If what you do outside of “work” is your true passion, then why not consider making it your career too? After all, you probably want to love what you do, especially if you’re going to spend most of your life doing it.
However, it’s going to take more than just passion to launch a successful business. It’ll take time, dedication, planning, and a bit of risk on your part.
Should you start a business?
As you toy around with the idea of turning your hobby or side hustle into a business, there’s one question you should ask yourself first. Should you start a business?
Typically it’s a question of feasibility, and we’ll cover that in a bit, but when you’re adapting a hobby there is one additional complication to consider. You may no longer enjoy it. The pressure of working to a schedule and meeting financial goals and customer expectations can simply take away the fun, relaxation, and personal satisfaction.
There’s a chance that you end up disliking the activity so much as a business that you never want to do it again. That fundamental change is something you need to be ready for. Think long and hard before taking that step and ask yourself “If this doesn’t work out as a business, could I live with not ever doing it again because I won’t ever feel the same about it?”
If the answer’s no, save yourself some heartache and choose some other way to make a living. If the answer is yes or if you’re unsure, then it’s at least worth exploring what your hobby as a business could look like. To get a full picture of your new entrepreneurial endeavor, you’ll want to follow these ten steps.
10 steps to turn your hobby into a business
1. Set a goal
Simply deciding to turn your hobby into a business isn’t a goal. Of course, you want to be working on something you’re passionate about, but what else do you want from your business?
Do you intend to quit your day job and run it full-time? Are you just looking for a side hustle? Do you simply want a challenge or even just the freedom to make something on your own?
Ask yourself these questions and determine, outside of passion, what you expect to get out of opening your own business. Having your reasons clearly outlined can help you stay the course and remember why you decided to become an entrepreneur in the first place.
2. Do your research
Many entrepreneurs fall into the trap of being enamored with a product or business idea. Starting with something that you’re passionate about can be even more dangerous. That’s why you need to conduct market research to make sure your business idea isn’t just appealing to you.
This process is simply you learning more about your potential customer. You’re asking questions, looking at the available market, analyzing competitors, and identifying your target market.
Now don’t get too caught up in this stage, as it can quickly turn into a barrier to ever getting your business out of the idea stage. Just do enough to verify that your idea is well-thought-out and has potential in the market. You’ll likely come back to this step fairly often throughout the life of your business and you shouldn’t worry about perfectly researching every single possibility.
3. Identify a business model
The second half of doing your research is identifying a business model. It can be really easy to find a problem, have an idea, and jump right into product or brand development. But if you don’t fully understand how you will actually make money, you won’t ever get your business off the ground.
To put it simply you need to know:
- How much it will cost to make your product or service.
- How much it will cost to sell it.
- How much your customer is willing to pay.
You also need to consider how you’ll actually sell the product. Will it be a subscription model? A one-time purchase? Ad-revenue? Franchising, leasing, or maybe even crowdsourcing?
Find a platform that fits your customer-base, business offering, and pricing strategy. Just be sure whichever model you choose brings in more money than your spending. And to be clear, you can always adjust and adapt as you go, but it’s better to start out on the right foot.
4. Test your idea
You’ve done your research and established a business model, but here’s the issue, all of that is hypothetical. You think there’s an opportunity. You think you know your ideal customer and how to sell to them. But you aren’t sure.
So, before you go full steam ahead you’ll want to validate your idea. You’ve done a bit of this already when asking potential customers questions, but this is where you test if they’ll actually buy it.
Some ways to do this include: releasing a coming soon landing page, taking preorders, selling a limited run, running a crowdfunding campaign, and even running digital ads. There are plenty of ways to test and your method really depends on your business model.
Now, the key to successfully validate your idea is to set out with metrics of success in mind. Whether it’s a number of newsletter signups, preorder amounts, or conversions on ads, you need to know how much represents success.
5. Develop a business plan
If you find that your idea does have traction, it’s time to make things official. Writing a business plan helps you put everything you’ve done so far in order and ensures you’re covering all your bases. This is where you put together all of your market research, business goals, operational costs and think about long-term goals and milestones.
You don’t need to worry about putting together a 30+ page business plan and can instead start off with a lean plan. Lean planning is a simpler, more efficient method of business planning that allows your plan to grow and adapt with your business. You’ll still have all of the necessary documents in order if you ever plan on seeking out a loan or pitching to investors, but it takes much less time upfront to get everything together.
