If your hobby involves making regulated products, such as food or cosmetics, you'll need to understand the guidelines from the U.S. Food and Drug Administration, as well as state and local regulations, and state and local requirements for business licenses and operating your business to stay compliant.
4. Write a business plan
Williams admits that she's a “huge advocate of business plans.” Plans don't have to be long; she gives clients a one-page version of SCORE to present when they're getting started. But she says the plan helps aspiring entrepreneurs answer key questions about their business, finances and operations. “We start there, then we have the client come back to us, and then we dive into specific areas that they might see as weaknesses,” she says. Having the details of their business outlined on paper allows potential business owners to identify and address issues before launching, avoiding costly missteps, Williams says.
“Make sure it's an endeavor that will ultimately generate financial benefits,” Castrillon adds. “If the business plan doesn't work, it may not be worth the risk.”
5. Get your pricing right
How you price your products affects everything from your business's profitability to how your product is perceived in the market. To get your pricing right, Castrillon recommends conducting a competitive analysis. Market-driven pricing involves looking at companies that sell products similar to yours and how much they charge, while cost-based pricing involves calculating your total costs and marking up by a percentage. Either way, you need to know how much you need to charge to recoup costs for labor, supplies, insurance, and other expenses that will come along as your business grows.
6. Find the right channels
There are many options for selling your products, so finding the right channel is also important. “If you're selling jewelry or crafts, consider Etsy, eBay, or Amazon as sales channels. Either way, I recommend creating your own website where you can sell your products,” recommends Castrillon.
You can also sell directly at events like festivals and fairs, or sell your creations wholesale to retailers, catalog distributors, and other e-commerce sellers for resale. The right choice for you will depend on a variety of factors, from the demand for your products to your own production capabilities.