Lots of people dream about getting paid to take part in their hobby, and many lucky entrepreneurs do make the transition from doing what they love for fun, to turning it into a business. You may currently be baking cakes, walking dogs, doing some creative writing, making your own clothes and accessories, or a number of other creative, fun or fulfilling tasks. And you may be finding that you’d much rather quit whatever your day job is and turn your hobby into a full-time job. Or maybe you simply want to take your hobby to the next level and start making a little money from your side project. But when does a hobby become a business, and when do you need a business plan?
When Is A Hobby A Business?
Your hobby turns into a business when you start trying to make money from it. This is particularly true in the eyes of HMRC – if you’re taking part in an activity with the goal of making a profit, you should be registered as a sole trader or a limited company, and you should be filling in a self-assessment tax return. While this does not necessarily apply to people who are clearing out the attic and selling the contents on eBay as a one-off, it will certainly apply to people who are buying or creating products and selling them, or providing services, for the purpose of making a profit.
How Do You Turn A Hobby Into A Business?
To turn your hobby into a business, you first need to treat it like one. Stop thinking of it as your hobby and start thinking about it as a source of income – it’s time to get serious. As a starting point, consider who your target market is, how you can reach them, what your goals are, how much money you expect to make, and how much money you will need, realistically – firstly to get yourself set up, and then to start making a profit and turning your project into a full-time job, if that is what you aim to do. Of course, this means you’ll need to start planning.
Do You Need A Business Plan?
Business plans are important for businesses of all sizes, whether you’re just starting out as a sole trader or you’re already running a long-standing business with several employees. You may remember from our blog post “When Should You Write A Business Plan?” earlier this year, that it’s never too early to start writing your business plan.
You’ll need a business plan so that you can start addressing those questions we mentioned a moment ago. Start writing things down so that you have a solid plan that you can keep referring back to. Rather than jumping in with both feet without a plan or consideration for the future, you need to strategize. Decide what you’re doing before you do it, and think about the effect each of your decisions could have on your profit and long-term growth. If you’re serious about starting a business, it’s never too early to start thinking about the future. And whatever your goals are, you won’t arrive at your destination if you don’t know the way there.
Starting a business is an exciting time, and we’d love to play a part in your journey towards success. If you would like any help with writing your business plan so that you can turn your hobby into a business, ditch your 9-5 and do what you love full-time, get in touch with cbm. Call 01604 420 420 or contact us using the form on the right. We’re looking forward to hearing from you!