How to turn your hobby into a business
If you’ve been thinking about how to make money doing what you love, you’re ready to explore earning supplemental income with a gig that harnesses your skills and passion.
How do you like to spend your time outside work? Photography, writing or crafting—everyone enjoys putting time and energy into hobbies. Some activities cost little or nothing, while others may require a considerable investment.
With some effort, though, you may be able to convert your hobby into supplemental income—and maybe even more than that. Before you get started, learn what to keep in mind and how to make smart financial moves, including making sure you prepare to pay taxes and watch profits.
Make a list and pick a direction
Start by brainstorming a list of hobbies you enjoy and skills you practice regularly. Include as many activities as possible—even those you wouldn’t expect could make money.
Decide whether you will sell a service or a product. Crafts, jewelry and furniture are just a few examples of products that tend to sell well. But you don’t have to create “stuff” in order to make money from a hobby. Plenty of skills translate into profitable services, too. If you speak a foreign language, you could tutor. If you like to play music, consider offering lessons. If you’re a skilled photographer, try offering your services for weddings, graduations and other events.
Consider costs and your market
If you decide to make things, determine how much it costs to create each item—money you won’t get back until the items sell. If you’re interested in providing a service, think about how much money you need to invest in supplies or equipment. And for both, consider the value of the time you’re putting in.
You’ll also want to find the right market for your product. Most types of work have associated apps and websites where you can sell your products or find gigs. You can use these platforms to determine your rates and prices.
What’s your specialty?
Start with what you love to do. Then look at how you might make money from it.
- If you’re creative – graphic design, writing, photography, videography, vlogging/blogging, social media influencing
- If you’re good with your hands – selling crafts, making clothing, doing alterations, performing home carpentry work, refurbishing furniture, teaching car repair classes
- If you’re a performer – giving lessons, entertaining at parties and local venues
- If you’re an expert shopper – antiquing, reselling clothing or tech/devices, personal shopping, working as a wardrobe stylist
- If you’re an animal lover – dog walking, pet sitting, pet grooming
- If you’re an athlete – coaching, refereeing, yoga instructing, personal training
Think about location, too. Will you keep your business local or sell everywhere? If you want to teach a foreign language, but your entire community speaks the same foreign language you do, you may have to look for students outside your immediate area.
Beyond practicality, be sure to choose an activity you enjoy, so you’ll stay motivated through challenging times.
Get the word out, real-world and online
Now you need to connect with potential customers. Boost visibility on your home turf and beyond, with an online presence. Creating social media handles for your business is a smart starting point. Before you tell people about your business, you want to give them some way to reach you about it. Bonus: The followers you attract to your account online can serve as a customer base.
You may also want to investigate paying small amounts to advertise on social media, because you can target specific demographics of viewers for your ads, and test to see what tactics are most effective. Every little bit of exposure helps—but remember that advertising can get pricey and offset your profits. You may want to employ one tactic at a time, to control costs and better measure your results.
Consider setting up a business-only free email account, too. You may not need to set up and maintain (and pay for) a full website, however, especially if you’re planning to use an existing website community to market your product or service.
Then get in touch with friends, family, neighbors and colleagues. Encourage friends to spread the word about your business; make business cards or shareable posts to expedite your word-of-mouth marketing.
Keep tabs on your business
Your business may have grown out of your passion, but once you get going you need to put some time into its financial aspects:
- Develop a business plan and stick to it.
- Keep an accurate record of your business expenses, as well as your earned income, to ensure you’re making a profit.
- Save receipts from business-related purchases. Your earnings from freelance work will be subject to income tax, but you may reduce your taxable income if you have tax-deductible expenditures. Check with your tax advisor.
Managing your part-time income, your time and even preparing for tax season will take a little effort, so it’s important to pay attention from the beginning. You want to ensure the effort is worth your time, and spot any financial problems before they get out of hand.
If you have questions along the way, the Small Business Administration provides plenty of resources for entrepreneurs at different stages of starting a business—especially important if you realize that your side business is ready to become your full-time career.
Whatever your reasons for trying to make some extra cash—paying off debt or saving for a special goal—you may be surprised to discover that it can enrich your life, as well as your wallet.
Neither Bank of America nor any of its affiliates provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.