So you’ve been playing with a little business for a while now…selling your crafts on Etsy or sharing your recipes on a blog…leading a workshop or teaching people how to do something fabulous! But it’s just a hobby that you try to fit in when there’s time. And you think you want to make it more than a hobby. If that sounds remotely familiar, this post is for you! I have the privilege of working with women at all phases of business – from “idea” to “7 figure success story.” The one thing they all have in common is the fact that they treat their business like a business. And here’s how they do it:
Five Steps to Turn Your Hobby into a Business
- Set a schedule. One of the perks of working for yourself is that you have a flexible schedule, which means (in theory) that you can work when it’s convenient for you. But that’s also one of the drawbacks of owning your own business – too much flexibility can lead to long, unproductive days. So, if you really want to start treating your hobby like a business, establish your working hours. Even if that means working one hour a day – or working from 10 pm to midnight every day. Figure out what works for you and set a schedule you can stick with.
- Pay yourself a salary. If you’re making money in your business at all, then start paying yourself a salary – even if it’s a small amount. There’s a temptation to invest all the money you earn back into the business but that creates a habit that’s difficult to break once you grow. I have a friend who was in business for five years and had three employees but still wasn’t paying herself a salary – she ended up resenting her employees and wondering why she was working for free! Paying yourself a modest salary will allow you to save for personal expenses or reinvest in the business if you choose. And there may be some tax advantages as well – talk with your accountant to determine the best way to pay yourself at this phase in your business.
- Open a business checking account. If you’re still depositing business income in your personal checking account, it’s time to make a change. It will make your life easier at tax time and it will help you get an accurate picture of your income and expenses. While you are at it, you will probably want to open a merchant account so that customers can pay you via credit card. That will help you make it easier for people to pay you!
- Make it official! If you haven’t established a legal business entity, you may want to consider talking with an attorney. By default, you may be a sole proprietor, which is fine if that’s what you want. But depending on your business, you may need the extra legal protection that comes with an LLC or corporation. And for tax purposes, you’ll want to have a business Tax ID that is separate from your social security number. Once you make the business official, it’s time to upgrade that Hotmail or AOL email address with a real, professional email address with your business name.
- Shift the way you talk about your business. Sometimes the only difference between a hobby and a business is the way we talk about what we do. When people ask what you do for a living, do you answer with confidence and clarity? Or do you mumble your way through some explanation that leaves people confused? If you need help figuring out what to say, watch this short video on four steps to crafting an elevator speech.
Just like having a baby, there is no perfect time to start a business. But if you’re feeling like it’s time to take your business more seriously, then I want to encourage you to take one of these five action steps. Which one will you take this week?