How can you make money from your hobby?
You will learn
- How you can find out if there's a market for your business
- What legalities and paperwork you need to complete
- How to price your products or services
In this article, we are going to help you understand some of the practical steps you would need to take in order to get yourself set up in business.
Finding your market
It is not a good idea to jump in to a business if you do not know that there is a market willing to spend money on your product or service. You will need to spend some time focusing on who your target market is going to be. Now you are thinking with a business mind-set, you need to expand your audience and reach a lot of people.
When you are considering who will want your product or service, you need to think about what problem you are solving. Once you know that, you can look for the people who have that problem, and build your target market around them. That is not necessarily enough to make a great business, though. You need to get out there and test your product. Gather together a group of your intended customers and offer them a sample of what you do best. You can then get their feedback on the quality of what you have to offer and gain a better idea of whether your business will work, or whether it is better to keep your hobby as something for pleasure.
Writing a business plan
Once you know you have got a viable market, you will need to sit down and write a business plan to help you understand exactly what you want from your business, and how you are going to achieve success. Writing your business plan can be a great way of highlighting in your own mind where your strengths are, and where there are gaps in your knowledge and experience. This way, you can see where you might need help, and where you can go it alone.
In your business plan, you should include things like: a business overview; your business objectives and goals; what products and services you will provide; who you might work with or employ to help you; where your market is; where you will work from; how you are going to finance yourself while you are starting out.
Deciding on a Business Structure
Knowing what type of business you are going to run is very important, especially in the early stages. You will need to figure out if you can go it alone as a sole trader, and if being self-employed is the right move for you, or whether you will need a business model that will involve people who might have more business experience than yourself from which you can benefit. You could start a partnership and share the ownership of your new business, or start a limited liability partnership which avoids the personal liability for any potential debts.
Learning the law
When you go in to business, there are a lot of legal considerations that you have to keep in mind. There are product and service standards that you will need to comply with, and you will need to make sure you register your business and pay the right taxes.
You will also need to take some time to understand and set out what the terms and conditions are for your business as failure to do so can have a negative impact on your cash flow. In your terms and conditions, consider:
- A clear definition of what products or services you will provide
- What your payment terms are
- If you will offer guarantees or warrantees
- Timelines for delivery and queries
- Specifying what happens if either party does not deliver
- Which laws will govern your business contracts (especially if you are going international with your business)
HMRC have a lot of support available to help you keep your business compliant, and we have got a handy guide to regulations that you can download for free.
Finding your workspace
You will need to make sure that you have got the space you need to be able to run your business. If you want to make a business out of selling cakes, it is unlikely that your home kitchen will be equip to handle your business cooking as well as your day-to-day. You will need to consider your space and decide whether you can continue working from home, or whether you will need to rent some space to be able to work efficiently.
Knowing how to price
Many people often struggle with knowing how to price their product or service when they first start out. Price too high and nobody will buy from you, too low and you will not cover your expenditure and customers might think you are of a lesser standard. Get familiar with the market you want to get in to, and research what other businesses are charging.
Spreading the word
Now that you know what you want from your business, have conducted your market research and know you have a viable business, it is time to attract your first customers. For this, you will need to choose what marketing techniques are going to be best for your business. Are you going to advertise on social media or is it better to go door-to-door and gather interest that way? You will also want to think about what your advertising budget is going to be, as that will have a big impact on what marketing methods you use. To learn more about marketing and how to create a brand, you can download our free eBook here.