What is the difference between a hobby or a business?
The difference is; if you are selling goods or services and making money (profit) at your venture, then it is a business. If you are providing goods or services and giving it away or just barley breaking even-it’s a hobby.
There is no dollar threshold to cross or any sales numbers you must achieve to be considered a business. All you need is a reasonable expectation of making a profit and proving the profit motive. If you are profitable year after year, there’s no argument you’re in business. But if you have losses year after year, the IRS may view your activities as a hobby.
Hobbies that could potentially be monetized and turned into businesses -- literally anything that provides value to others. Would people buy from you? If so, you really could create a profitable business. If you can do something you love and get paid for it, that’s not real work right? But before you go and quit your day job, I want to encourage and caution you at the same time. There is a big difference between making some extra pocket change at holiday time and running a small business full-time.
Every year people millions of people believe they can turn their hobby into a business. A very high majority of them fail in their new venture. WHY?
The problem is that many of us are afraid to take action, even when we know we have a marketable skill, because we are afraid of failure. We fear that if we attempt to monetize a hobby and fail, we’ll no longer feel joy or satisfaction from the activity at all… or others will regard us differently.
This can be a scary proposition that may prevent many talented individuals from pursuing their dream. If this sounds familiar to you, then listen up.
Trying to monetize a hobby isn’t easy, but on the other hand, it certainly isn’t rocket science. With a little preparation and strategic execution, you can enjoy a positive result.
Here are next 7 tips on how to get started.
- Build an online presence. In business today, everybody needs an online presence to generate activity. This means creating and maintaining a website, social media profiles, and everything else that goes into branding yourself as a professional. Keeping consistency in the way you present yourself will give you a more established image, which in turn will result in more fans.
- Create a brand and stick to it. Your brand is your business identity and what you'll be known for. A strong brand helps your loyal customers recognize you, just as people instantly know that golden arches mean McDonald's. Decide on a business name, logo, font, and/or color scheme that reflect your business's “personality" and use them consistently in your website, social media, and other marketing.
- Network. A few people will stumble across you online, but a lot of business success happens via word of mouth and networking. You have to be prepared to be active on this side of self-promotion, as well.Find clubs, conferences and groups in your specialty that cater to other professionals in the niche. You’ll learn a lot at these events and get the chance to mingle with people who are at the same stage as you, and preferably a little further. Just be sure you have an elevator speech prepared for moments like those.Start networking like it’s a new job. Reach out to all your contacts from college and any business associates to update your contact database. Spend time on at least one social media site to gain insights about your target customer. Use your downtime to do internet research for sourcing vendors and suppliers and to confirm your target market.
- Get your first customer — even if you have to work for free. Your first customer will give you confidence in your business idea and will make it psychologically easier to market yourself. If necessary, do your first job for free in exchange for a nice review or testimonial. You won’t go from hobby to a million-dollar business in a matter of days. Your number one goal in the beginning stages is to get your first sale. Your first sale is the hardest and most important sale you’ll ever make. While you may believe in your product, it’s important to remember that other people have no reason to believe in it. You haven’t proven yourself yet. Hustle hard for that first sale and then turn one sale into two, two sales into four and so forth.
- Put your finances in order. You must report your business income and expenses on your tax return and pay quarterly estimated taxes. You may also be required to collect sales tax. The easiest way to keep your business finances straight is to set up a bank account for your business, to keep business and personal finances separate. Meeting with an accountant and investing in accounting software can help you started on the right foot.
- Use Low Cost Business Resources. Once you decide that starting a business is for you, there are many books that you can read to develop your plan. You should also make an appointment with your SCORE chapter, which can provide online and face-to-face counseling.
- Check Out Your Local Library. You can get plenty of market research data help from the business librarian at your local branch. Also, find out information on legal entities, sales taxes, business insurance and small business accounting systems. There is also opportunity to learn about any business licenses or regulations that you will need to comply with to start your business.
Turning your hobby into a full-time business is a great way to become your own boss. Why not work at something you love to do? Just do your research before you start your business. Take the time to write business plan. You’ll need a lot more customers than the 30 people that buy your jewelry to replace your full-time salary. Make sure there’s a market for your goods and services, and start saving money. And remember to give yourself 12 months to develop a plan to become your own boss.
We all have those things we’re most passionate about—so why not turn your hobbies and interests into a career? As you follow these steps, you’ll begin the journey of turning your hobby into a business that can bring you even more satisfaction in the years to come.
Steve Feld, MBA, provides training and business performance coaching to business owners, professionals and executives. Steve also speaks to organizations, conducts workshops and training. Focusing on the lead generation and revenue creation to get growth results for the business. Contact Steve today to see how he can assist you grow your business, email@example.com, or www.bizcoachsteve.com. He is in the business of growing businesses. #bizcoachstevef #entrepreneur #smallbusiness #business #smallbiz #coaching #businessowner #businesscoach #leadership #marketing