We’ve all heard that quote a zillion times, “do what you love and you’ll never work a day in your life”. It’s easy to think this might apply to your hobbies. Why not turn your hobby into a business? At the outset, it makes sense: if you really enjoy a hobby and could make money while doing it, why not give it a shot?
I’ve accomplished this through multiple ventures and made a lot of money doing it. Here’s a chart from one such “hobby” business’s revenue:
That’s about $1.3M in revenue over the first four years of that business, with healthy profit margins to boot. I started cutting back on the business’s operations once we reached FI in 2018.
Despite that, I’m still not sure if it was worth turning something personally sacred into a cash cow.
- From Passion to Job
- Turning a Hobby Into a Business
- Why you SHOULD turn a hobby into a business
- Why you should NOT turn a hobby into a business
- Separating Hobbies and Businesses
From Passion to Job
People often think about turning their passions into business opportunities. The primary argument against FIRE is the ideal that work shouldn’t feel like soul-sucking labor. Work should provide us with personal fulfillment. But what if it’s not about finding work you’re passionate about, but rather, simply finding anything you’re passionate about?
What if turning passions into jobs and businesses actually make them…work?
Are you willing to risk something you’re passionate about for the sake of making a buck?
That’s not a rhetorical question! Some of you may be willing to (I was!), and some may not. But, it’s something to think about before you set out to do so.
The counterargument to my uneasiness is pretty simple to make:
“Chris, it’s easy to think you should avoid a money-making opportunity when you’re financially comfortable.”
That’s not incorrect.
In my situation, I could have done other work or built my primary business up to produce equal profits with a similar level of effort. In the end, I might have still had the pleasure, fun, and creative enjoyment with the hobby that I’ve lost.
If I’d avoided converting my hobby to business, I might have separated work and pleasure. I’d likely still wound up with the same bank account balance at the end of the day.
Turning a Hobby Into a Business
As this post is meant to be a cautionary tale more than a “do this” or “don’t do that” prescriptive take, I’d like to share some pros and cons I’ve experienced turning a hobby into a business.
Why you SHOULD turn a hobby into a business
1) Get to work on something you enjoy
Turning a hobby into a business is an opportunity to spend your working hours adjacent to a subject you enjoy. Arguably, this is the whole point of even considering it. You get to while away the hours doing something that tickles part of your brain.
2) Understand the economics of your hobby
You’ll understand the logistics, pricing, and costs of your hobby much better once you’re participating in the marketplace for it. With that knowledge, you’ll almost certainly be able to score a better deal when making expenditures in support of your hobby.
When you start the business, you’ll already have a leg-up on competition that is solely in it for the money as you probably have a bit of an inside scoop. But once you have a deep understanding of all of the pricing systems, wholesalers, sources, and experts—you’ll really be able to drive a bargain.
3) Your hobby might become self-funding
Taking #2 a bit further, once you have that inside track, there’s a good chance you’ll be able to turn the personal part of your hobby into a smaller expense. With all those new connections and sources, you’ll be able to score deals before most of the public can while knowing what is and what is not a good deal.
Think of it like a real estate agent: you can bet that they have the inside track on any property that hits the market priced too low. They can also make an equivalent offer to what someone else with their own agent can with a built-in discount. They don’t need to pay themselves that ~3% fee!
I’d argue it’s the reason real estate is such a popular license to obtain.
Realtors have three ways to leverage their license:
- Inside track and discount on personal residence purchases
- A professional job with growth opportunites
- The option to use insider knowledge and connections to start a business: real estate investing
You can imagine countless realtors start out as folks who simply enjoy window shopping houses, interior design, and HGTV. It’s their hobby come to life. My own father was lured into a realtor gig through a similar path.
Why you should NOT turn a hobby into a business
1) You’ll think of work
Seeing artifacts of my hobby no longer makes me think of fun activities, positive memories, or social opportunities. It makes me think of work. I’d spend hours each day with the hobby front and center, trying to figure out how to make a buck on the back of what the hobby represented.
