, skills, and resources required to turn your hobby into a business and discuss them with the people who would be impacted such as your spouse. Coordinate thinks like childcare before it's needed. Working for yourself is not a "cocktails at the pool" lifestyle. At least not initially. Working for someone else is a lot easier. As novelist and comic artist Oliver Marcus Malloy wrote, "Being self-employed means you work 12 hours a day for yourself, so you don't have to work 8 hours a day for someone else."

Define your business goals and target audience. Who are you selling to? Who is your ideal audience? And don't say - "everyone." Some people need your offering more than others. Find those people and get in front of them.

Choose a suitable business structure (sole proprietorship, LLC, etc.). While you don't have to incorporate before your first sale, you will want to do so in the first year. Consult a tax specialist to understand what form of business will work best for you. Depending on your industry and offerings, you may want to consider business insurance and liability.

Outline your marketing and sales strategy. Now that you've decided who you're going to sell to, figure out how you will do it and how you will get eyes on your product or service. Will you sell at public events like festivals or online running products out of your garage? There are many cost-effective solutions out there but having a strategy will help you from feeling like you need to chase every shiny object or opportunity that presents itself. Establishing business goals and a strategic plan will also give you a road map to direct you. A plan helps you decide what is worth your time and what isn't in that crucial first year.

In line with your strategic plan / goals, create financial projections, including costs, pricing and potential profit margins. Hobby businesses are often a labor of love, but if you enjoy eating and shelter, you need to understand if you're succeeding or not. Plans give you that objective measure. There are many businesses that while they bring in money, still fail. That's often because they don't have a solid plan and end up growing to quickly where outlay overcomes earnings.

Register your business with the appropriate government agencies. Obtain necessary licenses and permits. Check to understand your state and local obligations as well as federal.

Set up a dedicated business bank account. This will help keep your business expenses and earnings separate from other sources. Consider securing a business credit card or using a personal one for business-only expenses. Again, consult with a tax professional so you understand what you can write off for your business and so you keep accurate records and receipts.

Craft a compelling brand identity that resonates with your target audience. Utilize online platforms like social media and e-commerce websites to reach customers. You can begin doing these things for free (outside of the cost of your time).

Explore offline marketing options like local events and networking opportunities. The Gibson County Chamber office has a wealth of information of connections. As the Voice of Business, we can help make the right introductions for you and lend your business legitimacy. It's sometimes difficult to get people to take a chance on you. Chamber membership tells them you are a legitimate business with a vested interest in the community, not a hobby that may close shop tomorrow.

Most people assume that the first year of business is the most perilous. That isn't the case. Data from the Bureau of Labor Statistics indicates that while nearly 20% of new businesses fail within the first two years of opening, the riskiest time comes later. 45% of businesses close during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.

While no business is a sure thing, if you implement efficient processes for production, inventory management, and customer service, you're on your way to managing smart growth. Also track your business performance through data analysis and adjust your strategies accordingly.

Regardless of how you initially funded your venture, consider seeking funding and exploring expansion opportunities. The Gibson County Chamber is a great resource to find out about these and educate yourself on what's available.