Developing a Business Plan for Your Hobby Business
Does a Hobby Business Really Need a Business Plan?
Before you can get into how to write a hobby business plan, it helps to establish why one is needed. Some would argue that a hobby business does not need a business plan because it is simply doing what you enjoy doing and getting paid. The fact that a lot of hobby businesses happen accidentally contributes to the general notion that a business plan is not necessary. For instance, you might simply be offered the chance to tutor someone in exchange for a fee and then you realize that this can be an actual business. Similarly, you may be great at a particular craft when someone discovers your work and offers to buy your pieces. Several types of hobby businesses are born in this way, but this does not deter from the usefulness of a business plan.
The act of writing a business plan can do two things for any hobby business;
- It can help to crystallize the idea into a solid strategy to ensure feasibility, sustainability and profitability. Essentially, writing a business plan helps the entrepreneur to cover all the bases because the temptation to skip through phases can have catastrophic results.
- A business plan can act as your supporting document in case you need financing from outside sources, such as a bank or credit union.
How to Write a Hobby Business Plan
To write a business plan for a hobby business you should follow the general guidelines of the typical business plan, although some sections may not need to be dealt with in great detail. The subsequent steps can serve as a guide.
Examine the Product or Service in Relation to the Market
This section of the business plan looks at your hobby as a part of an identifiable market. It is here that the product or service as it is envisioned is described in detail and the outlook of the industry should form the backdrop of this statement.
Document the Findings of Your Market Research
When you have identified what aspect of your hobby will be turned into a business you need to make sure it is a feasible prospect. To do this you must conduct market research; find your competitors, ask questions of people in your target market and make notes on what you discover. These notes will be used to form your pricing and marketing strategy.
Create Plan for Marketing the Hobby Business
This section simply provides some structure for how you will price the product or service and how you will spread the word to potential customers. Marketing forms an important part of any hobby business plan because, more often than not, the business is run from home and cannot rely on walk-in traffic to propel its revenue.
Specify Details of Day to Day Operations
Here you address where the business will be located, your plans for expansion or improvement, the process for meeting clients or creating your stock-in-trade and if you will need to hire staff to make your plan feasible.
Identify a Management Team
If you will be the sole-proprietor of your hobby business, and you plan to remain a one-person operation, this section could focus on how much you will pay yourself and how often.
Get Down to the Money Matters
It is wise to draft forecast profit and loss statements as well as cash flow statements for your business idea. This helps you to see what the income potential is and can affect your decision to go part-time or full-time into the business. This section is also of interest to financiers if they are going to be sought for help in the venture.
Conclusion
Writing a hobby business plan should not be overlooked as an unnecessary step, because it certainly adds value to the business and helps to make certain aspects go much more smoothly than if the plan was ignored entirely.
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