1. The first step in determining if this is a good option for you is to assess the commercial viability of your hobby. You need to ask yourself you have something that people want or need and they will be willing to pay for. For example, you may be an excellent cookie maker. In fact, everyone who samples one of them may tell you that you should sell them. However, before starting a cookie business, you need to do some research to determine if there is actually a market for cookies, how you can reach that market, and what you will need in order to produce a high volume of cookies.
2. After researching the market, you will need to determine whether there will be enough long-term demand for your product to ensure a profitable business. For example, consumable products, like cookies, are things that people will continue to buy time and time again. However, if your hobby is making a product that requires only a one time purchase, like jewelry, chances are you are going to have a hard time staying in business if that is all you have to offer. You will have to consider that in order to get repeat customers, you will need to be continually adding new products to your inventory.

Now that you've determined that your product is marketable and that it will continue to be so, you need to take several points into consideration. One of the biggest pitfalls of moving your hobby into a business is failing to change your mindset from amateur to professional. With a hobby, you do things when you want and if you don't feel like it, there are no consequences. However, once you've moved on to the business level, any lack of performance now becomes a bad reflection of your business and you as a business owner. Your customers will now depend on you and you must deliver or your business will fail.

Additionally, your hobby had no competition for your time. Once you are in business however, you will not only need to spend time on doing that task you enjoy, but you will also need to devote time and attention to programs, advertising, purchasing and accounting (dealing with various state and federal entities and taxes). You will need to concern yourself with cash flow and capital considerations. Here is a checklist of tasks that you may want to consider taking care of as you start turning your hobby into a business:

• Open business checking account: This is important for accounting and taxes so that you are not mingling personal funds with business funds. Having separate accounts makes it easy to see where money is going and how much is coming in. Having an account under your business's name will also help you appear more professional to suppliers.


• Get a business credit card: Again, it is important for accounting and tax purposes that you keep funds separate. Have at least one card exclusively for business expenses. This will help you keep your records in order and, if the card is in your business' name, will help you establish business credit as well.


• Keep complete and accurate records: Set up a record-keeping system from the get-go and discipline yourself to stay up to date. You can use bookkeeping and accounting software programs to track income and expenses, and set up a filing system for receipts and accounts.


• Keep track of all purchases: Many start-up expenses can be deducted on your tax return. Check with your accountant or CPA to find out what deductions can be taken and make sure to keep all receipts or documentation of purchases.