Having a profitable hobby can be one of the most enjoyable ways to make a living, especially if you can turn it into a thriving small business. Who wouldn’t want to generate substantial income doing what they love? The world is full of people who have done just that -- they've taken their hobbies, originally enjoyed solely for personal pleasure, and turned them into income-generating career acts.

Hobbies with tangible outcomes, such as art, sewing, baking, cooking, photography, playing a musical instrument, and the like, can easily move to income-generating career acts. Let's consider, for example, Monica Hemingway, who turned her love for gardening into a fabulous business; Monica is a garden coach, helping people design, install and improve their gardens. She enjoys her hobby and shares her infectious love for gardening with her clients. Brilliant!

Do you, as Monica, have a hobby you would like to turn into an income-generating career act? If so, consider the following three (often overlooked) issues.

1. Understand the psychological shift You are now working for clients, not engaging in a hobby for yourself. You may lose freedoms enjoyed as a hobbyist when you begin to have customers or clients. My sister sews brilliantly – curtains, pillows, upholstery, and every other decorating detail you can imagine. She is truly gifted and refers to sewing her “release,” her way to unwind at the end of the day. Beyond material (and, often, not even for material), she doesn't charge for what she sews, transforming the homes of the people she loves with her designer creations. I always encourage her to charge for what she creates (she is really that good). She always says “no” that she does not want to lose her “release” by placing client demands on her designs. This is insightful and highly relevant for those who view their hobby as a personal outlet and would not want to fill orders to customer specifications. Alternatively, you can take a different approach and create what you like, hoping you’ll find clients or customers who will appreciate and purchase what you want to sell. In this case the trade-off is the preservation of personal freedom enjoyed as a hobbyist for a potential limitation on your range of clients or customers. Your call – just think it through.
2. Know how to value your time along with the tangible costs to price your goods or services – Even if you only want to engage in your profitable hobby for a few hours each week, value your time as if you were doing this full time. Try this: Ask yourself- What income would I (realistically) want to be making if this was my sole source of income? Divide this out to an hourly wage and multiply by the hours you spend on one unit of your profitable hobby. Add in overhead. Add in material costs. Add in taxes. Decide what profit you would like to make (taking into account your level of skill, experience, etc.). Too many people undervalue their time and their other intangible assets (such as their skill level).
3. Know your competition – Hobbyists can operate in a delightful bubble; they can be blissfully unaware of the cost, quality or marketability of whatever they produce. If I want to make melted-bottle spoon rests for myself, family, and friends, do I really care about competition? No. When you begin to market your hobby as a source for potential income generation, be sure you understand the competition and the potential market, the demand for your goods and services.

If you think you may want to start your own business, turning your hobby into an income-generating career act, you should take the Kiplinger quiz for your knowledge on small business start-ups. It is very informative and provides useful information for anyone considering starting a small business - of any size.

Do you already have a profitable hobby you enjoy? If so, I'd love to hear your story.

Paula