My mind wouldn’t just switch to “fun mode” once working hours were over.
The subject of the hobby was no longer “time for fun!”
Instead, personal hobby time was an opportunity for market research. I can remember studying friends’ and family members’ interactions with the hobby to try to identify what might be new and popular. It was “how can this element of the hobby make me more money?”
I value my time greatly, having sacrificed a lot of spending to gain extra time doing things I enjoy with the people I care about. Turning what should be fun time into work turns that calculation of my value of time upside down.
2) Costs become front and center
I bet you don’t think too much about the running costs of the hobbies you have a real passion for. They’re simply “worth it” when you love what you’re doing.
Mountain Bikers don’t analyze the per-mile cost of their new $3,000 29er. And hey, at three thousand bucks, they probably don’t worry too much about getting just the right combination of sale pricing, coupons, and cashback promos to bring that $3K down to $2.9K.
What’s $100 matter?
They’re buying that bike to hit their next competitive race, be ready for a trip with longtime trail buddies, or inch their way up to a new personal best. A hundred bucks is irrelevant on the scale of things that really drive your satisfaction, fulfillment, and happiness in life.
And when they do actually manage to find that $3K bike on some random shop’s closeout list for $2K? They do a little happy dance and proceed to drive that thing into the ground for all its worth.
But what about when your hobby is now a business? That $100 matters because it probably represents a large amount of your profit margin. Similarly, you might not think of the $2K deal on the bike worth $3K the same way when you know you can turn around and sell it to make a thousand bucks that afternoon.
Instead of driving it into the ground having a blast over the years, you’ll probably carefully ensure it’s been packed well from the shop to prevent any scratches and proceed to quickly put it up for sale on your local selling apps.
3) The magic of the hobby might slip away
Becoming an expert in your hobby, turning it into a business means you’re going to learn all the ins and outs of the hobby. You’ll discover the ugly underbelly of counterfeits, con artists, and bureaucracy. Compromises have been made to bring products and services to the market and you’ll be well aware of why those decisions were made.
You’re going to lose those rose-colored glasses that have let you see a purer version of the hobby you love. Those glasses will be traded for a cold reality check, or at least they better, or your business will not survive.
4) Will startup failure hurt your hobby?
Lastly, you should consider the risk of failure inherent to starting a business.
The SBA did an analysis recently outlining the survival rate of new startups over time.
More than a fifth of new businesses don’t make it to their first year anniversary. By the time you’re looking five years out, less than half survive.
Be sure to consider if business failure, and the associated psychological effects, will spread to your passion for your hobby its based on. Will it cause you to lose love for it?
Separating Hobbies and Businesses
Hobbies stick with us because of their novelty relative to the rest of life imprints on us. You don’t see accountants with after-work hobbies in spreadsheets, you see them doing something totally different—bodybuilding, painting, and hiking. Similarly, you won’t find professional athletes that desire to go home and play the same sport with their mates.
People want to do something different from what they do at work. Hobbies are the whimsical, fulfilling, satisfying parts of life. They’re the experiments, ever-changing to match our growth and interests. Hobbies are the part of life you get to build, what you save money to do.
For this same reason, virtually smack me if you ever find this website starts getting crowded with ads and sponsorships (or 100% would need to go to support a cause like our reader’s choice fund). The entire point of TicTocLife for Jenni and I is to simply be a place to share our story. We document our experience retiring early and interact with the welcoming personal finance community. Our goal is to give back a little of the wisdom we found which helped guide us to where we are today.
We intend to defend this hobby as our personal interest, for it to be a place where we’re genuinely us which we can grow from and reflect ourselves honestly. The goal of this hobby isn’t to make more money from behind a shiny facade without revealing mistakes whether that’s in investing or through the destruction of a passion.
Have you turned a hobby into a business or side gig? Maybe created an entire career from one? What’s been your experience with how you feel about the hobby afterward?
Let us know in the comments below!