Turn Your Hobby into a Business

Take Charge America Has 6 Tips for Success

PHOENIX, Ariz. (June 29, 2006)... Do you have a knack for scrap booking, or do you enjoy tinkering with old cars? Hobbies like these are often the driving force behind many successful entrepreneurial businesses, but you need more than passion to secure your financial future.

According the Small Business Administration (SBA), about 34 percent of new employer businesses fail within the first two years, and 56 percent buckle in at least four years. Mike Sullivan, director of education for Take Charge America, a non-profit credit counseling agency, says careful planning is the key to success.

“Running a small business is hard work and unexpected situations always arise,” he said. “However, two things can dramatically increase the chances that your business will survive: researching all aspects of the business market, and thoroughly evaluating your current and future financial states.”

In fact, small businesses are vitally important to the U.S. economy. The SBA reports that small businesses nationwide have generated 60 to 80 percent of new jobs annually over the last decade.

Sullivan notes that many of these businesses fail because of a lack of experience, poor location, bad credit management and a lack of planning. He offers six tips to help prevent that from happening to you:

• Is Your Hobby Business-Worthy? – Think about the location where you want to start up your business. Does your hobby help solve a problem, teach something, offer services or fulfill a need that is not available in this area? If so, how strong is the competition in this area? You also need to examine the potential customer base. Is there enough clientele to support your business venture?
• Evaluate Your Time & Lifestyle – Many entrepreneurs underestimate the amount of time it takes to turn a hobby into a profitable business. If you have small children, will the 40-hour plus work weeks be too taxing on family matters? Turning your hobby into a business may require many late nights and weekends.
• Research, Research, Research – I can’t really stress this enough—do your research. After determining whether your hobby is business-worth, examine trends in the job market and spending habits. If your business carters to luxury items, how is the economy doing? Can your customer base afford extra luxuries right now? Also, scrutinize internal aspects of your business. How large will it be? How many employees will you have, if any? What happens in the market shifts? Can you afford to stay in business?
• The Truth about Finances – Be realistic about how much money it takes to start up a business and know how much cash you need to invest at the front end. When can you expect to turn a profit while accounting for all of the unknowns? Being slightly pessimistic could be a good thing. So, assume that it will take more time, more money and more dedication than you think.
• Create a Business Plan – Now that you’ve done your research, it’s time to take action by creating a business plan for potential investors, lenders and other affected parities. The SBA offers a business plan format online at www.sba.gov. The business plan explains exactly how the business will be run, finances and company goals.
• Implement the Plan – Now, it’s the fun part. You’re prepared mentally and financially, so it’s time to jump in. Follow the advice of other successful business owners and financial experts. Be flexible and prepared to roll with the punches. No matter how carefully you plan, there will always be challenges and surprises.

About Take Charge America
Founded in 1987, Take Charge America, Inc. is a non-profit organization headquartered in Phoenix, Arizona. TCA offers a variety of services including financial education, credit counseling, and debt management. To learn more about TCA or its programs please call 1-800-823-7396 or visit www.takechargeamerica.org.