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How to turn your hobby into a profitable business

The key difference between doing a hobby and running a business? Simple: revenue and profit. 

Find out what skills you'll need to start a successful business out of that pastime you're passionate about.

The UK craft scene is booming with more people buying homemade crafts online than ever before. 

According to the Crafts Council, 10.3m Brits buy crafts online - a three-fold increase over the past 10 years - with crafting businesses contributing £3.4bn each year to the UK economy, according to the Creative Industries Council.

With over 11,600 craft businesses in the UK, around 88% of craft businesses operate as sole traders. 

That's in addition to the estimated 220,000 active craft sellers in the UK, according to online craft marketplace Etsy. 

With people under 35 the largest buyers of craft in the UK, it's a market that has the potential to keep expanding.

Turning your hobby into a business isn't just about tapping into a hot consumer trend. 

Hobbyists-turned-entrepreneurs often experience a high degree of job satisfaction running a business focused on a hobby they love. 

While pastimes such as photography and jewellery making can be personally rewarding, turning a hobby into a business demands a shift in mindset that requires planning, determination and perseverance.

From crafting to business success

Susan Bonnar knows all about the perseverance needed to make the leap from hobby to a full-time business. 

Founder of The British Craft House - an e-commerce site selling handcrafted artisan gifts - Susan started out hand-making cards to generate extra household income.

“I started making cards and I quite enjoyed it,” says Susan. 

Soon, friends and family asked for bespoke cards and she started selling her handmade cards in the village shop. 

Guestbooks, photo albums and keepsake boxes expanded the range, with Susan selling on eBay and Etsy. 

As a result, she says she experienced soaring demand from customers in the US.

Susan quickly spotted the opportunity to promote fellow crafters and emailed a survey to 700 hobbyists to gauge interest in an online crafting marketplace. 

“My poll ended up in my business plan as something like 94% said they would be interested in it,” she says.

Susan took out a £12,000 Start Up Loan in 2019 to fund the design and development of her online marketplace. 

The British Craft House now helps over 450 craft sellers reach an audience and the business has tripled its revenue during the Covid-19 pandemic.

How to turn your hobby into a business

What does it take to make the leap from pastime to a full-time business?

“Make sure your business plans are in place,” Susan says. 

“And you must be agile, especially if you're dependent on other people; you have to be able to change direction.”

The key difference between enjoying a hobby and running a business is that a business is about generating revenue and making a profit. 

You'll need to draw on a wide variety of skills - from business planning to marketing - that may not be second nature to hobbyists.

1. Research your market

Compliments about your baking or positive feedback about your photography don't automatically guarantee business success. 

You may be great at your hobby, but the litmus test is whether there is demand for it and if customers are willing to pay enough for you to make a profit.

Before giving up the day job, research the market for your products or services. 

Look at similar businesses, examine how much they charge and identify the types of customer you want to target. 

Research where customers buy from and the types of marketing messages used by competitors.

Read more about different market research techniques.

2. Develop a business model

A business model is how your start-up will make money. 

This could range from paying for your time, such as photography services, to single product sales, such as selling jewellery online. 

A business model is important as it allows you to more easily determine costs, how much you need to charge and how many customers you need to be successful.

Ideally a business model should be scalable allowing you to grow your business by, for example, making more products and generating more profit as your business expands.

Read more about business planning for start-ups.

3. Think like a business

Switching gear from hobby to enterprise means you need to think like a business. 

That means writing a business plan that includes financial projections, business costs and assumptions about customer sales, revenue and profit. 

You'll need to work out how much money you need to get started, any staff you need to hire and how you'll market your business to reach customers.

4. Stay on top of any regulations

Baking cakes for family members is very different to selling online to consumers. 

Make sure you're aware of any regulations your business needs to follow. 

For example, you may need to register your food business with your local authority and follow specific health and safety rules.

The Food Standards Agency has a guide on the regulations that apply when starting a food business from home. 

You'll also need to be aware of consumer rights when people buy from you, including their right to return products they've bought online.

5. Get organised

The move from spare-time hobby to full-time business can become overwhelming. 

Aim to be as organised as possible. 

Use time-management tools, office software, to-do lists and calendars to plan your day and note important deadlines.

It's a good idea to dedicate space at home to your business. 

Try to create two areas - one for your creative work such as jewellery making, and another area for working on your business, such as a desk with space for a laptop, diary and to-do list.

6. Sell online

Selling at local events may be a great way to get started, but to really grow your business you'll need to reach a wider audience. 

Look to sell on dedicated crafting sites such as Etsy or The British Craft House. 

You'll usually pay a share of your sales to the online marketplace, but you could reach far more customers.

Alternatively, build your own e-commerce website. 

There are lots of free tools for creating a website, and you can pay a company to host your website for a few pounds a month.

7. Expand your reach

Invest in marketing your business to relevant customers. 

This can be through social media channels and groups, to using PR to get your products featured on magazines and websites that your customers may read or visit.

Encourage customers to review your business on sites such as Google or Trustpilot and follow your social media channels through competitions and giveaways. 

Offer discounts to get customers to sign up to email newsletters so you can send them details or new products or offers.

Download our free marketing toolkit to get started.

8. Build your network

One of the many benefits of turning a hobby into a business is it can be easy to find like-minded people who are passionate about the same activity. 

Look for online communities, such as painters, writers, photographers and sculptors, to showcase your work, find support and get inspiration.

Learn with Start Up Loans and help get your business off the ground

Thinking of starting a business? Check out our free online courses in partnership with the Open University on being an entrepreneur.

Our free Learn with Start Up Loans courses include:

Plus free courses on climate and sustainability, teamwork, entrepreneurship, mental health and wellbeing.

Disclaimer: The Start -Up Loans Company makes reasonable efforts to keep the content of this article up to date, but we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. This article is intended for general information purposes only and does not constitute advice of any kind, including legal, financial, tax or other professional advice. You should always seek professional or specialist advice or support before doing anything on the basis of the content of this article.

The Start-Up Loans Company is not liable for any loss or damage (foreseeable or not) that may come from relying on this article, whether as result of our negligence, breach of contract or otherwise. “Loss” includes (but is not limited to) any direct, indirect or consequential loss,  loss of income, revenue, benefits,  profits, opportunity, anticipated savings, data. We do not exclude liability for any liability which cannot be excluded or limited under English law. Reference to any person, organisation, business or event does not constitute an endorsement or recommendation from The Start-Up Loans Company, its parent company British Business Bank plc, or the UK Government. 

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