Increase Your Cash Flow: Turn Your Hobby into a Business

by Jason on August 13, 2009

When you get right down to it, there are only two ways to get ahead financially – reduce expenses so you spend less than you make; or increase your income so you make more than you spend.  This post will look at the latter, specifically turning your hobby into a business.

According to, a hobby is “an activity or interest pursued for pleasure and relaxation and not as a main occupation.”  Basically, a hobby is what you like to do in your spare time.  Some would describe a hobby as something you love to do and not necessarily have to do.  Many people don’t realize there are opportunities to turn what you love into a little extra side money.

Photo by: chiesavecchia

What Do You Like to Do?

The first place to start is knowing what you like to do.  Perhaps you like stamp collecting or scrapbooking or maybe you are into photography or writing.  It doesn’t matter if you like playing guitar or playing tennis, take a minute to think about what you enjoy doing.  Now, you’ll need to figure out if you can make some money at this.

Sell Your Expertise

Is there demand for your hobby?  If so, why not start selling your services?  My wife loves photography.  She has enjoyed taking pictures and creating scrapbooks ever since I’ve known her.  She especially loves capturing candid shots of children and infants.   A couple of years ago, we decided to buy her a nice camera, a good lens, some lights and a couple backdrops and let her start taking pictures out of our home.  Parents and grandparents are always wanting to capture little Johnny’s adorable smile on camera so the demand is there.  My wife has a very creative eye when it comes to photos and thankfully people have been willing to pay for her services.

My wife no longer has time to spend creating the scrapbooks that she likes.  Although she still enjoys it, with two kids there just isn’t enough time.  What she decided to do was hire someone who turned their hobby of scrapbooking into a business.  Basically, Jen provides the pictures to her and she turns them into a beautiful scrapbook.  Both of these stories are examples of taking something you love to do and selling your expertise.

Teach What You Love

Most hobbyists know just about everything there is to know about that particular subject.  Even if you don’t know everything, but have a desire to see others learn, start teaching.  Turn that love for playing guitar or something else into lessons for others.  I have a couple nieces and nephews who did that very thing with their musical talents and it provided some nice extra spending money during high school.

Downside of Turning Your Hobby into a Business

The disadvantage of turning your hobby into a business is running the risk of burn out.  If your business starts growing and you must meet deadlines and answer to customers you may lose your love for that particular hobby.  Be willing to say “no” if you find yourself getting more stressed out in the process of trying to make a little cash.

Tax Consequences

Of course, Uncle Sam has something to say about your hobby.  You cannot continually show and take a loss for your business year after year.  At some point, the IRS wants to see that you made a little money or you need to stop counting your hobby as a business loss.   In fact, the IRS says you must show a profit in three out of the last five years in order for your hobby to be considered a “for profit” business.

Final Thoughts

This list is by no means exhaustive; it’s purely meant to get you thinking outside the norm to consider the real possibility of using your hobby to earn a little extra cash to help pay off debt, be more generous and help achieve your financial goals.

What About You?

Have you started a business from your hobby or took something you loved and found a way to make a little extra money?  I’d love to hear your tips and stories!

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