Turn your hobby into a successful business

7 January 2019

Ever dreamt of ditching the nine-to-five in favour of making a part-time hobby a full-time reality? Four successful small business owners share their tips on how to make it work

Returning to work after Christmas is never fun but what if you didn’t have to scrape the ice off the car and drive to the office, and instead your job was working from home, doing something you loved?

This is a reality for millions of people who run their own small businesses, many of which have started as a hobby, and in 2017 there were almost six million small businesses registered in the UK.

On Christmas Day 2012, Sanjay Aggarwal, 35, and his mother Shashi, 66, the founders of Spice Kitchen, did exactly this.

After retiring 12 years earlier, Shashi was looking for something to do to keep her occupied. She and Sanjay, came up with the idea of selling traditional Indian spice boxes, small tins filled with collections of natural spices, online.

Spice Kitchen founders Sanjay Aggarwal, 35, and his mother Shashi, 66

Spice Kitchen founders Sanjay Aggarwal, 35, and his mother Shashi, 66. Photos copyright: Lucy Ridges

As a joke, Sanjay listed a spice box on eBay to see if there would be any interest. By Boxing Day, someone had bought it. They then spent the next few days trying to find somewhere locally in Walsall, in the West Midlands, that sold these boxes to send to the buyer, which they did, and this is where the business started.

The tins are now sourced from India and the spices bought wholesale and then ground at home, using Shashi’s traditional 100-year-old spice grinder.

In 2013, Sanjay set up a website and in 2015 the duo won a competition for a free stand at the BBC food show in London. For four days, they sold their spice tins at the stall and were blown away by the success.

“My mum had cut up an old sari to wrap around the spice tins for decoration and everyone who bought one also wanted the fabric, which she still sews herself, so after the show I told her she’d need to start cutting up more saris,” he says.

Two years ago, Sanjay started working full-time for the business, having previously run a number of other small companies, and they’ve now moved the production out of his mum’s house and into a small factory. It now has 280 stockists and they have recently secured a place at Ocado and Booths supermarkets.

“We didn’t go into the business to make money, it was always meant to be a retirement hobby for my mum,” says Sanjay who hopes it will have a £1 million turnover in the next four or five years.

"You need to spend money and scale up in order to make it"

His advice to those wanting to make the leap is to look at the bigger picture. “You can’t get overly stressed by small things, instead take a longer-term approach and make sure you’re putting yourself out there. You need to spend money and scale up in order to make it,” he adds.

Simon Cavill, 58, owner of Bee Good, has had a slightly different route to success. He has been a beekeeper since 2004; it started as a hobby while he was working full time in the high-tech industry.

One day Simon and his wife, Caroline, 52, who live in Hampshire, were trying to see what else they could make with the honey and beeswax they produced.

Through his membership of a local beekeeping association, Simon got hold of a book by Hannah Glasse, dating from 1744, which included a number of recipes and beauty treatments that he used as inspiration. They made a lip balm and a skin cream, and sold these at local fêtes, farmers' markets and fairs.

Bee Good founder Simon Cavill, 58, and his wife Caroline 52, with a range of their honey and beeswax products

Bee Good founder Simon Cavill, 58, and his wife Caroline 52, with a range of their honey and beeswax products

“It was just a hobby to start with, but when I was thinking about retirement a few friends suggested making it a full-time business.

“We pitched to Waitrose without even having a product, just a few samples and a design. They told us if we could make it in six weeks they would take it. We did and now it’s sold at around 130 shops across the country,” he says.

The products are also sold online in the UK and Europe, and Bee Good has won several awards. Simon hopes to break into the US market in the future.

“It’s a huge step, moving from being an amateur to a small business, a bit like changing from a go-cart driver to a Formula One racer, and there is so much to learn,” he says.

The key to turning a hobby into a full-time business is being “very, very stubborn” Simon says, and to just keep going.

“There are times when you wake up at night in a cold sweat worrying about how something will work but the next day you have to just turn up and you have to keep going,” he adds.

In order to make a hobby into a successful business, not only do you have to persevere, you need to have a product other people will buy, says Kate Jenkins, 49, founder of Gower Cottage Brownies.

Kate started the business 12 years ago after selling her brownies at a local village shop.

