The dream of many would-be entrepreneurs is to slide seamlessly from their passionate, enjoyable pursuit of a hobby into the passionate, enjoyable establishment and operation of a company based on their favorite pastime. Nothing is better to do for money than something you already enjoy doing for free!
But there are caveats. As much as you might really enjoy learning different ways to filet salmon, for example, it might be difficult to "monetize" that expertise into a business, even on the internet. At the same time, if you're really good at making Christmas ornaments out of pipe cleaners, you might find that there are just too many other similarly gifted folks in the marketplace already doing the same thing.
And there are other important considerations when you want to turn your hobby into a business.
Focus on the prize
This is a goal worthy of a lot of effort, because there may be no greater joy for an entrepreneur. "You'd much rather start a business based on a hobby than something else, right out of the box, because you're connected with it, you understand the vernacular, the concepts, the community, and the psychographics and demographics of the market," says Lawler Chang, author of the new book Passion at Work and a management consultant. "It gives you an unfair competitive advantage."
Gregg Steiner, for example, was always helping techno phobic friends and family members set up their computers and TiVos and cell phones and plasma TVs for the fun of it. Then, last summer, a friend of a friend offered to pay him to wire his huge house in Los Angeles. And Steiner soon left his family's baby-ointment manufacturing company in Cleveland to turn his geekdom into a lucrative consultancy. "Now I'm getting paid $95 an hour and I get all these perks, and I'm busy all the time and just having fun," says the 35-year-old Steiner.
Just because you enjoy a hobby, and maybe you even know a bunch of fellow hobbyists, doesn't mean that your group's enthusiasm for this activity translates into a viable business.
Gene Fairbrother, lead business consultant for the Dallas-based National Association for the Self-Employed, advises you to "step back" first. "It's not any different from any other business," he says. "You've got to determine first if there's a market for it, then determine how much profit is in it."
Chris Cameron, CEO of TheToyPeddler.com, a marketplace for collectable toys, says that you must "look at the whole value proposition. How widespread is this need, or is it something unique to my experience?"
Jill Caren did exactly that before launching her company, Expressions Photo Design & Boutique, in Matawan, New Jersey, which sells her unique photo-album and scrapbook products. "I attended local craft shows and found an overwhelmingly positive response," says the 35-year-old.
Evaluate yourself realistically
Because your commercial success will be so tied into your personal proficiency at this hobby, reckon with yourself realistically. Are you skilled enough at this hobby that other people actually will pay you for your service or knowledge, or do you just enjoy the heck out of it? Do you have the commitment and disciple to fully pursue this venture when it starts to feel like a job instead of fun?
"When I'm working from my passion, I tend to be blinded by that passion," says Marilyn Heywood Paige, a 39-year-old, serial entrepreneur in Philadelphia whose businesses have included making greeting cards and professional singing. "I can name five things I would do differently now if I was marketing myself as a singer. I wasn't able to see those five things when I was in it because my ego around my talent was in my way."
Understand your top line
It's one thing to get paid for what you already do for no monetary compensation. But if you're going to try to form a company on the basis of buying and selling NASCAR paraphernalia, you need to figure out realistically what kinds of revenues this will generate. Even if it may work in microcosm, you'll want to figure out how to "scale" the business over time.
"Many hobbies don't allow for much leverage and so have a natural limit to their growth," says Rita Gunther McGrath, an associate professor at Columbia Business School and an author on entrepreneurship.
John Vence nailed this principle. He did such a good job of making a loft bed for his son, Michael, for college that word of mouth soon was garnering him dozens of orders from within 100 miles of his Horseheads, New York, home. He treated this venture like the hobby it was for awhile, but then he decided he wanted to make a full-time business out of it. So Vence checked with UPS to learn about how he could ship his beds nationally, and moved the business from his garage to an industrial park. Now, College Bed Lofts should make and sell about 5,000 lofts this year to customers coast to coast.
Figure out how to stand out
You've got to differentiate your hobby-based business as you would any other company. But if the only thing you can rely on is to underprice the competition, you might want to keep your day job. It's harder and harder to sustain a price edge once a marketplace gets populated.
Jimmy and Andrea Zeilinger loved to cook for their family and friends, and they longed to leave their professional jobs and turn their hobby into a business. But when they finally did so in early 2004, they didn't just launch a generic catering business or buy a restaurant: They came up with a snack-making kit for kids. And then they obtained a unique license from Crayola, the crayon company, to manufacture and brand it.
"We couldn't find anything else like this on the market," says Jimmy Zeilinger, a former film director and now co-owner of Brand Castle, in Shaker Heights, Ohio. "And we're going to be coming out with other fun products in 2006."
One last thing
Make sure you don't ruin something that brings you enjoyment by making a business out of that particular thing. Hobbies evolve from passions, but a company requires work and responsibility. Before mixing the two, be certain you've planned it out so the fun doesn't get lost!