Turn Your Hobby into a Busine$$ Harry Woloschin Emeritus College Fall Are you a hobbyist making crafts that you hope will sell, OR

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1 Who Are You? Are you a hobbyist making crafts that you hope will sell, OR Are you an artisan that makes what WILL SELL? Are You Ready To Take The Next Step? Getting Started Creating Real Business Goals Questions to Ask Yourself, Take stock of Your Business Sense What are my entrepreneurial goals? Do I have a business plan, and is it viable? Am I ready, willing and able to handle the business side of my hobby? How much time and effort am I willing to invest? Do I have the support of my family and friends? Do I need a motivational rah rah self-development pump up sessions? Work from Home, or use an outside office/manufacturing site? How to price my work? Where are my customers? How do I know when it s time to give up? What can I do myself, will I need outside help? Be realistic, how it will affect your life Consider the impact your venture will have on your family. If you have a family that requires a lot of your time, care and attention Page 1

2 Getting Started Opportunity Assessment Market Research: Do your homework! Business Model: Build one that works! Business Plan: Document your plan Business Formation: Make it legal Start-up Funding: Commit enough money and time Research Your Business Idea Will people pay me for my product or service? Is there an economical way to distribute and sell my product or service? Market Research Intellectual Property Patents Trademarks / Service marks Copyrights How to Evaluate Your Business Idea Is There a market for your product, How much money you need to start-up and run the business Who are your customers and competitors? Page 2

3 Your Business Plan What sort of capital do I need to start the business? When can I expect to make a profit? How much income can I expect within a year, two years and up to five years down the road? How much you'll be spending to produce this hobby or item or whatever What you can sell it for How much time is involved? Products and Services Strategic and Market Analysis Marketing Plan Is It a Hobby or a Business? The IRS may have already answered that question Work from Home, or use an outside office/manufacturing site. Do you carry on the activity in a business-like manner? Do you take the time and effort you put into the activity indicate you intend to make it profitable? Do you depend on income from the activity for your livelihood? Are your losses due to circumstances beyond your control (or are normal in the start-up phase of your type of business)? Have you changed your methods of operation in an attempt to improve profitability? Do you, or your advisors, have the knowledge needed to carry on the activity as a successful business? Were you were successful in making a profit in similar activities in the past? Does the activity make a profit in some years and do you expect to make future profits from this activity Page 3

4 Money Management Considerations Getting Paid Accounting/Banking and Record Keeping Profit & Loss Taxes Structuring your business Cash Flows Research you competition's pricing Base your retail prices on all of your costs DON T FORGET TO PAY YOURSELF! Advertising and Marketing Join a craft guild or group with similar interests Know your customers: Set up a website and sell on-line Identifying and reaching your customers, Publicity (free & Paid) You will need to learn a lot about non-hobby topics: Business plans Finances and taxes Advertising and marketing Computers and the Internet, To name a few. Page 4

5 Do Not! Be a know-it-all!! Think you will get rich quick!! Be greedy!! Overlook the importance of a solid foundation Intermix your hobby/business and personal expenses Take legal shortcuts Forget about the Law of Unintended Consequences better known as MURPHY S LAW Deadly Mistakes to Avoid Poor management Lack of experience Poor financial control Weak marketing No strategic plan Uncontrolled growth Poor location Inventory control Incorrect pricing Inability to be an entrepreneur Under-capitalized (lack of money!) Page 5

6 Final Considerations Resources Shipping & Mailing Crafts as Fine Art In Closing, Good Advice Know your business in depth Develop a solid business plan Manage financial resources Understand financial statements Learn to manage people effectively Stay focused, stay in balance! Be creative! Have Fun!!!!! Page 6