Before you jump into production mode, take a moment and assess how much time you really have to spend turning your hobby into a business.Ryan Sun | rsun@mlive.com
Guest columnist Jennifer Juguilon-Hottle, MBA, is president of J2H Consulting Group, a business consulting and advisory firm that specializes in the growth and profitability of small and medium-sized businesses. Hottle also teaches at Baldwin Wallace University’s Carmel Boyer School of Business, teaching undergraduate and graduate business programs.
Hobbies are a wonderful way to do something for the sheer joy and fun of doing it. For many, these leisure activities are also an escape from everyday stress and offer time to focus solely on mastering their skills.
But have you ever wondered if the activity you love could also make you money?
Maybe it crosses your mind when they tell you how good that cake you made for your daughter’s birthday is? Or when your friend loves the handmade hair clip you’re wearing and asks if you could make her one too, and suddenly everyone in your office wants one?
How do you know you’re ready to take the plunge and turn your hobby into a business? Answer three questions to help determine if you’re ready.
Is there a market for your product?
If you already have people praising your product, that’s a great sign that there is, in fact, interest. But interest doesn’t always translate into purchases.
People buy to satisfy a need or want. So do a little homework (aka market research) to see if people are buying similar products. You can do this by doing a keyword search on Google to see what’s trending. You can also run a survey on Facebook to find out if people are using your type of product. And you can talk to people and ask them if they’re using similar products and see what they like or don’t like about them.
It’s one thing to make time for yourself to do something you love just by meeting your own expectations. Another is to fulfill orders by a deadline. So before you jump into production mode, take some time and assess how much time you actually have to spend making this a business.
Sit down and take an honest look at your schedule and other obligations, like your job, the kids’ sports games, or volunteer work. Plan everything in front of you and see how much time you have to work.
Also, take a look at your space. Do you have space to store materials, inventory and packaging? Do you have a dedicated place to work?
This question is paramount. Will it be worth your time, effort and investment? Many people have very lucrative side jobs or full-time businesses because they paid close attention to their numbers.
Based on your research, calculate a fair selling price for your product. Now write down the total cost of all the materials needed to make just one. Keep in mind how long each one takes you to do, because your time is valuable too.
Be sure to include any packaging you may need to ship your product, such as bags, labels, or boxes. Add all of that up and subtract from your estimated selling price. How much is left? Anything?
If you’re not happy with your earnings, it doesn’t mean you can’t move on, but you’ll need to adjust your costs and/or selling price until you reach a worthwhile amount.
There’s more to turning your hobby into a business, but answering these three questions will let you know if you should take the next step.
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