How you can turn your hobby into extra cash
By Allie Johnson
September 4, 2015
If you spend your spare time playing miniature golf, scouring flea markets for vintage lunch boxes or perfecting your chocolate truffle recipe, chances are you could make some extra money with your hobby.
“A lot of people have hobbies they can capitalize on,” says business analyst and consultant Roy Barker, who pulls in an extra $200 to $300 a month by making clocks out of found items and selling them in his shop, The Clock Monkey, on the online marketplace Etsy.
If you're going to be doing an activity anyway, you might as well see if you can parlay your passion into extra funds to pay down credit card debt, build up an emergency fund or plunk down cash for a vacation.
Here are a few ways to turn your favorite hobby into a moneymaker:
- Set up a shop. Selling stuff you make or find is a tried-and-true
way to make extra cash, says Lisa Rowan, a writer and editor for the personal finance blog The Penny Hoarder. For example, Rowan has cleared as much as $600 a month finding vintage clothes at thrift stores, spiffing them up and selling them at local shops and online. And Chicago radio host Amy Guth creates and sells hand-lettered inspirational greeting cards peppered with off-color words to make the uplifting messages less “hokey,” she says. Selling handmade items is a great way to earn extra cash, says Barker, the clock maker. He adds, “With most crafts, there isn't much upfront expense.”
- Provide a service. Are you a whiz at playing the kazoo, designing logos or speaking Russian? If so, a service business is a great way to make money quickly with few startup costs, Rowan says. For example, several years ago, public speaker and trainer Milo Shapiro started tinkering with Photoshop. Soon, a friend asked him to touch up a photo, and it quickly turned into a side business, FreshenYourPhoto.com. Now, he makes extra dough by salvaging faded heirloom photos, removing ex-husbands from family portraits and erasing blemishes in headshots.
- Get a company to sponsor you. When Seattle public relations pro Claire Topalian started fly-fishing, she noticed that, as a 26-year-old woman, she stood out among a sea of men in the hobby. In fact, fly-fishing companies are trying to attract more female anglers, she says. So she emailed companies to ask for sponsorship deals and quickly started getting free equipment. Now, she has friends snap shots of her fishing, which her sponsors post on Instagram. “I fish for free, essentially,” she says. She hasn't made cash yet, but there's potential to do so, she says. She recommends starting with small or new companies that might be more approachable. “The worst they can say is no,” she says.
- Teach others. Maybe you've spent years learning how to tap dance, perform magic tricks or save hundreds of dollars a month by couponing. So, why not recoup some of your investment by getting paid to teach your hobby? For example, South Florida publicist Cassandra Cardenas has a passion for all types of dance, from ballet to jazz to tap. On evenings and weekends, she gives lessons and choreographs high school musicals. She once made $300 choreographing the first dance of a bride and groom and providing private lessons for the wedding party. She's used the extra $600 to $1,000 a month she makes to create an emergency fund and to travel. “I've done really well,” she says.
How to turn your hobby into cash
Here are six tips for successfully turning a hobby into a side business:
- Keep upfront investments low. Don't sink a lot of money into expensive equipment or supplies right away, Rowan says. Start by putting up as little money as possible so you start making profits sooner, Rowan says. “You can monetize as you go,” she says.
- Play by the rules.Check with your city or county to see if there are any licensing or other requirements you need to follow, says Deborah Sweeney, CEO of MyCorporation.com, a company that helps business owners handle legal filings. Some industries – such as food service – are highly regulated. So, if your hobby is making jam or raising chickens that lay organic eggs, and you want to sell your wares at the local farmers market, you might need a city or state license. And if you're selling a physical product, rather than a service, make sure you're following requirements for collecting sales tax, Sweeney says. Start by checking the U.S. Small Business Administration's state-by-state guide to sales tax for small-business owners.
- Don't undercharge. To set your fees, shop the competition and also talk to family and friends about how much they would pay for the type of good or service you're selling, Rowan says. Even if you're desperate for money to pay the electric bill or knock down the balance on a high-interest credit card, don't price your product or service too low, Rowan says. “You might damage your earning potential later on,” Rowan says. If you need to bring in business now, consider offering an introductory special for a limited time, Rowan says.
- Use word-of-mouth advertising. Marketing professional Trent Irwin started tinkering with videography for fun, then bought a camera. Soon, he started getting requests to shoot weddings and has made more than $2,000 with only social media and word-of-mouth advertising, he says. If you prove you're serious about your venture, your loved ones probably will be happy to spread the word about your business, Rowan says.
- Set aside money for taxes. Don't forget about Uncle Sam. When you make money from a hobby, you have to report those earnings on your income taxes, according to the IRS fact sheet on hobbies that make money. You may also need to pay estimated taxes to the IRS each quarter, Sweeney says. Put aside at least one-third of your earnings into a tax fund, Rowan recommends. “If you just spend all of your money, you could end up worse off than you were before, Rowan says.
- Plan for growth. Start with a vision for where you'd like your business to be in one, three and five years, Rowan says. “You need a plan,” she says. Don't grow too fast without thinking it through – a lesson Rowan learned through experience. When her vintage clothing business was thriving, she figured the logical next step was to open her own store, Beltway Vintage. But she quickly found she didn't want to spend six or seven days a week running a retail store. She's closing up shop and, in hindsight, wishes she would have spent her time continuing to build relationships with local shop owners who would sell her stuff for a cut of the profits.
After all, the one thing you don't want to do is turn your favorite hobby into a daily grind. “If it's not fun anymore, why would you want to keep doing it?” Rowan says.