Making money from your hobby may seem like a dream. Thousands of Brits are making it a reality, but what is involved in pursuing your passion full–time?
Starting out on your own and pursuing your hobby full-time is a dream many of us have shared at one point or another. However, when responsibilities start to pop up, working a risk-free nine-to-five with a steady cash flow seems like a much more viable option.
Despite this, the dream of financial and career independence lives on for many Britons, as more and more are turning to their hobbies to earn cash alongside their normal wage, and many plan to convert their hobby into their own business.
To get a closer look and find out who is dreaming of making the jump, we have delved deeper into the business of hobbying by commissioning a survey into this entrepreneurial area. We have discovered that 70% of Brits with an additional source of income think it is necessary to have a side project as an extra means of making money. With so many using their passion to boost their income as well, we are asking: why are so many opting to earn extra cash this way?
Making money from hobbies
Some extra cash in your pocket is always appreciated and our respondents agree, with 36% saying they have started up their side earner because they like having more money on top of their current wage or pension. Whether they are using the additional funds to pay bills or make their wage go further, a large proportion think it is necessary to turn to their hobbies to bring an extra injection of cash into their accounts.
An additional source of income is also a great way to boost your lifestyle. 28% of respondents want to build on their savings and 13% want to save to go travelling. Whether jetting off around the world of adding to their savings pot, it appears the extra cash is taking not only taking the pressure off the finances for our hobbyists, it is helping them do more too.
What hobby businesses are out there?
With so many hobby businesses popping up, it is interesting to know what these savvy start-up owners specialise in. Among the most popular responses, we found many are making spare cash as freelance consultants, writers and designers. There is also plenty earning money teaching classes or offering beauty services on the side.
Although these project pursuers have chosen to expand their passions into additional income, how likely is it they will turn their extra-curricular work into a full-time career? Although more than a third (34%) of those we surveyed said they have not considered turning their project into a business and do not intend to, 28% are considering the transition. Right now, over one in ten (12%) are in the process of turning their passion into a business.
Although it is something many of our respondents have thought about or might consider, turning that cash-earning hobby into a full-time business has a number of considerations. Here are some top considerations for those looking to become professional hobbiers.
What are the practicalities of setting up a hobby business?
So what does it take to turn that passion project into a full-time business? Setting up on your own is no easy task but there are preparations you can make for as smooth a launch as possible. From resources to funding plans, there are plenty of ways to prepare yourself for the challenges of starting your own company. Think about these practicalities well in advanced and you will be one step closer to making your hobby business dream a reality.
What is your project? Before you turn your favourite hobby into a smart earner, you have to think about resources. Consider how time consuming your chosen hobby is and if you can realistically fit in all the work on your own. Different projects require varying input levels, which could even mean hiring an employee. Weighing up exactly how much you can personally commit is a great place to start.
What do you need to get the work done? Different roles need different levels of spend on equipment - if you are starting a cooking company, you will need far more equipment than a freelance writer. You will need to manage stock, check on expiry dates, provide storage and even register with the Food Standards Agency to pass their inspections. Once you are thinking about what you need to get started, you can begin to address these issues well in advance.
What does setting up a business involve? From finances through to legal requirements, it is most new business owners will have a lot to learn regarding the ins and outs of setting up a company from scratch. Before you branch out on your own, find out exactly what is involved in the early stages of the process. Subscribe to entrepreneurial websites and listen to podcasts to hear from those who have successfully launched businesses. Websites such as YouTube can provide some great food for thought in an easy to digest format, and may help get your ideas going.
Are you financially ready? Expect to spend to set up your own business. In the early stages there is a lot of costs to think about, so you need to have the money to take on those bigger start-up payments. Start by saving up a lump sum to draw from, or even take out a small business loan to help you get started – provided you can afford the repayments at this early stage.
The finances of a hobby business
Setting up a business from your hobby might be a dream for many. However, be sure to include the financial management elements into that vision of their own company, as it is a critical element to any business. You will take full responsibility for all money going in and out of your company to begin with. Before you get started, think about how you would handle the money and look into what this would entail. When we asked what would stop our respondents from turning their side project into a full-time business, they highlighted money management as one of the key reasons. Specifically, 28% said managing tax would put them off the idea completely.
Tax is a huge part of setting up on your own - every business earning £2500 or more a year needs to declare this extra income as it is taxable. Despite the importance of tax, we found 45% of Britons earning from their hobby did not understand everything about the UKs small business tax process. This information is essential to a small business, and definitely something you need to be familiar with if you are turning that side-earner into a viable company.
Before getting started, read up on the financial processes and responsibilities of owning your small business to avoid any surprises in the future.
Funding a business start up
Managing the finances of a business is quite different from tackling your personal finances and a quarter (25%) of our respondents said managing cash flow would put them off starting their own business. If this is a concern, luckily there are some ways you can simplify your money management.
Saving up in advance is a great way to start off strong. If you have got cash specifically set aside, you can put it against any bigger payments, so you are not short on money as you begin setting up. To save the right amount, you will need to be planning months or even years in advanced to get enough together.
If you would rather things moved a little more quickly, a business or secured business loan is definitely worth considering. A boost to your funding pot could help in many ways. Kickstart a marketing campaign to get word out there; shore up your finances to get much-needed equipment, or even buy supplies for your first big job. With a small business loan, you can pay back the money you have borrowed in regular monthly payments, helping you streamline your cash flow. If you are paying bills or renting space, you can consolidate your outgoings into one monthly payment, taking the stress out of your finances.
If you are still not sure whether to take the plunge, our hobbyers have identified plenty of benefits to turning their hobby into a full-time job. Two in five (40%) say they would love the opportunity to work from home and enjoy more flexible working hours, while more than a quarter would jump at the chance to be their own boss.
Whether you enjoy making a little extra cash with your passion project or you plan to turn your side-earner into a thriving business, making money from hobbies is a brilliant way of getting the most out of your favourite pastime. If you need a little financial boost to get started, opt for a secured business loan to kickstart your hobby business.