How to earn money from a hobby or skill
Could you make a profit doing something you love?
Whether it's making music, baking cakes or repairing furniture, many of us spend a good deal of time and energy on hobbies or skills outside work. Some activities cost little or nothing, while others may require a considerable investment. With some effort, though, you may be able to convert your hobby into a moneymaking enterprise to supplement your primary source of income.
Start by brainstorming a list of hobbies you enjoy and skills you practice regularly. Include as many activities as possible—even those you wouldn't suspect could make money.
Crafts, jewelry and furniture are just a few examples of products that tend to sell well. But you don’t have to create “stuff” to make money form a hobby. Many skills translate into profitable services. If you speak a foreign language, you could tutor. If you like to play music, consider offering lessons. If you're a skilled photographer, try offering your services for weddings, graduations and other events.
If you decide to make things, determine how much it costs to create each item—money you won’t get back until the items sell. If you're interested in providing a service, think about how much money you need to invest in supplies or equipment.
You’ll also want to consider whether there’s a market for your product. For example, if your entire community speaks the same foreign language you do, you may have to look for students outside your immediate area. If your chosen product or service will require marketing, consider any costs that may be associated with that, as well.
Beyond practicality, be sure to choose an activity you enjoy, so you'll stay motivated through challenging times.
Now you need to connect with potential customers. Start by getting in touch with friends, family, neighbors and colleagues. If you're a photographer and your friends have children who are graduating or getting married, offer to take pictures at a price below the going rate. Encourage your friends to spread the word about your business, and make business cards to expedite your word-of-mouth marketing.
Supplement these efforts by advertising locally and connecting with people in your industry. Consider posting fliers in local businesses and community centers, as well as attending nearby trade shows, exhibitions, markets and fairs in your area of expertise. Every little bit of exposure helps—but remember that advertising can get pricey and offset your profits. You may want to employ one tactic at a time to control costs.
If you want to tap into markets beyond your immediate area, as well as boost visibility on your home turf, you need to establish an online presence. Social media is a great place to start, since it comes with a built-in customer base of friends and followers.
Beyond social media, you can advertise services on Craigslist, while eBay and Etsy are popular sites for selling goods. If you're a photographer, post photos for sale on sites such as Shutterstock. If you're a writer, advertise your services on sites like People Per Hour.
While your business may have grown out of your passion, once you get going you need to put some time into managing your finances and the money you earn. Develop a business plan and stick to it. Keep an accurate record of your business expenses, as well as your earned income to ensure you’re making a profit. You want to ensure the effort is worth your time, and spot any financial problems before they get out of hand.
Also save receipts from business-related purchases. Your earnings from freelance work will be subject to income tax, but you may reduce your taxable income if you had tax-deductible expenditures. Be sure to keep any evidence supporting the deductibility of those expenses, and check with your tax advisor. An attorney can help you determine how to form an appropriate business entity, as well as help with questions about licensing and insurance.
If you have questions along the way, the Small Business Administration provides a number of resources for entrepreneurs at different stages of starting a business.
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