Industry Market Trends
Turning your Hobby into a Business
October 14, 2008
Converting your personal hobby into a profitable business can be a handy way to supplement your existing income or even embark on a whole new career. From crafts projects to car upgrades to home machining, the range of hobby-based businesses is vast. The variety of success stories can make the idea of turning a pastime into a paycheck even more appealing. But it is important to understand the risks involved in such an undertaking, and prospective entrepreneurs should consider factors such as market conditions, competitor status and their own range of skills. Once committed, there are several steps that can help a small business improve its chances for expansion within an industry. Is Entrepreneurship Right for You? Many well-known businesses had humble roots as a hobby or personal passion. Through skill, persistence and timing, some enthusiasts have managed to develop their pursuits into full-fledged companies. Paul Teutel, Sr., for example, was a metalworker who began building customized motorcycles in his basement. After he and his son, Paul Jr., founded Orange County Choppers in 1999, they saw success with their first custom bikes and their business took off. In September 2002, the Teutels' shop gained prominence in the custom vehicle industry with its own TV show, which has since been syndicated. Of course, not every startup can expect rapid success, and it is usually important to evaluate your circumstances to determine if a viable business model can be formed. According to Entrepreneur.com, some of the important questions to ask before embarking on a new business venture include:
- How committed are you?
- Is your glass half full or half empty?
- Do you like to make decisions?
- Do you have the money to make it happen?
- Do you like to sell?
- Determine which market would yield the most profits from sales of products and services;
- Estimate the size of the marketplace and the amount of potential revenue based on your company size;
- Develop an operational plan that will balance equipment purchases and hiring practices according to the startup's expected market share; and
- Establish financial projections by which sales goals, expenses and profit margins can be measured.
- An executive summary of your business and its goals;
- A description of the products or services being offered;
- Market research that details the targeted demographic;
- Possible advertising and promotional strategies;
- An operational assessment of the supplies, employees and workspace required; and
- A financial forecast, including cost analysis and income flow projections.
- Develop Partnerships Whether you enter into partnerships, have acquaintances steer clients in your direction or simply have peers provide sound advice. Relying on existing connections can give you a useful leg-up.
- Target Your Segment of the Marketplace Try to establish relationships with companies that purchase your products at a rate favorable to your production cycle and turnover and which make the most of any specialty service you can provide.
- Initiate Scalable Growth Securing more expansive contracts from within existing relationships can be a secure and scalable method of growth.
- Diversify According to Demand New projects that seem within reach and will provide a cost-efficient result can be a helpful way to diversify your operations.