Make money from your hobby

Matt Davies, 35, from Highgate in North London, has been interested in inventions and discovering how things work from a young age. "I have always spent my spare time thinking of ideas – scribbling sketches and designs for new products or to improve existing ones – since I was a young lad," explains Matt.

Four years ago Matt decided to try taking one of his ideas from drawing board to market. "I had lots of good ideas on paper but wanted to see if one could actually work in practice and make a profit."

His product - the Yoke Shopper is a device to stop painful 'bag-burn' when shopping bags cut into your hands. It also keeps bags together and has a shoulder strap to distribute weight evenly over your body.

"I could never have foreseen quite how much work would be involved," he says, "and how I'd have to become an expert on everything from business and finance, through to design and manufacture, and even legal issues.

But it's worth it: there's nothing like running your own business and spending your own money to focus the mind."

Matt spent his house deposit on developing the product, and also received funding from the Welsh Assembly. He decided to take the plunge and gave up his full-time senior management position in January 2009.

He started a digital consultancy to give him more time to work on the Yoke Shopper. "It was an extremely worrying time, but after all the work and money I'd put in, I decided I might as well go for broke," he explains.

Matt had sold around 200 units, making around £2,000, prior to the official product launch in September. "I've had great feedback so far but now it's crunch time," says Matt.

We could all do with some extra cash at the moment, so earning money from what we enjoy as a hobby seems like a great idea. Depending on your level of skill and how much spare time you have, there is scope to profit from a whole host of popular pastimes.
If you're earning from your hobby to supplement income from your regular job, there's no requirement to inform your employer. Yet it's common sense not to let it interfere with work or take on something that will compete with your employer.

Whatever your skill, the key is to get yourself known. Word of mouth is one of the best routes, so offer your product or service to friends, family, colleagues and neighbours. If you do a good job, this is often enough to encourage people to spread the word further, and you'll soon develop a web of positive marketing.

A request from a lady at her daughter's nursery was the trigger Alison Galpin needed to grow her hobby of jewellery making into a successful business. Alison, 44, lives with her daughter who is now 15 in Chesterfield, and started making jewellery in 1997 as a way to earn an income from home as a single mum.

Alison sold her creations at craft fares and to local shops, and was asked by a fellow mum to make a tiara for her wedding.
"She showed the ladies at the bridal shop, who loved it, and they approached me to make some to sell in the store," says Alison, who previously worked in publishing.

"It soon snowballed as they were then spotted by a sales rep, who asked if they could be used in a photo shoot for a wedding brochure, and they were also featured in the News of the World because one was worn by a Coronation Street actress."

In addition to her mail order tiara business - - Alison has since developed her business further.

She now also runs a bead supply company called, and has recently launched an online magazine – – to provide information and tips for jewellery makers who want to turn their hobby into a moneyspinner.

While your casual moneymaker might not technically be a business like Alison's, getting some business cards printed is a useful networking tool to share your contact details with customers or business contacts at social events.

A website is also a useful tool. It will allow you to spread your contact details on a wider scale and provide information about your product or service, and you can even include a portfolio of your work, which may be useful for skills such as photography.

If it's relevant to your hobby, attend trade shows, exhibitions and craft fairs to make contacts, and get tips and ideas to increase your profitability. "You've really got to put yourself out there and not be shy," says Alison.

Placing an advert in the local paper is a good idea, as is handing out leaflets and posting adverts on noticeboards at community centres and schools.

If you're considering taking your hobby further and turning it into a profitable business, you're set for a difficult yet incredibly rewarding journey. Vicki Hoskins, 33, a mum of three from Milton Keynes, took up cake making as a hobby after attending a course, and decided to try it as a business.

"I really enjoyed it, but also found it quite overwhelming as professional cake decorating looks so difficult and the shops are full of expensive, complicated equipment."
She thought other people must feel the same, so decided to set up a website called in March to provide an online community for users to swap tips and ideas.

Vicky introduced a shop to the website, selling tried and tested baking gadgets, and has since evolved the business further by moving to offices and starting cake-decorating classes.

Vicky and her husband have invested around £20,000 in the business, and hope to start seeing a profit next year.

