Making money while doing what we love is something we all aspire to do. The story isn't an uncommon one: You work your day (or night) job, but during your leisure time, you're up to your elbows in what you really enjoy. Your friends and family tell you you're really good at it. They even tell you that you could make a living doing it. You wonder if it's possible. Can you really turn your hobby into a business? Can you do it and effectively manage your cash flow?
The short answer is…maybe.
While it's possible to monetize your hobby, there are some strategies you can employ to improve your odds of success.
1. Do your homework.
Before you open an Amazon seller account or advertise your accounting services, you should take a long, hard look at the market. Ask yourself the following questions:
- Who's successful?
- Who's struggling?
- What holes do you see in the market?
- How would you meet needs the market doesn't currently satisfy?
- Do you need any licensing or insurance?
- What are the tax implications of starting your own small business?
- Do you need a small business loan?
- What sort of cash flow will you be looking at?
If you can't answer these questions, you may not be ready to open up shop. Look at the market and come up with a plan.
We can all find a way to bring in a little extra money from our hobbies. But success comes when we're disciplined, when we treat our little venture as a real business.
2. Specialize your offering.
For the most part, no matter what you do, the world doesn't need another garden variety version of it. There are thousands of accountants, landscapers, graphic designers, writers and personal trainers. I don't point this fact out to discourage you. I point it out because one of the best ways to make money and maximize profitability is to specialize.
If you're an accountant who caters to contractors, a landscaper who's known for innovative water features, a graphic designer with a distinctive style, a writer with an area of expertise or a personal trainer with marathon-prep experience, you can charge a premium for your expert services. What's your edge?
3. Borrow carefully.
Cash flow, working capital, business credit cards and small business loans are all part of running a successful business…no matter the size.
Choose your loans and your business credit cards carefully and use them wisely. Don't get overextended. Don't pour mountains of money into a venture that's not even close to being off the ground. Your cash-flow decisions can haunt you if you're not careful, or they can set you up for success. The outcome is in your hands.
4. Think outside the box.
Maybe you're a world-class knitter. Perhaps you're a self-taught guitar whiz. You have other options than just selling stuff you've knitted or begging for a weekend gig somewhere.
If you're the real-deal expert, think bigger. Why not write a book? Why not create and market a masterclass in which you share your wisdom and experience. Why not teach classes or private lessons? Don't limit yourself!
5. Get the word out.
All those people who told you how amazing you are? Put 'em to work. Network. Use the power of social media. Ask friends and family to hand out your cards, share your posts and tell everyone they know about your new venture.
Be active in your community and don't ever pass up an opportunity to make a new friend. You never know who your next customer will be. Get out there and meet them.
6. Take your profit first.
I see a lot of micro-entrepreneurs who shortchange themselves when they turn their hobby into a business.
“Oh, it's just for fun."
“No one will pay that much."
“I don't need to keep track of all my expenses. It's not a real business."
Hey: If you're spending money on it and charging money for it, it's a business. Treat it like one. You've got to keep track of your sales and expenses, and you must track and take your profit first!
Before you pay a single bill and before you buy a single new item for your inventory, you take a percentage of every bit of money that comes in and you designate it as profit. You keep it in another bank, not linked to a debit card, and you save it. If you're in business, you need to be in a profitable business.
Anyone can open an Etsy store. We can all find a way to bring in a little extra money from our hobbies. But success comes when we're disciplined, when we treat our little venture as a real business.
We must make careful decisions about cash flow and small business loans. We need to avoid recklessly running up the balance on our business credit card. We need to deliver excellent, specialized services, and we need to charge a premium, fair price.
You can make money doing what you love, but you need to treat your venture like the very real business that it is.
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