Financial planning advisor Martin Lane from money.co.uk provides his tips to Business Advice readers on how to turn a pastime into a flourishing startup.
Whether you’re a budding photographer, love to fix and maintain bikes, or make fun bespoke swim hats, making money from your hobby is easier than ever before.
Websites like Gumtree, Amazon and eBay allow you to sell your products and services online to thousands of potential buyers. Promoting what you want to sell is cheaper than ever too, with a variety of social media channels available to market what you want to your target customers.
Do your research
Jump online and identify your potential competition. It’s important to make sure there are customers who will actually want to buy what you produce.
Ask your friends and family to fill out a survey so you can measure demand. Ask them things like how much would they pay and what’s important to them when selecting certain products or services.
Pinpoint your unique selling point
If there are lots of other people offering similar products or services, you’ll need to decide what your USP is. This is something you offer that your competition doesn’t, it could be a unique design, extra product feature or anything else that makes what you’re selling stand out.
Work out how much to charge
Setting the right price is crucial for making your new business venture a success, pitch it too low and you won’t make a profit, too high and no one will buy what you’re selling. Start by working out how long it takes and how much it costs you to make what you’re selling.
Factor in any raw materials you need to buy if you’re making things and remember to include the rise in utility bills if you plan to work from home. Check your insurance policy documents because working from home could affect your cover and remember to take into account how much national insurance and tax you’ll need to -pay as well.
All of this information should give you a figure you’ll need to charge. You will then need to do more research to see if you come in cheaper or more expensive than your competition. You should be able to work out whether or not turning your hobby into your day job is actually worth your while
Put together a marketing plan
You can build your own website these days for free using services like Word Press and Wix. Social media is an excellent way to spread the word too in the early stages. Remember to put some cash aside to boost your marketing and get great at explaining what it is you do in as few words as possible.
Get help with your tax return
Bear in mind if you start to earn money from your pastime, HMRC will consider you partly self-employed. You’ll need to register with them to declare your income and work out your own tax and national insurance contributions. Speak to an accountant and visit the HMRC website to get a better understanding of what is involved with setting up on your own.
Martin Lane is an executive at www.money.co.uk
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