You’re passionate about your hobby, whether that’s hand sewing baby clothes or creating terrariums. And maybe you’ve started to make a little money selling these items. So when should you take your hobby to the next level and build a real business?
Here are five signs that it’s time to take your hobby up a notch:
- You’re Super Busy Filling Orders – You might have started out just making products for friends and family, but now you can’t keep up with demand. If your hobby is taking over your world, it might be time to consider doing it full time.
- You’re Making More with Your Hobby Than Your Job – This is a fantastic sign that you’re ready for business ownership! If the profits from your “little” hobby are more than what you’re bringing home in your paycheck, it might be time to put in your notice at your job and start focusing on developing your new business.
- You’re Investing a Significant Amount on Your Hobby – If you’re spending a lot on materials and supplies for your hobby, those are expenses you could write off if you were set up as a business. Keep track of your expenses now, because you may still be able to write them off once you launch your business.
- You’ve Got an Etsy Page – Don’t discount your hobby just because you sell on Etsy. There are hundreds of thousands of sellers operating full fledged businesses through Etsy. While their revenue varies from one seller to another, Etsy (as well as eBay and Amazon) is a great place to test the waters with your business.
- You’ve Got the Right Mindset – You think like an entrepreneur. You’re constantly coming up with new product ideas. You’re ready to own your own business! There’s nothing stopping you but yourself.
Now That You’re Geared Up, How to Prep Your New Business
Making the mental shift to turn your hobby into a business is the first step. Now you’ve got more work to do!
- First, search to see if anyone’s using the name you want. If it’s available, file a DBA under that name.
- Next, choose your business structure. The S Corp is popular for small business owners.
- Then, register for a Federal Tax ID number. It’s free!
- After that, open a business checking account. This will keep your finances separate.
- Next, apply for any business licenses you’ll need. Check with your city and state to find out what’s required.
- Then, create your business plan. Include how you’ll market your business and what you’ll spend to launch it.
Now you’re ready! You’ll find that running a business based on a hobby you love is satisfying!