Turning Your Hobby into a Business

You do it for fun, so why not consider doing it for profit

By Diane Benson Harrington, Freelance Writer, Diane Benson Harrington

While it's normal to want to chuck it all and turn your hobby into a money-making business, few people ever really do it. But if you're committed, you can. Use these simple steps to turn that dream into a profit-generating reality:

Research the marketplace
Write a business plan
Assess your set-up

Study the market

The percentage of startup failures is high. Don't be one of them. Make sure the marketplace needs what you have to offer, or tweak your business to create a new niche.
Try: Head to your Chamber of Commerce, the U.S. Census Bureau, trade journals or local business journals to get started. GreenBook.org can help you find market research companies to take you even further. BizMiner offers industry analyses. MarketResearch.com offers a huge collection of market research.

Write a business plan

Determine how much capital you'll need, what you can expect to make and what your goals are for the present, as well as five and 10 years out. Hire an accountant to guide your process within IRS constraints.
Try: Use CCH's cash requirements worksheet to get started. The Small Business Administration shows just what you need to include. AllBusiness.com, Business Resource Software and SCORE offer business plans forms or templates. The IRS's small-business resource has downloadable forms and details on expenses you can deduct.

Gauge your need for employees

Even the best, most dedicated worker can't always do everything himself. If you're going to add employees, you'll need to learn how to manage them efficiently.
Try: BusinessBalls.com's guide to managing employee performance and CCH ToolKit's projected staffing schedule are also helpful. The IRS has forms you'll need for employees and details on withholding taxes.

Complete the environment

Can you legally work out of your home? Do you have enough space and equipment to do so? Are you ready to market what you create?
Try: Consider leasing equipment; use CCH ToolKit's equipment lease checklist. For marketing templates, turn to HP. To compare your business to competitors, try SCORE's competitive analysis worksheet.

Determine your personal viability. You need discipline, motivation and a host of business skills (from managing to marketing) to make it a success.
Stay organized. Once you get behind in your schedule or lose track of supplies or paperwork, it's hard to get back on top of it.
Don't take on too much at once. In terms of customers, time outlay and production, it's much easier to enlarge your business than to shrink it back down.
Join a professional association. Whether the Chamber of Commerce or various national associations related to your business, it's vital to make connections that will lead to information and sales.
Build in support. Even if you can surround yourself with employees, it's good to interact with others in the same position so you can vent — and learn.