There’s no doubt that turning a hobby into a business is hard work — much of it a mental battle. Many people have successfully turned their craft or area of interest into a viable business that generates recurring income. They did it by following well-documented and proven steps to starting a business. 

So if you’re struggling with the mental battle of “how the heck do I get started?” question, there are reliable strategies to kick procrastination to the curb (backed by extensive psychological research, of course).

Once you do that, you just need time and persistence to execute the 11 clearly-defined steps we’ll unpack below. 

Let’s dive in — but first, let’s look at why you’d want to turn your hobby into a business in the first place.

It’s exciting to imagine making money doing the hobbies we love. We’re already doing them and getting an intrinsic reward from the joy it brings. Why not add an extrinsic reward, too, in the form of a profit-generating business?

Make sure a business won’t ruin your hobby

One word of caution before you dive headfirst into turning your hobby into a business: not all hobbies need to be businesses. 

Colleen Deyell Hood is a professor at Brock University in Canada and an expert on leisure (and she doesn’t just watch Netflix all day. She’s an author, speaker, and pioneer in therapeutic recreation research). 

She warns that “there is research that suggests adding an external reward like money to an internally motivated activity may dilute the pleasure.”

So be sure that transforming your side hustle into a business won’t steal the joy it brings. 

Things to consider before starting a hobby business

Ask yourself these questions to uncover if you’re ready to turn your hobby into a business:

  • Can this hobby reliably generate income for you repeatedly? If your hobby may only make a few bucks here or there, the effort to create a business may not be worth it. 
  • Are there others with similar hobbies that have successfully turned them into businesses? Do some research online and find people that have done what you are hoping to do. 
  • Do you want your hobby to become a side hustle or a full time business? Visualize your long-term goals. It’s important to consider whether you want a side hustle that provides hobby income or a business that requires fully replacing your day job.
  • What do you need to learn to start a business? It’s wise to assess yourself and see what kind of learning curve you face. Maybe it’s financial literacy like taxes or how to build a business plan. Perhaps you need to explore how you can market your business online. Maybe you need to learn about shipping logistics for future customers. If you want to start a subscription business, maybe you need to learn how to sell customers on a subscription plan.

These questions can get you out of your head and stop overthinking. Answer these questions one by one and write down your thoughts. By the end of it, you’ll have a clear idea of whether or not you’re ready to make the jump to making a full time business out of your hobby. 

Now, if you’re ready to turn your passion project into a business, let’s unpack the steps you need to follow.

As we said above, turning your hobby into your own business is hard work, but getting started is the important part. 

Start by following the below steps, and you’ll build momentum. Suddenly, in the not-so-distant future, you’ll find yourself running a successful business.

The first step in turning your hobby into a business is looking at your niche. You already know your hobby well, so now you need to do some research. 

For example, imagine you make hand-made soap for friends and family and have had a lot of positive feedback. They tell you that you could turn this into a business. So you think about how you could do it and decide you want to turn it into a subscription box business where you send new bars of soap to your customers each month. Before you jump, it’s best to find stories of others that have done something similar and learn about how subscription business models work. In doing so, you’re laying the groundwork to build your business. 

When investigating your niche, keep these questions in mind:

  • Who else has started their own business with my hobby? Is it proven to be a viable business?
  • Is there a lot of competition?
  • How much do others doing what I want to do charge for their products or services?
  • How do they attract customers?
  • Is there a lot of demand for these products and services?
  • Are there review sites for the products or services I plan to sell? What positive or negative feedback is most frequent?

These are a lot of questions to answer and can keep you busy researching. But the main goal is to give yourself a well-rounded idea of your niche.

When you’ve done the legwork to understand your niche, you now need to decide on your business model.

Before you start a business, you’ll need to decide on your business model. As an example, let’s return to the handmade soap business. There are a couple of different business models you can choose from.

  • You can sell your soap as a one-time purchase and hope to build loyalty with customers, so they come back to buy more in the future. This is a retail model.
  • Alternatively, you can use a subscription model where you charge customers a recurring fee to have your soap delivered to their door every month.

Exploring different models for your business widens your horizon to what’s possible. Other business models include service-based or product-based businesses. In the soap business plan, that’s a product-based business. 

