Harley Davidson, Spanx, and Craigslist: These multimillion-dollar brands all started out as passion projects. Often, successful companies start as hobbies. Entrepreneurs who have deep interest and skill in a particular area already have two main ingredients necessary for developing a business. It just takes a few extra steps to take that hobby from casual interest into a vested company. Here’s how to get started.
[Read more: This Week on Entrepreneur: Growing Your Side Hustle Into a Business]
Do a market test
Before you invest time and effort in creating a business plan, make sure there are customers who are interested in your hobby. You may love your craft, but do others?
One way to see if there’s a market for your product or service is to test it on smaller groups, such as friends and family. Share your hobby with those close to you to gauge interest. Do some research online, at a farmer’s market, or at a local craft fair to see if others are selling a similar product or service.
Then, decide if the level of interest matches your goals. Your hobby doesn’t necessarily need to be your full-time occupation. “If you’re in it for the love of your craft, a business can serve as a way to pay for itself or generate a little extra spending money,” wrote Shopify.
Many people start small and turn their hobby into a side hustle or part-time job. Then, as interest grows, you can start to think about expanding your commitment to a full-time business.
Determine your business model
The next step is to determine what kind of business you want to run. For some hobbies, the model you choose may be obvious. But there are still details to sort out, such as: Will you run your business solo, or bring on a partner? Do you need to outsource any part of your business? Will customers find you online, in-person, or both?
A hobby is something people do because they enjoy the activity. Setting up and running a business may not fall into that category.
Della Monroe, Black Business Guide
Writing a business plan can help you think through some of these key questions. Research shows that entrepreneurs who write a formal business plan are 16% more likely to create a viable business than those who do not. And, if you decide to ask for funding assistance, a bank or investor will want to see a business plan before they give you any money.
[Read more: This Week on Entrepreneur: Using Passion To Fuel Business Success]
Create a brand
Branding is one of the most fun parts of turning your hobby into a business. Choose a name and logo to represent your unique business. If you’re selling a product, you may want to work with a designer to come up with packaging ideas, too. Service companies can create websites using the templates built into sites like Squarespace, Wix, and Shopify. Tools like Canva, Prezi, and PicMonkey are all affordable ways to create a distinct visual personality for your new company.
Find the right balance
Running a small business takes persistence and patience. Hobbies, however, are supposed to be fun.
“A hobby is something people do because they enjoy the activity. Setting up and running a business may not fall into that category,” wrote Black Business Guide. “One of the largest hazards in turning a hobby into a business is losing the joy once associated with the hobby.”
A key part of turning your passion into a long-term, viable business is taking small, incremental steps that enable you to continue feeling the joy the hobby brings to your life. Be realistic about your goals for the business. Consider bootstrapping your company with the sales you make, scaling slowly rather than bringing in outside investors or loans.
Turning a hobby into a viable business doesn’t happen overnight. It can take many years for a business to become profitable, let alone for it to become a sustainable source of income. But finding a mentor, balancing your commitment, and constantly learning new things about your craft can make this process enjoyable.
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