How to turn your hobby into a source of income | money
Find out what the market is like for the product or service you are offering. How many other people are offering the same or similar? Do they seem busy? how much do they charge
High-revenue hobbies include making quality custom items like jewelry, wall hangings, buying and reselling vintage fashion, or providing services like music or language classes and gardening.
Also think about where you see these services advertised. Etsy, for example, is a great place to sell crafts, but sites like Fiverr and TaskRabbit are better suited for selling skills like home improvement or writing services.
Make sure you are aware of any regular costs that will come from selling your services or products on these platforms.
Etsy charges 15p for each listing and charges a 5% fee when you sell. If you make a sale directly through the offsite promotion, a 15% fee will be charged.
It’s free to set up on TaskRabbit – it adds a standard service fee and any VAT to your client’s invoice.
Fiverr, on the other hand, takes 20% of every transaction and charges your customers a service fee.
Does the cost justify the profits you can make – or would it be easier to sell through social media, on sites like Facebook Marketplace?
Don’t sign up for something that costs money until you’ve considered your options. The last thing you want is another bill adding to your monthly expenses instead of alleviating them.
Appreciate your time and effort
Deciding on the perfect price point is key to the success of your side project. You want to charge a price that is competitive, will satisfy your customer, and bring in the money you need to turn a profit.
To do this, consider your cost of producing a single item or providing a service. What are the costs for raw materials, shipping and packaging, travel expenses and more? Can you reduce these costs by buying some items in bulk – or by taking advantage of supplier discounts?
Also, if you’re selling something you make yourself, consider how long it will take and how much experience you have. For example, if it takes days of work to make a single piece, the price should reflect that.
Think about how the price you want to charge translates to an hourly rate and decide if that’s reasonable. When you offer a service, it becomes easier – and more comparable to the market.
When in doubt, rather over than under. It’s much easier to lower the price than raise it.
Have a marketing strategy
Think about who your typical customer is likely to be and where they might be looking for a product or service that you sell. Are they social media users or do they use search engines like Google to quickly find what they need? Do they live nearby or are they spread across the country?
It can make sense to do marketing and sales in one place. For example, if you set up a storefront on Instagram or Facebook, you can use hashtags and content to grow your audience on the same platform. These can be set up and started free of charge.
If you want to upgrade for greater reach and management options when you’re more established, there are a number of pricing plans through software companies like Ecwid that let you do so from £19 a month.
Alternatively, you can set up your own website for free through sites like Wix.com and use social media tools purely for marketing purposes.
Leverage classic PR and marketing opportunities by offering commentary, sending samples, or guest blogging to journalists looking for information about your product or area of expertise, for sites targeting the type of audience you’re trying to reach.
Local free magazines and forums are good places to get your name out there.
Be realistic over time
dr Nikki Ramskill has turned her hobby of blogging about personal finance into a small coaching business, Female Money Doctor, which she runs alongside her main job as a family doctor. She charges £1,050 for a bundle of six money coaching sessions and offers free resources and low-cost planning advice through her website for those who need it.
“Stay organized,” she says. “Make time to work on your project and put in a little effort every day, even if it’s just getting a listing on Etsy. Be gentle with yourself and realistic about what you can accomplish around your main job.”
She also recommends keeping marketing and administrative tasks small – and not letting the perfect be the enemy of the good.
“Master a handful of things first,” she says. “No one is great on social media right off the bat, it evolves over time and you adapt. It doesn’t have to be perfect either. For example, don’t spend hours picking a color for your logo. You can always customize it later.”
Stay up to date VAT
Set up an account for your hobby to separate your earnings from your personal finances, and consider using digital tools to keep your taxes under control.
Any ancillary business earning more than £1,000 a year must be declared to HM Revenue and Customs and you will have to file a tax return at the end of January each year or face penalties and fines.
Enzo Ottens is co-founder of fintech app Earnr, which helps you track how much income tax you owe before you make £3,000.
“One of the most important things we try to warn people about in advance is to think about starting a limited company,” he says. “Mainly because of the extra administration that comes with it – the balance sheets, the bank statements – and the hundreds you’ll end up paying an accountant to manage it. We recommend starting as a sole proprietor first.
“Also, many of our customers sign up with HMCR too early – before they’ve made £1,000 in sales. And then they have to file a tax return, even though they may not have made those sales yet.”
Other products aimed at small businesses include NatWest’s Mettle account, which lets you create and send bills and prepare your accounts for taxes on the go, and Mastercard’s SumUp app, which creates payment links you send to customers and clients can send. Both can be set up freely.