Written by Danette Harkness
Senior Manager – Small Business Banking for Coast Capital Savings (BC)
Many women develop their business ideas from hobbies or personal pursuits, which is great because when you work at something you love, it doesn’t feel like work!
However, to successfully make that transition from favourite pastime to small business, careful planning is needed. At Coast Capital Savings, every day our dedicated business banking experts help emerging entrepreneurs – and mompreneurs – turn their labour of love into a livelihood.
Here are our top tips for mastering the transition:
To monetize your hobby, conduct research to ensure that your idea meets a need or solves a problem. For example, is there interest in learning your hobby? If so, providing workshops or authoring books on the subject may be a possibility. You may also want to make or sell products used by fellow hobbyists. So, if you enjoy painting, a business selling art supplies may be of interest. Alternatively, you may open a commercial studio and produce your own artwork for sale. No matter the route you take, make sure there is a demand for your offering.
Your hobby-turned-business may not be able to immediately replace your income so it’s advisable to plan a gradual transition from your day job. You may want to launch and grow your business while maintaining your current full-time job, or switch to part-time work while you expand. When your hobby begins to earn sufficient income, you can concentrate on it full time. Regardless, be prepared to go through a lean financial period as you transition and make sure you have the full support of your family during this time.
Map Out Financial Projections
Business success requires smart financial management and decision making. To this end, take time to develop cash flow projections for your first year. This is a key business plan requirement and will also help you assess how you’re doing. I also recommend talking to your financial institution about how they can help. For example, your credit union can help you select a business account that meets your needs, talk to you about business insurance options, or set you up to receive debit and credit card payments from your customers.
Get to Know Your Tax Bracket
Once you start making a profit, Revenue Canada considers your hobby to be a business and that means paying any required taxes. To be on the right side of the law, keep good records and make sure you understand and follow applicable provincial and federal tax obligations. For example, if your income exceeds $30,000 a year, you’ll need to collect and remit GST/HST. Also, familiarize yourself with the tax deductions available to you as a business owner and take advantage of those that apply! Learn more by visiting this link courtesy of Canada Revenue.
For additional helpful tips for small business owners, visit Coast Capital Savings’ Small Business Tips
Featured image courtesy of shutterstock.com