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Turning a Hobby into a Business
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Could your hobby turn into a business idea?
Could your passion pay in retirement? Ask yourself these questions.
As you get closer to retirement, you might be thinking that some activity you love—Italian cooking, gardening, woodworking—could provide you with income after you've left full-time work. After all, retirement gives you the commodity you need most in order to pursue that dream: time. But that's not the only thing you'll need. Bear in mind that starting a business is a major commitment, and just seven out of 10 new ventures survive the first two years, according to the U.S. Small Business Administration.
Before starting the journey from entrepreneurial dream to business reality, you'll need to ask yourself a number of questions. As Michael Liersch, director, Behavioral Finance at Merrill Lynch, points out, answering them honestly can help you determine whether your personality is suited to the entrepreneurial life, and whether your passion has the makings of a viable venture.

Can I dedicate my life to my hobby?

Businesses can be all-consuming, limiting the time you have to travel, spend time with grandkids or enjoy other traditional retirement pursuits. Liersch asks, "Will your enjoyment of the entrepreneurial pursuit exceed the pleasures of having ample time, freedom and flexibility in retirement?"

Am I comfortable with financial risk?

Even when businesses thrive, success rarely happens overnight. "People tend to focus too much on whether a business will fail or succeed quickly," Liersch says. To give your venture a chance to work properly, you need to be comfortable with the possibility that it might not be profitable soon, or ever.

Do I have the support of those around me?

Your spouse or partner also has a vision of what retirement will hold for you both. And those closest to you will become integral to your success, sharing in the business's inevitable highs and lows. If you were to explain your plans to everyone who will be affected and detail the commitments involved, would they be willing to support you through thick and thin?

Am I prepared for the business side of my business?

No matter how much you love your hobby, keep in mind that businesses are also about invoicing, inventory, cash flow and innumerable other crucial details. Some owners enjoy these tasks, but if you hate dealing with details, they can take all of the joy out of being in business.

What are my entrepreneurial goals?

Some entrepreneurs are content simply to be their own boss or to make a positive impact on the world—getting rich is not the goal. Others, however, measure success largely in financial terms. "Wherever you fall on that scale," Liersch says, "knowing how you define success can give you a much clearer picture of your own road to happiness."

Is my business plan viable?

A detailed business plan—including your market, competition, costs and other critical information—can help you look at your idea objectively and decide whether it's worth pursuing. And having one will be essential if you're seeking outside lenders or investors. If you've never written a business plan, the U.S. Small Business Administration (www.sba.gov) and your local SCORE affiliate (www.score.org) can help.

Does my business offer something different?

"One great way to stand out is to find a niche and become master of that small piece of the pie," says Nancy Collamer, a career consultant at MyLifestyleCareer.com and author of Second-Act Careers: 50+ Ways to Profit From Your Passions During Semi-Retirement. She gives the example of a retiring executive who loved performing as an amateur magician. Aware that many professional magicians lack business skills, he created a firm to help them market themselves effectively.

What do I do best?

Are there ways you can hone and exploit your specific skills? Collamer tells the story of a woman who started as an importer of Ecuadorean crafts but soon discovered she had a special skill for building relationships with others. With that knowledge, she adjusted her business model and found greater success and fulfillment helping other entrepreneurs learn how to import Ecuadorean goods.
It takes passion, desire and commitment to turn a hobby into a business. But as Liersch notes, "it also takes a strong sense of who you are, what you want and whether you're the kind of person who will truly enjoy the everyday adventure of entrepreneurship."
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