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10 tips for a thriving hobby business

Take a hobby you love and turn it into a business -- nothing could be simpler, right?

Wrong. To be a success, you need a little marketing savvy and a lot of elbow grease. Hobby entrepreneur Barbara Brabec, author of "Handmade for Profit," offers the following 10 tips for getting your business off the ground and keeping it flying high.

1. Determine if a market exists. Read books, study the Web and get involved in discussion lists -- do whatever it takes to make sure your product or service has legs in the real-world marketplace.

2. Don't limit your market. Find out where your product is in demand and establish a presence there. Your product may not sell locally in a down economy, but may sell well in more affluent areas.

10 tips for a thriving hobby business

3. Don't overlook mail order. Not everyone is on the Internet. If your product appeals to nontechnical or rural folks, try reaching them via traditional mail.

4. Test market your product beyond friends and family. Those who care about you are less likely to be brutally honest about your product or service. Unfortunately, you need such unvarnished feedback to help determine the true appeal of whatever you are offering.

5. Don't waste money on high-priced marketing gimmicks. Books are cheap and the Internet is free. You'll find all the marketing information you'll need for little or no outlay.

6. Price it right. Be sure to charge for your time and overhead when setting a price or you will not have sufficient resources to grow the business.

7. Don't overlook the tax benefits. Get to know your Schedule C. There are plentiful tax deductions available when you are self-employed and work from home. Consider forming a business entity (partnership, limited liability company, S corp or C corp) to mitigate the risk of an IRS audit.

8. Don't barter, even when tempted. There can be nasty tax consequences to bartering. Instead, cultivate business relationships where you refer business to one another.

9. Find a mentor. Look for the support of someone who already has been through what you're going through and can show you the way. Don't be afraid to ask; most successful entrepreneurs had mentors once, too.

10. Network. Talk to others who share your interests, in person or online. As you learn, you will naturally become a resource for others.

Bankrate.com's corrections policy
-- Posted: March 21, 2008
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