If you’re unsure where to start with your business plan, you can download our free lean planning template. Or if you want a streamlined process that takes the guesswork out of building a plan, you may want to consider investing in business planning software such as LivePlan.
With LivePlan, you get step-by-step instructions as you develop your plan and a long-term solution for maintaining and updating your financials and planning documents. It ensures that you spend more time running your business and less time digging through spreadsheets and word documents.
6. Get your finances in order
You’ll naturally identify your startup and operational costs throughout the business planning process. But you’ll also need to get the rest of your financial plan in order. The documents included represent a snapshot of your current monetary situation, the health of your business, and any future expectations you’ve forecasted. You’ll need a:
- Profit and loss statement
- Cash flow statement
- Balance sheet
- Sales forecast
- Personnel plan
- Business ratios and break-even analysis
At the start, a full financial plan is valuable for you to keep track of how your business is doing and identify any areas for improvement. Eventually, if you apply for a loan or pitch your business this will be a vital piece to successfully receive funding.
Lastly, you’ll also need to get your personal finances in order. This means understanding your current financial situation, what you can afford for your business, and if your personal credit will affect your business. You’ll likely want to separate your business from your personal finances if you become a full-time business owner, but if it’s initially more of a side-hustle and you’re in good financial standing this may not be necessary.
7. Learn marketing basics
The potential of your business can quickly die if you’re not reaching your customers. That’s why it’s vital that you do some research and know some marketing basics from the get-go. There are plenty of low-cost offline marketing methods you can consider, as well as digital marketing practices to keep in mind.
At the least, be sure to set up a website and social channels for your business. This gives potential customers an easy focal point that you can feature in both digital and physical marketing material. You also may want to consider running digital ads on Google Search and Facebook, which can be a low-cost method for building a customer base.
The key to successfully marketing your business is iteration and connecting with your customers where they’re at. Don’t just stick with one message, test multiple iterations, and see what converts more. And don’t spend money on tv ads if your customer base is mostly in their early 20s and that money could be better spent marketing to them online. Be willing to try, fail and try again as you narrow down your messaging.
8. Get customers
This may seem like an obvious step, but it’s vital for long-term success. You’ve tested and validated your idea, which may have led to sales, but now it’s time to get your first official customers. These buyers are acquired through the sales and marketing channels you’ve established, and represent everything you’ve planned in action.
You may find that these customers are a bit more difficult to acquire than your early adopters, but they can also be your best chance at gaining traction. Offer promotional discounts, incentives, and even free services in exchange for reviews and feedback. This initial group serves as your springboard for building an audience and a positive reputation.
Take what you learn as you acquire these customers to grow and refine your business model and marketing efforts. With the right incentives, you can make a name for yourself and work out any initial problems that would deter less interested customers.
9. Set milestones
Milestones are something you’ll need to cover in your business plan, but they aren’t goals that you set in stone. Instead, they should evolve as you operate your business, see results, and adjust your trajectory accordingly. While you likely set milestones to get your business up and running, these later goals should be what you intend to achieve long-term.
And while specific sales, operational, and even funding milestones should be included, you’ll also need to consider professional milestones for yourself. You did turn your hobby into a business after all and you may not be working on your startup full-time. So you should set goals around how long you need to stay at your current job, or how much personal debt you need to pay off in order to invest in your business full-time.
Use these long-term goals as a guiding force to become a successful entrepreneur. They can help inform any short-term actions and ensures that you stay on track without taking any unnecessary risks.
10. Find a mentor
Now that you’ve gotten your business off the ground it may be time to grow your network and find a business mentor. This is someone who’s gone through the process before and can help guide you through the startup and growth stages. They could be someone in your current network, an old business colleague, part of a local startup community, or even a well-known entrepreneur.
The only thing that you need to keep in mind is that you shouldn’t try and force the mentorship. Instead, it should occur as a natural part of you growing your professional network. Be on the lookout, showcase a willingness to learn, and have your business plan or pitch deck at the ready to showcase how you’re handling a startup.
Be prepared for startup post-partum
If you’ve followed these ten steps there’s a good chance you’ve successfully turned your hobby into a business. Or you may have found through the exploration that your hobby should just stay a hobby.
Just remember if you did end up creating a business, that the process may sour something that you used to enjoy. And this can be compounded by the natural let down as you fall into the regular cadence of maintaining operations. Just remember this is perfectly natural and there will always be opportunities to grow and experiment that will inject that excitement back in.