Hobby or Business?

Many people believe that it is important to find a passion and work at it. But, do you really feel like you are actually living your dream or are you just working?

Do You See It as a Business Venture or Hobby?

Some businesses are not profitable or full-time. Not every single hobby can make you money. It can be difficult to distinguish what you started as a hobby and what you are making from your side hustle.

What Is Considered a Hobby?

Your hobby can be a thing that you can easily give up without affecting your income or lifestyle. It could be something you are working full-time on, or it potentially could even pay your bills. But it could still be a hobby and not a strict business.

It is fine to stay where you are, even if your hobby isn’t. Things change. It’s possible to be passionate about something and make it a business later on. You’ll still have fun and enjoy doing something that supports yourself personally and the family around you.

What Is Considered a Business?

A business requires you to be more involved in the game. It could be that you have invested your life savings, university funds, credit card debt or loaned from family members or banks. It is in your best interest to make sure it works. However, if you treat it as a hobby, you are only increasing the risk.

How to Make Your Hobby a Business

You have been investing in your hobby for the purpose of making a profit or significantly growing you footprint . Now it is time to decide if it‘s worth turning it into a business. You can easily lose control of your investments if you don’t have a plan or a business map for where you want to go.

You don’t have to start a business if you just want to run a side hustle and make a little money. Here’s how you can turn that money inbound hobby into a small business.

1. Set Goals

You have likely worked on this particular hobby for some time and already know what you may want from it. It’s now time to make those thoughts, desires, or wants into concrete goals. These are the questions you need to ask:

What are you hoping to achieve?
What is success?
Who are the involved?
What resources are you looking for?

Do you want to be able to leave your job and make enough money? Are you looking to start a passion project? Are you looking to start a family business?

These various questions will help you to start thinking critically about how to initially get your business up and running. These questions are the first baby steps towards developing SMART Goals. This will help you develop multiple strategic steps to make your business succeed.

2. Make a Lean Business Plan

The first step in developing a Lean Business Plan is to establish goals. A Lean Plan can be used to turn a hobby into a business. This plan is flexible and quick to create, and you don’t have to write every single section of a traditional business plan if you don’t necessarily need them.

The Lean Plan is useful for defining how your product/service will work as a business. The Lean Plan helps you consolidate your product or service offering into a certain business identity. It also considers the target market you are entering, possible competition, and what costs, revenue streams and milestones you will need to achieve.

It’s early in your business career, so please don’t be concerned about getting everything right from the beginning. A Lean Plan’s beauty is that it can be used as a starting point to outline what you want. It’s possible to modify and refine it later.

3. Reach Out to Existing Customers

You may have an existing customer base if you’ve been promoting/selling your products/services as a hobby. Reaching out to people you have sold products to gauge interest in your business may be worthwhile. This is a great way to get your idea out there, make sales and even gain positive customer reviews before the business launches.

It’s okay to not have customers. Before you make your official announcement, there are many other ways to test your idea. You can run ads, create a pre-order page or social media groups to present your business idea. This early work can help you decide if your hobby is worth keeping or if it’s a hobby that has the potential to become a successful business.

4. Register With the UK by Choosing a Name

Your business needs a name. It also needs an identity. You can use your children’s names or something completely different. You can choose a name that suits you best. If things do change, you can always add a DBA to your business name.

Next, register your business. You can do this online. It is easy, but it can be complicated. Before you do anything similar yourself, we recommend consulting with your tax advisor.

It is important to decide what business structure you will choose and how you will file your taxes. To determine the best structure for your company consult an attorney.

5. Make Sure You Have Your Finances in Order

As a business owner it is important to understand what you are financially spending and how much you have coming in.

There are many options. There are many options. You can either track everything manually using a spreadsheet or hire a professional accountant. Or you can invest in cloud accounting tools such as Xero or Quickbooks.

It is a good idea to start your accounting process right from the beginning. Make sure that you hire a modern bookkeeper or accountant who is proficient in advising. They can also present your information digitally so you’re always informed.

6. Open a Bank Account For Your Business

To keep your personal and business finances separate, you will need a business bank account. It is important to separate the costs of your business and hobby so that you can see how much it is costing you.

It is also recommend to get business cards. You don’t want to accumulate debt. However, you should be able to charge business expenses and manage cash flow by only paying these expenses once per month. Rewards points are another benefit to credit cards. You could earn a lot of points for your business that you can then use to get cash back or air miles. This will help to cover upcoming business expenses.

You Can Now Go From Hobbyist to Entrepreneur at Any Moment

You now know the basics of what makes a business a successful business. There are many things you must do in order to make your business a success. But these basics will suffice.

You can start to create a structural plan for your business. This is one of the best things you can do. However, it is always sensible to keep in mind, that you can always pull your business back if you are not enjoying a hobby you enjoy.

Take a look at our most recent blog: The 2023 Guide to market research

ActionCOACH can help you from business coaching and mentoring to sales training and marketing assistance. No matter what stage your business is in, our team of experienced coaches can help you take it to the next level.

If you’re serious about transforming your hobby into a business, ActionCOACH is the perfect partner to help you get there.

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