If you’re an expert in carpentry, as another example, you’re a service provider to your customers if you rebuild their fence or deck. But you could turn it into a product if you start selling hand-made tables, chairs, or garden boxes. In doing so, you ‘productised’ what was once a service.

You can mix and match different models and evolve them over time. Selling soap to one-time customers can evolve into a subscription business if people keep coming back to you. The world is your oyster! There are many different business models to choose from.

After you’ve chosen your model, it’s time to define your brand. 

It’s likely that if you’re planning to turn your hobby into a business, there’s someone else out there who has done the same thing. However, don’t let this worry you. Many hobby-to-business entrepreneurs aren’t planning on going national, so the likelihood that you’ll compete with one another is slim. Instead, you can learn from them if they’re farther along. 

As you learn from fellow entrepreneurs, you’ll also find big brands that provide the products or services you plan to. They’re your real competitors. If you sell hand-made soap, for example, why should a customer buy yours instead of the plethora of options at the grocery store?

That’s where branding comes in.

Ramotion, a renowned design agency that’s worked with brands like Firefox and Salesforce, outlines eight elements of a brand:

  1. Purpose and vision
  2. Mission and values
  3. Name
  4. Logo
  5. Main message
  6. Color palette
  7. Voice
  8. Graphics

Dig into each for your business strategy and differentiate yourself. How do you want to be perceived by your customers? Do you want to be professional, fun, exciting, or cool? These dictate how you brand yourself. 

We’ll get to this in other sections further down, but the process of building your brand will naturally lead to cultivating a social media presence, building a website, and creating email campaigns. For now, however, consider how you want your company to stand out from the rest. In doing so, you’ll build a brand that reflects the values and mission that you want.

If you want to be your own boss, you’ll need to have a business plan. A business plan is a formal document that details (among other things) your business’ goals, how you plan to reach those goals, and in what time frame.

If you document your plans for each of the steps outlined in this article, you’ll have a strong framework for a business plan. Business plans can look different depending on the business model you choose, but, generally, these are the sections in a business plan:

  1. An executive summary that outlines the below sections from a high-level
  2. A description of your company and its mission
  3. A market analysis showing the opportunity your business plans to capitalize on
  4. An outline of the business structure – i.e. who’s running the business and key stakeholders
  5. What you offer as a business, be it products, services, or a combination
  6. Details on who your customers are
  7. Your marketing plan
  8. Outlines of your logistics and operation plans
  9. Financial planning, predicted costs, and funding needs (if any)

Many see creating a business plan as a grueling task, but there are strong benefits to going through the process. 

Firstly, it clarifies your business idea, strategies and goals. Writing down your goals can remind you why you’re starting the business and help evaluate future decisions. 

Secondly, it helps to understand your competitive landscape and do research into your customer base. It’s a great place to summarize all the research you did when investigating your niche. 

Lastly, creating a business plan adds credibility to your business. You’ve done the research and thought this idea through. It’s not an impulsive decision. Showing that you’ve done your homework is crucial for hiring employees in the future, forming partnerships, and securing funding if you need it.

Many entrepreneurs bootstrap their transition from a hobby to a business. They start small and find affordable ways to grow. At some point, however, you may want to scale faster or need an infusion of cash to stay cash flow positive. 

At times like this, you’ll need to secure funding. There are many ways, but let’s outline the most common ways to secure funding for your business:

  • Get a loan from a bank. Most banks offer loans to small businesses, but if you’re just starting out and don’t have a lot of history, it’s common to have more trouble securing a loan from a bank because they don’t know if you’ll run a viable business.
  • Find and apply for government grants. There are many small business grants supported by the government. Do some research to find out if there are any in your state or country to take advantage of. 
  • Start a crowdfunding campaign. Crowdfunding is a popular way to use your brand and mission to garner support. In a nutshell, crowdfunding asks supporters to invest small amounts in your business to help you kickstart your business. 
  • Set up product presales. Similar to crowdfunding, you can ask customers to pre-order your products to help inject cash into your business to get started. 
  • Attract angel investment. Angel investors are wealthy individuals with cash on hand who want to invest in businesses they believe in. Usually, they’ll want a stake in the company and to influence decision-making.
  • Bootstrapping from your personal life. Many hobbyists making the jump to entrepreneur will get their side hustle off the ground by investing their own money from their current job or investments. They use their personal finances to get started.
  • Asking for help from friends and family. Most new entrepreneurs will seek support from friends and family for a little extra spending money to grow their business.

