Turn Your Passion Into A Business
Small business has become big business in the U.S., with more than 32 million small businesses meeting the marketplace’s demands in various ways. This large number does not include companies that are not registered. Many people earn money doing things they consider to be a “hobby.” For example, the barber who cuts hair in his garage or the lady who sells cakes to make ends meet. Some novice business owners are doing what they love but fail to see the hobby’s income potential. I encourage you to step outside your comfort zone and explore ways to turn your passion into profit.
Here are a few basics about business startup if you are ready to take the next step. I must disclose that I am not an attorney or a CPA. I have been a business owner for many years, and my advice comes from my personal experiences. I recommend that you consult with an attorney who has in-depth knowledge about business such as Dan Branum, located on Main Street in Olney. You may also consider consulting with a CPA—one of the local CPAs is Kathy Myers, located on Main Street next to Olney Enterprise.
The first step is to determine if there is a need in the marketplace for what you are offering:
Determining if there is a void in the marketplace is an important step that most people overlook when starting a business without having a plan. I love making pecan pralines. Sometimes the pralines turn out perfect, and 5 percent of the time, they flop. Several people said they enjoy my pralines even when they have to eat them with a spoon. Go Figure. I have often asked myself if I could turn my love of candy-making into a business? Perhaps, but will be the return on investment (ROI) concerning profit? Who are my competitors? Is their product better than the one I’m offering? Do people in my local market area enjoy eating pecan pralines? If so, is there room for me in the candy-making arena? At the end of the day, is it worth it?
The next step is to analyze the income potential for your business idea:
The IRS will tell you that a hobby is not a business. In other words, people who open businesses do so to make money. You must consider the amount of time you have to engage in running the business and performing the necessary tasks. Then you must determine how much money it will take to operate. Compare that to the income potential to calculate your ROI. Keep in mind that the first three years will be challenging and may likely result in either a loss or you may break even; the break-even analysis is a crucial component of your business plan.
After you have proven there is a need for what you are offering and can earn money or at least breakeven with your idea, you should move on to the next step, the business plan.
Business planning is an essential facet of starting a business. The business plan comprises an execu tive summary, which is the beginning of the business plan but is the last thing you write. You will include a thorough description of your company. You will research the market and include the market and competitive analysis. Another key component is the organizational chart that outlines your management team, the chain of command, and operations logistics. You will provide details about the product or service you are offering, along with your plan to market the product or service. The most important part is the financials, which is what most investors focus on the most.
Don’t let anyone or anything defer your dream. Be smart about your approach to launching a business. Determine the need and income potential, and get started with writing your business plan. One of my favorite scriptures in the Bible is Habakkuk 2:2 (ESV), “And the LORD answered me: ‘Write the vision; make it plain on tablets, so he may run who reads it.’”