10 Tips to Turn Your Hobby Into a Business .

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Susan Wilson Solovic

What do you love to do? I enjoy cooking and playing the piano when I have extra time in my schedule. Now, imagine if you could turn that joy and passion into a lucrative business venture.

Many people today are doing just that. Tired of worrying about becoming the next pink-slip victim, sick of dealing with office politics, or simply burned-out on their traditional career paths, they're finding ways to turn their avocation into a full-time vocation.

1. Evaluate your "joy" factor. Could transforming a favorite leisure activity into a business be too much of a good thing? Some people find that when they make something they love a full-time endeavor, they lose the joy they had for it. Do some soul-searching to determine how much you truly love your sideline – and whether you'd continue to take pleasure in it after turning it into a commercial enterprise.

In 2006, Kristin Omdahl parlayed her passion for knitting and crocheting into Styled by Kristin Inc., a Bonita Springs, Fl., provider of needlework patterns. The single mom says she now spends about 55 hours a week on her design work, up from 20 when the activity was just a hobby. "If you're passionate about something, it justifies the long hours," Ms. Omdahl says. "My hobby consumed me and I wanted to spend every waking hour knitting and crocheting, designing, sketching, creating -- and I knew that the only way I could spend that much time doing it is if I made it my work, too."

2. Evaluate the market. Say you enjoy cake decorating, and your family and friends always praise you for your work. Are there people who would be willing to pay you for your craftsmanship? And has your talent risen to the level of other players in the marketplace? Be honest with yourself. Remember, family and friends tend to always say nice things. If the answer is yes, then ask yourself how you'll stand out from the competition. Perhaps you could fill a special niche or undercut competitors' fees.

3. Name your price. It's important to charge enough for your product or service to make a profit. To determine the right price, you'll need to add up your expenses and factor in intangibles, such as the time you spend on labor. Then ask yourself: Will people be willing to pay that amount? (See related article, "The Price Is Right. Or Is it?")

4. Try it out. It's always a good idea to test the waters first, so consider starting your business on a part-time basis while maintaining your day job. Just remember that customers will still expect the kind of service they'd get from a full-time operation. Be ready to put forth the effort and manage your business growth carefully.

5. Do the math. Estimate your start-up capital, the amount of money you'll need to get up and running, and your working capital, the amount you'll need to stay afloat until you become profitable. This way you'll know what you can afford to spend your money on at first and what can wait until later, helping you to avoid running out of funds too soon. (For help, try the WSJ Startup Calculator.)

Meanwhile, try paying off as much personal debt as you can. "It's tough to make two car payments, make a mortgage on an over-leveraged house, pay off student loans, and chase a dream at the same time," says Rusty Meador, who early in 2009 turned his passion for woodworking into Beach & Barn, a home-restoration company in Wilmington, N.C. Being debt-free makes starting a business more fun and less stressful, he adds.

6. Make it real. Start treating your hobby like a genuine business instead of just a pastime. Set up a bookkeeping system to log your income and company expenses. Open a business checking account and credit card. And consult with a legal or tax professional about whether you should create a separate legal entity for your start-up, such as a corporation or limited liability company.

7. Choose a name. Your business name is the beginning of your new brand, so choose it wisely. Make sure it's easy to remember and spell, and indicates something about the nature of your business. Also, check if the website address for the name you've selected is available. You don't wan to confuse customers by using a name with a different Web address. (For more, see related article, "And Now, the Tricky Part: Naming Your Business.")

8. Decide on your distribution strategy. How are you going to sell your product or service? Where are you going to be located? Some hobby-type businesses sell only through community fairs, flea markets and on the Internet. Others choose to sell via consignment opportunities. If you plan to work from home, you need to make sure home-based businesses are permitted in your area. Check with your neighborhood association as well as your municipality about what's required, whether that's a license, permit or special approval.

9. Build a Web presence. Every small business needs a Web presence today. It is the modern-day equivalent of being listed in the phone book. However, a credible website doesn't have to be flashy or expensive. There are many low-cost Web design and hosting tools online that are easy to use. Alternatively, you could create a blog or social-media profile to represent your business, or you could list it in an online business directory. Another option is to set up a store within an online marketplace like eBay.com or Etsy.com. Some start-ups have also found success selling products on Craigslist. See "A Web Presence Without a Website."

10. Create a marketing plan. If you don't have funds to spend on marketing, there are excellent resources that cost next to nothing, save for your time input. For example, you could create a Facebook fan-page and offer incentives to your followers. You could also stay in communication with repeat and potential customers via an e-newsletter.
Of course, these aren't the only things you'll want to think about before heading down the entrepreneurial path. (For a list of newbie mistakes you'll want to avoid, read "10 Mistakes That Start-Up Entrepreneurs Make.") Another you may want to consider: finding a new pastime. Here's to your success.