5 Steps for Turing A Hobby Into Business
Step #1: Identify something you enjoy doing that you do well.
Many of the things you do well, you could also tweak or adjust into an alternative form of income. It might take some creativity. It might take some marketing or it might just happen. Here are some examples of things people enjoy that can be turned into a source of income: babysitting, baking, cutting grass, carpentry, plumbing, sowing, scrapbooking, house cleaning, tax help and on and on. In Thou Shall Prosper, Rabbi Daniel Lapin writes: “Most people understand that they enjoy greater success when they feel good about their activities.”
Step #2: Do some goal setting.
- How much time am I willing to give to this?
- How much capital am I willing to offer to get things started?
- What measurable criteria will I use to quit – to know the idea won’t work
- Why am I doing this?
- When am I willing to do this – part time, weekends, certain months …
Step #3: Identify how your ‘product’ will help people.
When it comes to turing your hobby into business it is always better to give than receive. At times, before we will ever consider charging anything we need to know that we are helping people. A common misconception is that what makes a good business is greed. We won’t ever say that out loud, but we think that big, successful businesses must be greedy. However, if you offer a service to someone and they happily pay you, that would be considered a win-win situation. For example, if you want to have your house cleaned and someone is willing to do the job, (for reasonable pay) then you both can walk away happy.
Photo by just0000lie
Step #4: Decide on a reasonable charge or price.
About.com has a great article here about pricing strategies. In the article they introduce four ways to price an item.
A. Cost Plus Pricing: What is the cost of the items you need to purchase? Add to that amount a set dollar amount or a percentage.
B. Target Return Pricing – Your price is set by the total amount you wish to earn divided by the number of items you have to offer.
C. Value-based Pricing – if your item is going to save someone money, price the item based on how much it will save an individual in a set time frame.
D. Psychological Pricing – price the item based on how the customer will perceive the price.
Here is my thought on the pricing. Since I am so cheap, I naturally undervalue items when I sell them (e.g. on Ebay). The nice part about Ebay is that the pricing naturally sets itself. Most money making opportunities are not the same. Here are some ways you know if your product is priced too low:
- Compare it to similar items available for purchase.
- Are you getting more orders than expected?
- At times customers will just tell you that is not enough. Listen to them.
You might even feel better about setting your price low initially (as long as it can be easily altered). Call it an introductory special. This helps give you confidence and build up a client base. When you start getting more requests, increase the price (with an explanation).
Step #5: Set your time limitations.
I already mentioned this under goal setting, but it deserves attention again. If this is a side business or a way to make a couple extra dollars you will really need to limit your time. Because you love it and believe in the potential, it is easy to give too much time to the endeavor. Keep what is most important as most important. Especially if your product or service becomes popular you will need to learn to say no or reconsider your goals.
Do a good job. If you do something you love and you do it well, you will find a way to make it prosperous for yourself and a blessing to others.
Do something responsible with your earnings. In debt? Apply any earnings to your debt. Debt-fee? Consider applying revenues to your church or favorite charity.