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If you are like most people, you have at least one hobby that keeps you busy and helps you stay entertained outside of working hours. You can practice woodwork, paint abstract art, improve your flexibility with yoga, or draw the patterns of the stars in the night sky.
With your entrepreneurial attitude, it is tempting to think that there is a way to make money with this hobby and bring you personal enjoyment. But does your hobby really have business potential?
You may be surprised to find out the answer.
For a company to be successful, it must have a way to make money. Even if you do this mainly because of your passion, you still need a source of income to offset your costs and keep the business going.
Accordingly, you need a way to "monetize" your hobby. Here are some possible options:
Production. One of the easiest options for hobbies that involve physical production is to sell the physical goods you created. You can sell your art, craft, and structures at a price that exceeds your costs. Due to the proliferation of online platforms, this is a very popular option: there are 2.1 million sellers on Etsy alone. Number of viewers / readership. You can also make money by gaining a sufficient readership or audience. Producing blog content or regular video streams about your hobby can be your way to a steady audience. From there, you can monetize your practice with sponsorship, affiliate links, and advertising. Even if the other ways don't go, there can be a way to monetize by telling people how to do your hobby. You can charge for classes, private coaching sessions, or group seminars. The only requirement is an adequate qualification level.
These are just a few ideas, and there may be more creative ways to monetize your hobby. The bottom line, however, is that you need to find a reliable way to generate revenue. This is possible for almost all hobbies, but for some hobbies more promising than for others.
Once you learn that a source of income is possible, you need to consider whether it can be substantial enough to justify the existence of the company.
Related: Is It A Hobby Or A Business? 5 things you need to know to monetize your hobby.
Target group demography and consumer interest
Unfortunately, just because you are good at your hobby does not mean that people are interested in you practicing it (or buying your products). Before you get too excited about your potential customers, it's important to identify your target audience and measure consumer interest. How many people would be interested in this hobby? How many people buy products like the ones you make? According to CB Insights, 42 percent of startups simply fail because there is no market need.
Later, when you work out your business idea, you have to ask questions like "Who is my target audience?" Answer. and "How can I sell to them?"
Related: How to make a career out of a hobby – without remorse
You are not the only person who wants to turn your hobby into a full-fledged business. There are probably hundreds, thousands, or more people doing what you do and already making money from it. If you want a piece of cake, you have to stand out from the competition. What makes your brand unique? Would customers be willing to pay more for your approach, or would they prefer your products over those of your competitors? A thorough competitive analysis is required here.
Cost and profitability
Next, you need to think about your financial model. How much will your expenses be and what is your potential profitability? For some hobbies, like practicing yoga or playing music, the recurring costs are tiny. For others, such as woodworking or painting, you need to carefully calculate the cost of your supplies and the prices customers would be willing to pay.
From there, you also want to determine the growth potential of your potential business. In other words, what options do you have to increase your sales over time while reducing costs and minimizing the time you personally need to invest? Can you find a way to expand your business? Is that an important goal for you at all?
Related: You will not survive as an entrepreneur and treat your company as a hobby
The death of a hobby
Before you get too excited about the prospect of turning your hobby into a business, be careful of a word of caution: turning a hobby into a business can result in a loss of the pleasure you originally got from the hobby have drawn. Once you start looking at this task as a job, your relationship with activity will change – and probably worse. You may also be forced to think about your hobby or practice it differently than you are used to. Some entrepreneurs are unwilling to make this transition.
Obviously, turning your hobby into a business is more complex than this article suggests. You still need to draw up a business plan, secure funding (if you need the initial capital) and establish a brand for yourself. Knowing that your hobby has potential as a business idea is the best possible start.
Related: 4 Ways To Know If You Treat Your Business As A Hobby Or Like A Business