Ever dreamed of turning your hobby into a business? Read on...
Your money or your life, what is most important? Well I say both - because money buys freedom. The trick is to know how much money it takes for you to survive and then to spend no more time earning it than is necessary for day to day survival, savings for emergencies, a decent level of comfort and a few luxuries. And some longer term savings of course, but it's actually keeping the spending in check that will get you there, not how much you earn.
I know the perceived self help book wisdom is to do the work you love in order to earn a living. However, reality check although I know this is contraversial. That dream can disappear rapidly when it is pursued at the expense of work/life balance! Because trying to turn what you love into a business usually means working very long hours to earn enough money. This can seem okay at the start but after a year or so it becomes well, just more work.
Your dream of being an artist becomes at least 50% marketing, selling and book keeping if you really need to make a living from it. Then there is what sells. Probably producing the same thing over and over - limited edition prints and variations on a popular theme, such as painting the coastline or mountains near where you live cos it sells, fine a few times but 50? 100? 500? coasters, greetings cards... So where is the studio time for producing one-off creative pieces? There is the same challenge fitting that in as there would be in an actual job...and you are probably earning an awful lot less money.
So go ahead if you don't mind that and if not, keep it as a hobby business for earning a bit extra and enjoy it. For your main source of income, get work with the best hourly rate you can, that you like and that is relatively easy to earn a living from. That may well be a job but going freelance or having your own business is an excellent option as your main source of income, just look carefully at the earning potential, competition and profit margins before you decide what to do. Have more than one business if you want to!
If starting any business but especially a 'dream' hobby business, think about scale and that sweet spot where your business will produce the best return whilst not taking over your life. We are both self employed and have three businesses between us. That sweet spot is in constant motion and a hot topic for discussion in our house! It works and we are part time with a decent income. It has also been very handy in these Covid times not having all our eggs in one basket. If you re not too heavily invested in your business being your 'dream' and markets dry up, you can change what you do and still have an income. So you were an artist? You are already set up as a business and art is not selling in a recession? Start doing something else, such as dog walking, cleaning or helping others with book keeping...Or all of the above.
Charles Long puts it well in his book 'How to Survive Without a Salary'. He tells the story of a young man who is a baker and walks to the local town delivering cookies from his rucksac. He loves it. Loves the baking, loves the walking to town. He has a simple lifestyle with few overheads so it works.
Then someone suggests his product is so good he should expand. So he gets a Unit to work from and a van to deliver cookies. Before you know it, he is working twice as hard, spending a lot of time marketing cookies, doing admin, accounting and cash flow, ordering supplies and driving the van - and of course paying someone to make the cookies and paying the bank for the loan that bought the van. But does he earn twice as much? No, because of the overheads. More worrying, he is now back in the rat race, competing for the same market as other cookie companies and doing all the things he did not want to do. No time for walking with a rucksac now!
Aim to maximise your hourly rate, doing well-paid work full or part time. Assess all your work-related expenses to work this out, even if you are in a job rather than having a business. For example, the car needed to get to work, child care, a cleaner, lunches you buy instead of make when rushed, work clothes, extra treats and holidays to make up for working full time etc. Often, working full time is not such good value as you thought, especially for the second job in a household. This is because it often means getting child care, a cleaner, dog walker and not having time to get the best price for groceries and other items.
The less you spend, the less you need to earn. When we are happy and working part time, we tend to spend less. And you can squirrel away the cash from that extra wee hobby business whilst working at the day job. You will enjoy watching it grow and it makes it a very satisfying hobby business.
News flash in the UK you can earn £1,000 profit from a hobby business, ebay Airbnb or other sources without having to declare it or pay tax on it. That's profit, not turnover. So a hobby business can earn you 20% more if you are a basic rate tax payer. If you live elsewhere, check if your country does the same.
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