"It's incredibly hard work, much harder than I anticipated, and I spend every spare minute when the kids are at school or have gone to bed working on it," explains Vicki. "But I enjoy it all, and I like being able to arrange it around being a mum too."

But being successful depends on more than having a useful skill, explains Matt Perkins, a business adviser at Business Link. "You have to be 100% committed to your business and be confident that you'll power through even when the going gets tough."

The first issue is to determine whether your hobby will make a viable business to bring in your main supply of income. "It's important to draw up a realistic business plan to figure out cash flow and whether the business is sustainable," advises Perkins.

Going it alone

To make it in business, you'll also need to be comfortable with selling. "Whether you like it or not, you need to be able to sell and promote yourself and your business to be successful," adds Perkins.

"If you know you'll struggle with the sales and business side of your hobby, consider getting a business partner – someone with the necessary expertise to help out as an adviser or mentor."

You'll need to consider how you'll survive financially and continue to meet your regular commitments.

Perkins explains that as new businesses often don't make a profit in the early days, "as a general rule, it's important to be making enough from your business to live on when running it as a sideline, before quitting your regular job".
It's also important to consider the benefits you will be giving up by choosing to work for yourself. When the nine-to-five drag gets us down, it can be easy to forget the advantages of working for a company, such as paid holidays and benefits including a company pension, sick pay and private healthcare.

However, providing you plan properly, turning your pastime into a lucrative business can certainly be done. In the meantime – or even if you're just looking to supplement your regular income – profiting from your hobby as a casual sideline is a good place to start.

Will I have to pay tax?

Depending on how profitable your hobby is, you may need to consider the tax implications of earning an income from it.

"This is particularly relevant if you have a day job and your pastime brings in cash as a second income," explains Leonie Kerswill, a tax partner at accountancy firm Pricewaterhouse Coopers, "because your regular income will have already used your personal allowance."

However, the tax issue also hangs on whether your motive is to make a profit from your hobby.

"If you're selling off an old stamp or china collection, for example, or if you're having a clear-out to sell possessions at a car boot sale or on eBay, it's unlikely these things were initially purchased with a view to making a profit so this income wouldn't be taxable," explains Kerswill.

"Similarly, if you're baking cakes on a small scale for weddings and birthdays for instance, and just charging for ingredients, this is also non-taxable," adds Kerswill. "However, if you were to start to charge more, for your time and expertise for example, it becomes a business and liable to tax."

It's important to declare your earnings through filing a self-assessment tax return. If you are self-employed in your spare time you have to pay Class 2 National Insurance contributions (currently £2.40 a week) – even if you pay Class one contributions through working as an employee in your main job.
However, you may be eligible for the small earnings exemption if your earnings – after deducting business expenses – were less than £4,825 for the 2008/2009 tax year, or are expected to be less than £5,075 for the 2009/2010 tax year.

"Hold onto receipts for every outgoing relating to the income earned from your hobby – such as tools, stationary and petrol – if you're delivering and the electricity bill if you are using your home cooker for baking," explains Kerswill. "All these expenses can be used to claim against the tax bill."

If your hobby develops into your main source of income, it's important to address tax issues and formalise your status, from sole trader to partnership or an actual company, for example. "And remember that if your spouse isn't earning, it's possible to use their personal allowance for tax purposes," adds Kerswill.

Top money-making hobbies

Depending on your level of skill and area of interest, photography can be a particularly profitable hobby – from landscapes and arty pictures, through to personal commissions for portraits and weddings, which 
offer the potential to charge more.
The size of your kitchen and amount of spare time you have will usually dictate what types of events you can market your catering skills for. From weddings and christenings to smaller events like dinner parties and birthdays, you'll need to be professional, flexible and, of course, a great cook.
Music or language lessons
Fluency in a language and a high standard of musical ability are skills that you can profit from by teaching others. Group or private lessons are the way to go. You'll have to undergo the relevant checks if you'll be working with kids.
Web design
This is a handy skill that can earn a substantial income providing you are organised and professional. Obviously, having an impressive site of your own is key to attracting business.
There's a shortage of reputable tradespeople, so there's lots of potential for profit. You'll need to pass safety and competency checks and register with the relevant trade body.