When you have the foundation of your business established, now you’ll need to develop a marketing strategy to attract your first customers.

To make the transition to business owner and entrepreneur from your hobby, you’ll need a marketing strategy to attract customers. You’re likely doing your research now on how to turn your hobby into a business and seeing lots of advice on where to direct your marketing efforts. It can be overwhelming to see the 101 things you need to do. 

Here’s the thing: when you’re just starting out, you don’t need to use 101 marketing tactics. Start with the basics, like making a website and setting up social channels. Then optimize. Find out where your customers spend time, and investigate. If they’re scouring online marketplaces, then post your products there. If customers want to see lots of pictures on Instagram, then you know where you need to be.

You’ll get better at marketing yourself and your business as you spend time actually using each channel. But a word of caution, don’t try to do it all. Focus on one or two channels you know work. Then, after you’ve got a good marketing system for those channels, spend a little time experimenting with new channels, whether it be paid advertising, search engine optimization, email marketing, or all the other 101 things you can do.

As you continue to grow your side hustles and hobbies into businesses, you’ll begin to feel the squeeze of not having enough time to get everything done. You’ll feel the need to be more productive. To do that, you need to streamline and optimize your operations. 

To optimize your operations, you need to systemize your business. What does that look like?

  • Hiring help through employees or freelancers so you can outsource tasks and focus on what only you can do.
  • Building templates and checklists for repeatable tasks so you can hand them off to others and have consistency in output. 
  • Having analytics for the metrics that matter to your business to help make informed decisions quickly.
  • Financial systems are always up to date, so you know where you stand with critical things like cash flow, the lifeblood of a small business.

To streamline and optimize your business, you’ll likely need tools to help run your business. For subscription-based businesses, for example, Subbly’s platform makes it easy to power your subscription business all from one place. 

In a similar vein to streamlining your business for efficiency, having your financial processes in place is non-negotiable. If you don’t have a good and reliable way to keep on top of your finances in a way that gives you confidence that you know how your business is doing — then you need to as soon as possible. 

You need financial systems for the following tasks:

  • Invoicing customers
  • Payroll (if you have employees)
  • Expense reporting and tracking
  • Accounting for financial statements (profit and loss, balance sheet, cash flow)

Without these, you’re in the dark. And that’s a recipe for disaster for a business. 

So you’ve put in all the work building a solid foundation for your business. You’ve got your product and services priced out, a website and social channels promoting your brand, and the systems in place to make it run like a well-oiled machine. Now it’s time to launch. 

Launching your business can be subtle or extravagant. If you want to just get to work, you can begin putting out the word on different marketplaces and platforms that you’re open for business. If you want to be more extravagant you can get a stall at a conference like SubSummit or kick off your launch with a high-value contest. Putting together a raffle or sweepstakes is a great way to garner interest from customers. 

After launching your business and getting your marketing engine up and running you’ll start to get your first customers. Treat these customers with the utmost care to build your brand with them. Word-of-mouth advertising is the most effective strategy for attracting new customers, so think of your first customers like they’ll generate another two customers for you if you keep them happy.

As your business grows, you need to have goals to keep you focused. Where do you want your business to be in six months? What about a year? 

Set goals for your business’ growth and work backwards. By having your “North Star” clearly defined, you’ll have a greater sense of urgency and reason to push through the challenging days.

Having goals also helps with motivating yourself and your team, securing funding, and forecasting. A good goal-making system used by the likes of Google and other companies is Objectives and Key Results. If you want to unpack your goals further and break them into manageable chunks, this is a great system to adopt.

When turning your hobby into a business, there are proven steps to follow. There are hundreds of examples of entrepreneurs who have made the leap to learn from and inspire you. Follow the 11 steps we’ve outlined above, and you’ll be in a good position. 

When building a business, it’s also important to have the tools that make it easy to manage everything. If you’re building a subscription business because you want a reliable way to generate recurring revenue from your customers, use Subbly. Subbly is designed and engineered to help you start your subscription business no matter your level of expertise.  

Start your 2 week free trial today!

By Zaki Gulamani
Editor-In-Chief at Subbly