Many people know that small businesses are actually a huge part of the United States economy. Small businesses make up 99.7 percent of U.S. employers and provide Americans with 64 percent of net new private-sector jobs. But did you know that 52 percent of small businesses belong to home-based business owners? So, if you’ve been thinking about turning your hobby into a business but have been hesitant to take the plunge, with these encouraging statistics, maybe now is the time to follow your dream.
It’s that “can-do” attitude that helps them succeed, but it can also have dangerous consequences. You don’t know what you don’t know and it is okay to admit that. Seek good advisors and mentors to help you start and grow successfully. The recent Sage Business Index found that nearly half of American business leaders described themselves as risk takers. It’s this type of risk taking person who not only sees the risk paying off with a great reward, but also keeps working toward and past the original reward even through the rough, slow and economically challenging patches.
Before taking the leap, do your homework! There are two important things to research. First, you know that you have a great business idea or product, but is there a demand in the marketplace? Are family and friends impressed with your hobby and have they encouraged you to take that next step? Not only should you see what competitors are out there, but look to family, friends, friends-of-friends, colleagues, and online communities to see if there is an interest in your product in the market. Second, can you charge enough to make a viable business? Can you be profitable? Many businesses get started and quickly realize that they can’t charge a price that makes their business profitable. If you’re working harder than you’ve ever worked before, you need to be able to make money.
Another important question to ask yourself is if you will be able to maintain your joy factor. Most people with a hobby really enjoy it, but when you turn it into a business, you are now working 24/7 and you will need to factor in the business aspects and time commitment. Will you still have the same joy factor or will your hobby now become a chore?
There were three top challenges that entrepreneurs faced when starting their own business as reported in a recent study conducted by Sage. First, many struggled with the work/life balance. More surprisingly were the preceding two challenges: figuring out how to do marketing and taxes. What’s surprising about this is not that many admitted that they experienced these challenges, but that they also confessed they did not invest in software specifically designed to make these processes easier for start-ups. Instead, they turned to family and friends, rather than experts and professionals. It’s important to build a solid network of people around you who aren’t just your family and friends, but are professionals and have substantial experience. Technology and management software can also smooth out your processes around tracking finances, projects, and customers – much easier on your stress level and your schedule!
One of the first steps to starting your business is to develop an initial business plan that will serve as a starting point and evolve with you and your business. A business plan can sound overwhelming to some, but understand that you don’t need an MBA to write one and there isn’t necessarily a right or wrong format. It’s merely an exercise of thinking through important questions and details about your business. Who are you customers? Where are you going to find them? How are you going to reach them with your marketing messages? Ask yourself the kinds of questions a journalist would ask about every aspect of your business – who, what, when, where, how and why.
Still hesitant about turning your hobby into a business? Why not try it part time? If it is doable with your lifestyle and finances, working on your new small business part time is a great way to test the waters. Now that you have some answers, what are you waiting for?!
Gabrielle (“Gabie”) Boko is Executive Vice President of marketing for Sage North America, a company focused on helping small and medium sized businesses realize their ambitions and achieve success.