How to turn your hobby into a business

How do you like to spend your time outside of work? Whether it’s taking photographs, writing or crafting, everyone enjoys devoting time and energy to hobbies. Some activities cost little or no money, while others may require a considerable investment.

However, with a little effort, you can turn your hobby into supplemental income, and maybe even more than that. Before you get started, know what to look out for and how to take smart financial steps, including making sure you’re prepared to pay taxes and keep an eye on earnings.

Make a list and stay on track

Start by making a list of hobbies you enjoy and skills you practice regularly. Include as many activities as possible, even those you don’t think make money.

Decide whether you will sell a service or a product. Crafts, jewelry and furniture are just a few examples of products that tend to sell well. But you don’t have to create “stuff” to make money from a hobby. Many skills also turn into profitable services. If you speak a foreign language, you could be a tutor. If you enjoy playing an instrument, consider offering music lessons. If you are a talented photographer, try offering your services at weddings, graduations and other events.

Consider costs and your market

If you decide to create things, determine how much it costs you to create each item, since you won’t recoup this money until you sell. If you are interested in providing a service, consider how much money you need to invest in materials or equipment. In both cases, consider the value of the time you are spending.

You will also need to find the right market for your product. Most jobs have apps and websites where you can sell your products or find occupations. You can use these platforms to determine your rates and pricing.

Also think about location – will you keep your business local or sell everywhere? If you want to teach a foreign language, but your entire community speaks the same foreign language as you do, you would have to look outside your area for students.

In addition to functionality, be sure to choose an activity that you enjoy, to keep you motivated during the tough times.

Spread the word, in your environment and online

Now you need to connect with potential customers. Increase visibility in your own area and beyond with an online presence. Creating social media user IDs for your business is a smart place to start. Before you tell people about your business, you should give them some way to contact you. Bonus tip: the followers you attract to your online account can serve as a source of customers.

Also, you may want to explore the possibility of paying small amounts to advertise on social media, as you can select specific demographics of who will see your ads and test to see which tactics are most effective. Every little advertising attempt counts, but remember that doing this can be costly and can offset your profits. It may be best to use one tactic at a time to keep costs under control and better evaluate your results.

Also, consider setting up a free email account just for your business. However, you may not need to set up and maintain (and pay for) an entire website, especially if you plan to use an existing website community to market your product or service.

Next, start by reaching out to friends, family, neighbors and colleagues. Invite friends to spread the word about your business; make business cards or share posts to speed up word-of-mouth advertising.

Keep track of your business

• Your business is more than just a passion, but you will need to devote some time to the financial aspects once you have it established.
• Develop a business plan and follow it.
• Keep accurate records of your business expenses and earned income to make sure you are making a profit.

Keep receipts for business-related purchases. Earnings from your self-employment will be taxable, but it may reduce your taxable income if you have had tax-deductible expenses. Check with your tax advisor.

Managing your part-time income, your time and even preparing for tax season will take some effort, so it’s important to pay attention early on. You want to make sure it’s worth your effort and time, and catch any financial problems before they get out of hand.

If you have questions along the way, the Small Business Administration offers many sources of information for entrepreneurs at different stages of starting a business, which is particularly important if you realize that your side business is poised to become your full-time career.

Whatever your reason for trying to earn a little extra money; whether it’s paying off debt or saving for a special goal, you may be surprised to find that it can enrich your life as well as your wallet.