Let Me Lobby For A Hobby

Hobbies can be fun distractions from the daily grind. Whether you enjoy making crafts, bird watching, or home brewing, it's all about finding something refreshing and interesting to you. Some hobbies can even turn into side hustles! While no one is going to pay your to find sparrows in your local park, many hobbies where you produce a good or provider a service can make you some extra money. But can you turn this passion into a career? Similar to my blog post on the Gig Economy, it really depends. Below are my ideas for how to decide if your hobby can be a money-maker for you!

I can't believe I built this from scratch... now how do I get in it to drive?

Where Are You In Life?

Everything I mention below is said within the context of trying to make this a legitimate business. But what if you're retired and just looking to keep busy and do something you love, while making a little fun money on the side? Well, don't let me stand in the way. Just make sure you're not losing your shirt on the proposition and have fun with it.

But what if you're trying to make your hobby into a significant portion of your income? Be especially thorough with your cost analysis and think long and hard about this choice. Are you doing it because you need the money or because you really enjoy it? There are millions of ways to make good money if you are willing to work for it. If you enjoy it, that helps you devote the time and energy to make it successful. But don't turn something fun into work - expectations of making money adds stress, and your pastime quickly becomes a chore. In the end, you basically switched one job for another; plus, you lost what was once a fun hobby!

Time and Materials

If you want to monetize your hobby, let's get the financials right so you're not operating in the red. First, I recommend determining your non-labor costs. If you built custom furniture, it's so much more than the wood and hardware used. You have to account for the fixed costs like the tools needed to build the furniture. The goal is to get a handle on the true costs to make the product.

The other component of your costs is time. How long does it take to make your product, and how much is your labor worth? If you're a $400/hour corporate attorney and you make bracelets for fun, good luck producing reasonably-priced items. Realistically, you should do some market research to see what price your product commands, and then back-calculate your hourly rate. The other consideration with time is not just what you spend making the product, it's everything else - marketing, selling, transporting, etc. This all adds up, and if you're being honest about it, you could be surprised how little you're making per hour. Lastly, don't forget hidden costs. If you're selling your bracelets at craft shows, you have other expenses to consider. Do you have to pay to have a booth? What about display cases? That $12 hot dog combo at the craft fair food stand? Roll all this in with your other costs. Oh, and if you're making more than $600/year you will have to file a 1099-MISC for tax purposes. The fun doesn't stop!

Making It Happen

So, if you're not deterred by the risk of turning a hobby sour and think you can capitalize on it, there are several ways to push your wares. Depending on your product, you may be able to sell in-person at events like street festivals or craft shows. Of course, this is typically a full-day commitment with set-up, operating a booth, and tear down. If you have the time to spare, and enjoy interacting directly with potential customers, it may be a good option. But, as mentioned earlier, there is substantial cost to these in-person events.

At the other end of the spectrum, websites like Etsy are built specifically for those of us trying to monetize their creations. Of course, these sites will charge fees for listings and/or sales (fees for Etsy here). However, these fees compared to the time/expense of in-person sales are reasonable. Lastly, there are consignment opportunities that reduce time invested in selling your goods. Besides finding the right retailer willing to do consignment, they will often take a substantial portion of the sales price (think 25-50%) for the privilege. Just like any business, the cost of making sales can be significant, but are a necessary evil.

Verdict

Hobbies can be a fun way to make some cash doing something you like. If you run the numbers, accounting for all costs and time invested, you may learn it's not the best financial return. But if it works out, you could have a great small business for yourself. The key is doing some financial analysis and planning to get an idea of how practical your hobby could become to be profitable. Now, go get yourself a hand-made face mask and be safe out there!