Have you ever caught yourself daydreaming about ditching your dead-end job to start your own business? You’re not alone. A lot of us would love to stop wasting time twiddling our thumbs in somebody else’s office and create a more fulfilling career doing something were actually passionate about. That being said, it’s fair to say there are a few inherent barriers that often prevent individuals from actually acting upon their dreams.
Many would-be entrepreneurs can’t help but worry about the lack of financial security, support and benefits that potentially go hand-in-hand with becoming an independent business owner. Yet with a little organisation and forward planning, it’s surprisingly easy to overcome many of these hurdles and plenty of UK professionals have already beaten their fears, decided to go it alone and have found success transforming their hobbies or passions into thriving businesses.
According to the UK Governments Office for National Statistics, there’s been a rapid surge in self-employment in recent decades. In 2001, there were approximately 3.3m people in the UK who ran their own business. This represented about 12% of the workforce. But last year, almost 5m people representing 15.1% of UK workers were classed as self-employed.
So, how have that many entrepreneurs been able to achieve success as independent business owners? No two businesses are alike, and best practice for setting up a new enterprise will vary wildly from industry to industry. Yet despite the type of business or the type of industry in which you’re hoping to operate, all aspiring entrepreneurs should be able to apply these ten crucial tips to start turning their hobbies into successful businesses.
1. Set SMART goals
Before you leave the world of work behind and go it alone, you’ve got to sit down and have a long, hard think about what it is you would actually like to achieve.
For example, do you want to create a full-time business so that you are able to quit your day job? Are you simply trying to earn some extra cash to supplement your normal income?
Your first step towards creating a successful business is deciding you’re considering setting up your business in the first place. You’ve got to be honest with yourself, and you should try your best to manage your own expectations. Be realistic, and use your honest intentions to create a concise set of goals your business can realistically achieve in the short-term, mid-term and long-term.
To ensure you can tackle your list of goals, you should do your best to ensure they are all specific, measurable, achievable, realistic and timely (or SMART). For example, you could set the goal of creating and selling 75 hand-knitted sweaters within a 12-month period. You’ve got to give yourself a deadline by which to achieve your goals, and you absolutely must include some form of measurement that you can use to easily chart your progress.
2. Think outside the box
If you’ve got a specific hobby or skill you’re hoping to turn into a business, there’s probably a good chance you’ve already got a specific set of products or services in mind that you’d like to offer. But it’s important that you don’t stunt your business potential before you’re even on your feet.
That’s why you owe it to yourself and your future business to conduct some market research, chat with friends or colleagues in the industry and develop an idea of different approaches, products or services you might be able to apply to help your business stand out and create improved financial sustainability.
For example, if you’re a freelance journalist who would like to start a full-time reporting business, you should think about other ways you could utilise your writing skills to diversify your business and protect your bottom line. You could also offer corporate copywriting services, shadow writing, produce online learning products or teach writing classes.
That way, you won’t be over-reliant upon one niche set of services and so on the off chance your list of clients dries up, you will have relevant services to fall back on to support yourself and your new business.
3. Make sure you enjoy doing your hobby
At first glance, this might seem like painfully obvious advice for someone who’d like to turn their hobbies into a full-time business, but its something you need to consider.
After all, if you choose to transform your chief leisure activity into your main source of livelihood, you need to be aware that the way you perform and engage with that hobby will probably change dramatically. You’ll need to meet deadlines and sacrifice your artistic integrity to please demanding (and sometimes obnoxious) customers and clients. You’ll also need to do your hobby day-in and day-out even on days that you don’t particularly feel like doing it.
That’s not meant to put you off in any way, but it is a reality you need to be aware of. By turning your hobby into a business, it will become your life. You need to be ready and willing to make that change.
4. Practice before you quit your day job
The worst possible mistake you could possibly make if you want to turn your hobby into a business, is to hop into the deep end without actually testing the waters first. Translation: just because you think you’re good at something, doesn’t mean other people will think so, too.
If you want to make it as a business owner, you need to hone your skills and practice before you quit your day job. A great way to get started is by blocking off designated time each day or week to practice your hobby. Once you’re happy with the skills you’ve developed, start sharing those skills with friends and family before offering up your services on a casual, freelance basis to new customers.
This is your way in, and its a crucial first step. Even after you have reached the level at which you can safely sustain your business, never stop practising or trying to improve your skills.
5. Write a great business plan
If you want to turn your hobby into a successful business, you’ve got to write a great business plan first. Not familiar with business plans? Don’t sweat it.
Simply put, a business plan is basically just a written document that outlines everything there is to know about your new business. Your business plan will need to cover all the basics, from objectives and strategy, to the services you’ll offer, how you’ll promote your business and your projected finances.
Writing a business plan isn’t nearly as complicated as it might sound, although the process is admittedly a bit labour intensive and crucial to your business success. But we can help you get started.
In terms of what information you must include in your business plan, you absolutely must produce some market research documenting your competitors, who you think will be using your services and how well you’re expecting your business to perform.
