6 Tips to Turn Your Hobby Into Profit
Fear holds us back. It might’ve held me back, too. Because, just like you might be now, I was truly terrified.
In my book, Before You Quit Your Job, I share how I felt on the day I said “enough is enough” and took the plunge to become a full-time entrepreneur:
One of the most frightening days of my life was the day I quit my job and officially became an entrepreneur. On that day, I knew there were no more steady paychecks, no more health insurance or retirement plans. No more days off for being sick or paid vacations.
On that day, my income went to zero. The terror of not having a steady paycheck was one of the most frightening experiences I had ever experienced. Worst of all, I did not know how long it would be before I would have another steady paycheck.
Very often, it’s this fear of not having a steady income that holds most people back from starting a business.
Perhaps you’ve faced this fear yourself. Here’s what it takes to overcome…
The Unlearning Process
I know I wasn’t born a natural entrepreneur. I had to be trained. My rich dad guided me through the process of starting as an employee to eventually becoming an entrepreneur.
For me, it was not an easy process. There was a lot I had to unlearn before I could begin to understand the lessons he was trying to teach me.
It was difficult hearing what my rich dad had to say because what he said was exactly the opposite of the lessons my poor dad was trying to teach me. Every time my rich dad talked about entrepreneurship, he was talking about freedom. Every time my poor dad talked to me about going to school to get a job, he was talking about security. The clash of these two philosophies going on in my head was confusing me.
Finally, I asked rich dad about the difference in philosophies…
“Aren’t security and freedom the same thing?”
Smiling, he replied, “Security and freedom are not the same. They are opposites. The more security you seek, the less freedom you have. The people with the most security are in jail. That is why it’s called ‘maximum security.’” He went on to say, “If you want freedom, you need to let go of security. Employees desire security. Entrepreneurs seek freedom.”
So the question is: Can anyone become an entrepreneur? My answer is, “Yes. It begins with a change in philosophy. It begins with a desire for more freedom than security.”
What Type of Business Do You Want?
There are many important characteristics of an entrepreneur when starting your own business: determination, creativity, knowledge, self-confidence, strong work ethic, flexibility, discipline, and more.
But in my opinion, the most vital one is passion. It’s what gets you out of bed in the morning, and what keeps you going when you face setbacks and doubt (and start to miss your old salary or other corporate perks you gave up). When the day is over, it’s what stops you from giving up and going back to the “safe” road of working for someone else.
That’s why, when people want to start their own business, they frequently focus on something they’re passionate about. Oftentimes, the most natural place they look is in their hobbies.
In theory, turning your hobby into a business makes a lot of sense. You love your hobby, and presumably have a lot of knowledge about it. Those two things should make for a successful business, right?
Take a look at how you spend your free time. What are you passionate about? Maybe it’s cooking. Now, find a way to make money doing it.
Can you start a blog? Document your creation process and write about the food you cook. You do it anyway, so it should be fun to share your skills with the world. And you’ll probably meet others who share your passions. Better yet, can you sell a recipe ebook? Compile your 100 best recipes and sell the ebook for $5.
If cooking isn’t your thing, find out what is and find a way to make money doing it. It won’t even feel like work.
Turn Your Passion Into Profits
If you turn your hobby into a business, you have to treat it like a business. That means getting serious about your work and your plan for growth.
It requires a change in mindset. You can’t approach your business the same way you would a hobby — in your spare time, lazily, when inspiration strikes and hoping to have a little fun.
You have to devote all your time and energy to it, going over the details, making plans, thinking strategically, growing it so it can run without you. Again, it might be stressful and frustrating, it might even take some of the initial passion you had for the hobby away — which is why you should think long and hard before you start down this path.
Focus on these six tips to turn your hobby into a business:
#1 Focus on a product, not services
A lot of employees’ first thought is to take the skills they use in the business world and to offer them as a consultant, in short, to build a service business. The problem with a service business, especially if it’s on the side, is that you don’t own a business. You simply own a job.
Services are a tough business because you have to sell your time. If you’re not working, you’re not making money. And when you work full-time, pulling long freelance hours is a surefire way to burn out.
Rather than sell services, figure out a way to create a product. If it’s consulting, put together a course that you can sell. Or if you’re a writer, create books that you can sell. Many writers sell their books on Amazon as e-books for $1 a copy and generate income even while they’re sleeping.
The trick is to look at what services you can provide and find the product angle. If you can do that, you’ll be making money even when you’re not working. That’s a true side hustle.
#2 Learn how to invest
I know a couple, for instance, who have a passion for real estate. Together, they’ve learned how to find the perfect single-family houses to turn into room shares. So far, while working full-time, they’ve purchased six houses. Each one cash flows significantly thanks to their business model.
And better yet, they’re paying off the debt on their assets. It’s their retirement plan to have a portfolio of cash-flowing houses that are completely paid off.
This requires investing in your financial education, as well as making it a priority to save money for investing, but once you get in the game, the sky’s the limit. And it can all be done easily in your free time.
#3 Work on your business, not in it
The temptation for those who are just starting is to do all the work themselves. But a much better way is to find quality contractors or even an employee or two who can work in the business so you can spend your time managing them and building the business.
For instance, I know a writer who frequently takes on freelance jobs, sub-contracts them to a team of writers, reviews the final product and enjoys the profit margin. In this way, he can do multiple jobs that he could never do on his own, each making money while he works as an employee during the day.
Another person I know owns a shipping company and a fleet of trucks. He hires drivers to do the long-hour drives, and his time is spent lining up jobs and managing the business on the weekends and in the evenings.
By focusing on working on your business from the get-go, you’ll be able to grow and build your company to be more than just a side gig.
#4 Assemble a great team
A lot of part-time business owners are cheap. They try and save money on things like accounting and legal. But because they’re not trained in those things, they end up costing them more in the long run in terms of time, and sometimes in lawsuits and tax liens.
Find great team members and use them. Get a good CPA. Find a great attorney. If you’re investing in real estate, use a reputable and successful broker. Focus on what you can do best, and let others do the rest for you.
#5 Own your schedule
A common excuse for not starting a business is that you don’t have time. This is bull. Most people, if they did an audit of how they spent their time, would see that they have ample time to work on a side business. The problem is that most people are owned by their schedule rather than owning their schedule.
If you want to run a successful business while working full-time, you need to become an expert at productivity and time management. Cut the TV time, stop going out for drinks, and buckle down. You’d be surprised what the work you do in an hour or two in the evenings and a half-day on Saturday can do for you.
#6 Leverage technology
Finally, there is a ton of technology out there to help cut many tasks that used to take hours to a mere matter of seconds in some cases.
Research and utilize a solid CRM and marketing automation software to automate many of your mundane emails, administration software like Quickbooks, which integrates with your smartphone, to keep track of expenses and income on the go. Use a service like Shoeboxed to scan your important documents and make them searchable. Employ project management software to help manage your team of experts and contractors.
The possibilities are endless.
Play it smart,
Editor, Rich Dad Poor Dad Daily