My sister and I weren’t the first kids in the neighbourhood to make fresh lemonade in our spare time and decide it was worthy of selling to passers-by for 40c a cup.
We also weren’t the last to realise that creating a money-making exercise out of something you love doing isn’t always what it’s cracked up to be—we lived in the quietest street in the neighbourhood and were lucky to make even one lemonade sale over the course of an entire afternoon.
While your own career goal might be far from lemonade peddling, here’s some food for thought for any want-to-be business owners and entrepreneurs looking to turn their passion into profits.
Ask yourself these 7 questions
1. Have you thought about it rationally?
You might be ready for a change of scene and dream that being your own boss will lead to more money, autonomy and creative freedom, but the likelihood a non-employing small business will still be in operation four years after its establishment is only around 55%.1
Turning a hobby or something you love doing into a successful career will depend on a number of variables, such as your strengths, weaknesses, determination, and willingness to be practical and plan ahead.
Transitioning from your previous role to business owner will also mean you’re faced with different challenges and responsibilities, with harder work and longer hours often likely in the interim.
2. Have you spoken to someone in this line of work?
Speaking to someone who’s doing what you want to do and asking them for a list of pros and cons could provide insight around where you need to build skills, and what you might like and dislike.
For instance, mixing what you love doing with deadlines, customer demands and pricing estimates may affect your passion for what you do and the time you have to do other things.
3. Have you researched your customers and competition?
It’s a good idea to know your target market, assess if there’s a genuine need for what you want to offer and whether those you want to sell it to will actually be able to afford it.
On top of that, it’s worth sussing out opportunity in the space and importantly, your competition. You can do this by searching online, reading industry news and speaking to others in the sector.
4. Have you estimated upfront and ongoing costs?
If you’re currently in full-time work, you’ll want to think about whether you can afford to leave your job or if you’ll need to run your new venture, at least initially, as a part-time exercise.
Draw up an assessment of the upfront and ongoing costs to establish your business and how this will impact your current financial responsibilities. This will help you to create a workable budget and determine an appropriate amount of finance to borrow if you don’t already have the funds.
Apart from the potential of needing to pay for things like space or storage, costs may include things like signage, advertising, website development, importing, exporting, training, insurance, wages (if you plan to hire staff), superannuation, tax and accounting services, and financial advice.
5. Have you contemplated your business obligations?
When registering your business, the business structure you choose will determine things like the licences you require, the tax you’ll pay, personal liability and how much control you have.2
The way you structure your business can also determine ongoing costs and how much paperwork needs to be done, so consider your circumstances and what support you may need.3
6. Have you begun writing a business plan?
Writing a business plan is a good idea as it gives you a visual map of what you’re trying to achieve and it also becomes a resource for potential investors or partners who want an overview.
A business plan may include things like a mission statement, a company outline, an executive summary, details about your product or service, your marketing and sales plan, a description of the target market, the cost of operations and any financial projections.
7. Will you enhance your skills in the interim?
If you’re set on turning what you love doing into a career, you might want to think about further training. You could do this online, through TAFE or university, or via networking events and conferences where you can exchange ideas with like-minded people and experts in your field.
Where to go for help
In the meantime, while starting your own business is no easy feat, remember anything’s possible. Despite packing in my lemonade business, last year an 11-year old lemonade-stand entrepreneur from Texas landed a multi-million-dollar deal with a recipe inspired by her great grandmother4.
According to research, forking out money on experiences, time and other people is the way to go.