Need a hand structuring your business plan? To be honest, there’s no right or wrong way to organise it. That being said, most UK companies generally draft their business plans using this structure:
- Executive summary and elevator pitch
- About you
- Your products or services
- Your market and customers
- Market research
- Marketing strategy
- Competitor analysis
- Operations and logistics
- Cost pricing and strategy
- Financial forecasts
- Your back-up plan
Again, you need to bear in mind that this structure is only a guideline not a hard and fast rule. You do not need to include all of the 11 sections we’ve outlined. You can feel free to add sections, delete sections or combine some sections together if it feels right. If you need more tips on writing your business plan, the UK Government has resources and templates that will help you get started.
6. Change your mindset
This one can be tricky, but it is critical to your success as a business owner. When you’re doing a hobby for fun, you get used to doing it in your leisure time. It might be something you do to de-stress, and it might be something you’re fantastic at, but only feel like doing once a month. To turn your hobby into a business, you need to change your mindset.
When you commit to starting a new business, you need to adopt a business mindset and alter the way you perceive your hobby. You need to show up to work, and you need to make it a priority long before you quit your day job. Start looking at what you’re producing in your spare time with an analytical lens, and try to calculate the ways in which you choose to develop your hobby from a shrewd business point-of-view.
7. Figure out how to market yourself
There can often be a fine line between self-confidence and arrogance but the truth is, a lot of individuals don’t feel confident tooting their own horn in public. It can often feel strange, needy or artificial, marketing a small business to the world, because in many cases your small business might just be you and your hobby. But if marketing yourself is something that frightens you, you’ll need to overcome your fears quickly.
One way you might be able to do this is by writing everything down in a marketing plan.
Not familiar with a marketing plan? It’s essentially just a detailed outline that lists everything there is to know about the marketing strategy you’d like to use for your business and what you want that strategy to achieve. They’re usually timestamped strategies that focus on a specific period of time and like your company’s business plan, tends to evolve as time goes on.
What should your marketing plan include? Again, there’s no hard and fast rule here. However, it should typically include details about your business or your hobby and your status quo. It must also spell out a clear definition of your target market, and a breakdown of who your business needs to reach to generate sales.
From there, you should be able to develop an idea of where you’ll be able to speak to those individuals, the tone you should use and how you should approach them.
One of the best ways to start this process is by taking a look at how other, similar businesses market themselves. Take a look at what they’re doing well, how they could improve and what you may want to do differently to maximise your chances of success.
8. Establish your brand
All of us are familiar with what a brand is but not everyone is familiar with how they’re created and why small business owners should strive to establish one.
Simply put, we can define a brand as any feature that identifies your products or services as being distinct from the goods or services of others. That distinction can take one of many forms from a unique name or design, to symbol, term or all of the above.
By creating a distinct brand, you’ll be creating an identity your would-be customers will be able to latch on to. You can associate your business with an emotive symbol to create physical and emotional cues that trigger instant recognition, feelings and (hopefully) a desire to purchase. In marketing, this is referred to as a decision-making shortcut, and it’s totally invaluable to your business if you’d like to establish some sort of brand loyalty.
So, how do you create a brand? It all starts with making sure you have a core brand message and a solid idea of who you are and what you want your business to be. Know your skills and know what you stand for and apply that to everything you can from colour schemes or logos to packaging and the decorations in your premises. Whatever you do, just make sure you’re being consistent.
9. Be willing to work for free
This one won’t sound super appealing, but it’s an important step that many entrepreneurs will need to take at some point when trying to turn their hobbies into real, sustainable businesses.
In a lot of cases, it can be difficult tracking down your first couple of customers because you’re not well-known and you don’t necessarily have a proven track record. That’s why a brilliant way to win the confidence of customers and establish brand loyalty is to offer to do your first job free in exchange for a gleaming review or a customer testimonial.
Depending on what you offer, you might even be able to extend a free trial period to your customers to demonstrate your commitment to customer satisfaction. It might not seem like a great move for your short-term finances, but it could ultimately help you create a more sustainable business in the long-term.
10. Make sure your finances are in order
Before you start trying to make money off of your hobby as a full-time business, you should be aware that you’ll subsequently be forced to comply with a new host of financial obligations.
For example, you need to report your business income and expenses as part of your Self Assessment tax return for HMRC. You may be expected to pay estimated taxes on the account, and you may also want to consider registering for VAT. Depending upon your business size, you may also need to think about payroll, and you’ll have to spend a lot more time keeping track of your overheads, as well as recording and submitting detailed company accounts.
The best way to do start getting your finances in order is to set up a designated business bank account and form a limited company to make sure that your personal finances are constantly being kept separate from your business finances. It’s also worth having an initial consultation with a professional, chartered accountant to better understand your business needs and tax obligations.
That being said, it’s worth pointing out that this list is by no means exhaustive. There are all sorts of different techniques and strategies you may want to explore as part of the process of turning your hobby into a business and we’re here to help. Check out the Blue Square Offices blog now for all sorts of useful advice on company formation, managing remote teams, outsourcing and more.