5 Steps to Turn Your Hobby Into a Startup Company
Can you imagine a world without Netflix? Or Amazon Prime? How about Facebook, Google Maps, YouTube, or Snapchat? These are just some of the many companies that were started by people who had an idea and then went for it. The truth is that anyone can become an entrepreneur simply by following their passion and turning it into a business. In fact, there are five specific steps you need to take in order to turn your hobby into a startup company.
#1 Set up a Company
The first step in turning your hobby into a startup company is to set up a new business entity, also known as a DBA (Doing Business As). The most common types of business entities are sole proprietorships, partnerships, and corporations. In this case, it is best to create a corporation since you will get the most tax benefits and limited liability. To set up a corporation you will need to fill out some paperwork (Forms Incorporation or Articles of Incorporation), open a bank account, and file for an EIN (Employer Identification Number) with the IRS.
#2 Get Insurance
Since you are starting your own company there are some risks you will need to protect yourself against. The most important type of insurance your business should have is for general liability, which protects you from people suing you because they were not compensated for their work or they were injured while working at your company. You can either take out a separate policy or add it to your homeowner’s insurance.
#3 Arrange for Contracts
If you want to turn your hobby into a business, then it is very likely that some of the things you do will involve exchanging money. It is important to have good legal documentation so both parties know what they are entitled to and how much they need to pay or spend in order to get it. You can either make these contracts yourself or ask a lawyer to help you out.
#4 Spread the Word
Your next step is to spread the word about your new business and get people interested in what you are doing. The best way to do this is by using social media, such as Twitter, Facebook, and LinkedIn, to share your company’s mission statement and future goals. You can also post pictures of what you are working on, behind-the-scenes videos, or polls to get people involved in your business.
#5 Analyze data
Once you have started making money off of your startup there are many ways for you to analyze how well everything is running. The most important thing you need to do is to track all of your expenses. Your goal should be to reduce your costs, which can be done by finding cheaper suppliers or optimizing where you are spending the most money. The more money you save the more profit you will make.
You have now completed this five-step startup guide! Use these pointers to create a business that is functional and profitable. What are you waiting for? Start turning your hobby into a startup company today!
