Turning Your Newfound Side Hustle Into A Business
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Turning Your New-found Side Hustle Into A Business
Are you among the entrepreneurs who turned a hobby into a money-maker in the past year? If your answer is "yes," consider turning that "side hustle" into a small business.
Close to 6 in 10 of 1,000 respondents told a LendingTree survey that they had started a hobby during the pandemic.
"The coronavirus spawned an army of journal-keepers, sourdough seers, bakers, cooks, weavers, painters, gardeners and bird-watchers," writes Joanne Kaufman in an article for The New York Times.
But for many new pandemic-inspired hobbyists, their pastimes were more than stress-reducing and enjoyable activities - they produced extra income during the pandemic.
Nearly half (48 percent) said they were paid for what they did, meaning their hobbies became a "side hustle," according to the survey by the online loan marketplace.
An additional 25 percent of those with new hobbies said that while they hadn't made money with their hobby, they hoped to in the future, reports LendingTree.
Check out this advice on how to make your newfound side gig into your new small business.
Assess What It Will Take
Whether it's new equipment or space - or even more time - take a good look at what you'll need to expand the hobby into a successful full-time gig.
Examine your needs from a different perspective - as a new business owner vs. a hobbyist.
"The thing about a hobby, of course, is that you can spend just as much or as little time on it as you choose. No big deal if you're not up for painting or drawing or embroidering today," writes Kaufman in The New York Times article.
"But the calculus changes and so, sometimes, does the need for specialized equipment, when the pastime becomes a business."
For hobbyist-turned-entrepreneur Lan Ngo in California, figuring out what she needed to make and sell her miniature furniture on Etsy was key to taking it next level.
Ngo came to "the unavoidable conclusion that what she had made by hand with Popsicle sticks and cardboard was both labor intensive and not quite ready for prime time," Kaufman writes.
So she invested $3,000 in a laser printer.
"When I bought a laser printer, I was able to make more detailed and precise cuts, and I could make an item in five minutes instead of two weeks," Ngo told Kaufman for the article.
Budget For Your New Small Business
While you may have a good idea of expenses for your side-hustle hobby, you'll want to map out a more detailed financial plan for a bigger-scale operation.
Create a budget that includes startup costs and expenses over the next year for any additional equipment, physical space, and other supplies, as well as down the line. Having a budget will, in turn, help you assess your startup funding needs.
Also, Matt Schulz, chief credit analyst at Lending Tree, suggests taking a broader look at your finances to see where your new business and its expenses fit into your life.
"If you plan to seriously pursue your newfound hobby, factor it into your financial plans," he writes in a blog for LendingTree. "Doing so will allow you to better judge when you might be going a bit overboard."
The more comprehensive look, he says, can also help you see what expenses you may want to trim so that you can redirect that added fund to running your small business.