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How to turn your hobby into a successful business
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Don't do you homework and you could find yourself losing rather than making money. Stephen Fairley, for example, found that Entrepreneur magazine rated personal coaching as one of the fastest growing forms of self-employment. That sounded promising, but in researching his own book, "Getting Started in Personal and Executive Coaching," Fairley learned that 73 percent of all coaches make less than $10,000 in their first year and that 53 percent of all coaches make less than $20,000 a year.

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That didn't dissuade Fairley from coaching, but it did show him that anybody going into coaching had to find a way to make more money than the average coach. Fairley's method for boosting his profits: coaching coaches and writing books.

Step 3: Take stock of your business sense.
In addition to doing strict statistical research, you also need to look inward and take stock of your own abilities:

  • Do you have what it takes to run a business?
  • Can you have your business and the lifestyle you want?
  • Will you still love your hobby when it's a business?

"Many times we love to do something, but that doesn't mean we love the process we have to go through to enable us to do that thing and make money," says Leslie Ungar, executive coach and founder of Electric Impulse Inc./Igniting Careers in Akron, Ohio.

For example, you may love practicing yoga and have the skills to be a great yoga teacher, but if you don't like selling -- placing advertisements, convincing people to take your classes, glad-handing at trade shows -- then yoga should probably remain your hobby.

"You may love your hobby, but ask yourself if you will love the marketing you will need to do to enable you to 'do' your hobby?" Ungar asks.

Ungar also reminds would-be entrepreneurs that when a hobby becomes a business, the approach to the activity changes. "Will it still be a passion when you have to work at it?" she asks.

A bike-frame manufacturer learned such a lesson. All went well until he decided to open a bicycle store. While he loved designing and crafting bike frames, he hated managing people at the store and dealing with retail customers. Two years after the store opened, the entrepreneur closed the doors to again focus strictly on manufacturing. "I've never seen him happier," says a friend.

Step 4: Be realistic about how it will affect your life.
You also have to consider what impact your entrepreneurial venture will have on your family. Keep in mind that to turn a hobby into a business requires a lot of work, including late nights and weekends.

"You have to do a lot of soul searching before you go ahead," says Klein, who also is president of Financial Design Center. "What effect will having a business have on your family and your long-term financial goals? Does it really make sense?"

If you have small children who require a lot of care and attention, you might want to reconsider plans to become an entrepreneur. But if your children are grown and you're close to retirement, now may be the perfect time to start your own business.

 
 
Next: "They improve, adapt and overcome."
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Tax benefits of turning your hobby into a job
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