After entering the brownies into a competition, which she won, Kate spent £200 setting up a website; she then wrote a press release and sent it, with a box of brownies, to 10 food editors. Within weeks, all of them had written up her story and the orders began to flow in.

At the start Kate baked everything herself, with help from her husband and two young children, but she now has three full-time staff and a number of flexi-staff, all of whom are local mums.

Gower Cottage Brownies founder Kate Jenkins, 49

Gower Cottage Brownies founder Kate Jenkins, 49. Photo copyright Emma Howells-Protheroe

The business now has 16,000 online customers, but Kate admits there have been issues to overcome. These include a large firm trying to stop her using the word ‘brownie’ in the business name, which after gaining press attention, the objection was withdrawn, and a number of Royal Mail strikes, which she says “could have sent the business under within six months”.

Kate also points out all the hidden costs which need to be accounted for, including heating, lighting and packaging, and she lists the three key ingredients as being a good service, a good product, and a fair price.

“Make sure people will buy what you want to sell, and that it’s not just your friends and family who like it,” she adds.

Many people begin a small business by working on it in their spare time and at the weekends.

Sinead Starrs, 32, from Dublin, set up her business while working full time and admits the first year was “absolutely horrendous”, as she spent every moment when not at her day job working for the business.

When she got engaged she was living in Australia and had to plan the wedding, which took place in Dublin and Spain, from the other side of the world.

Although she planned everything meticulously, and the weather in Spain was gloriously hot in the lead-up to the wedding, it poured down on the day. While standing at the end of the aisle she realised she hadn’t bought umbrellas, partly because she hadn’t found the ones she wanted and because she never thought she would need them in Spain.

This was the start of her business idea and she now runs the successful, international website The Lovely Little Label, which sells more than 200 different wedding accessories from her home.

On her 30th birthday, Sinead took a day off work and set up her website and came up with the name of the company. The first thing she bought was £500 worth of white umbrellas, and within a week they had been sold, so she reinvested this money in more products (see below).

Top left: Sinead Starrs, photo by Rashida Keenan, Bottom: robes by The Lovely Little Label, photo by Marianne Taylor. Bottom right: Sinead with her husband, photo by Kris McGuirk

Top left: Sinead Starrs, photo by Rashida Keenan, Bottom: robes by The Lovely Little Label, photo by Marianne Taylor. Bottom right: Sinead with her husband, photo by Kris McGuirk

When Black Friday was approaching, she decided to write and send a press release to her local newspaper about a discount she was offering on the website.

The journalist printed a small section about the website and she had a huge rush of customers buying her products online. There was so much interest, in fact, she had to take a week off work in order to fulfil all of the orders, which were not just from Ireland but from the UK and other European countries.

Shortly after this, she decided she couldn’t continue in her full-time job, working in finance for a pharmaceutical company, and started with the business full time.

“One of my biggest mistakes was paying out for a service that didn’t come through, this has happened a couple of times when I’ve paid out for an agency to push up my traffic and it hasn’t worked,” she said.

Spending money on something that doesn’t work out was a hard lesson for Sinead as she found at the start that cash flow was tricky and she didn’t have money to waste.

Her top tip for those wanting to make the leap into starting a small business is not to take massive risks but to “take the kind of small risks that give you butterflies, those which wouldn’t be too disastrous if they didn’t work out”, she says.

Now she receives orders from couples all around the world and she’s currently looking to rent a warehouse to keep her stock. “It’s a little bit crazy at the moment, the house has been taken over by wedding accessories and packaging and in the new year I’ll need to find somewhere to keep it all.”

Consider specialist insurance

If you’re setting up a small business, you will need insurance, and the type you buy will depend on the nature of the business.

“Most businesses have some interaction with the public, so public liability covers you if, due to your business activities, you accidentally injure a member of the public. However, it doesn’t cover an employee working for you," explains Gary Holmes, spokesperson for insurer Direct Line for Business.

If you’re employing staff, you’ll need employer’s liability insurance and if you’re selling products you will need products liability insurance to cover for injury or illness caused by the products that you sell.

The most common way to trade as a business is as a sole trader

Contents and stock insurance will cover your stock if anything happens such as a fire, flood or burglary. Business interruption cover can also protect you for loss of turnover if you are unable to trade due to damage to the property that you have insured.

“Even if you sell your products at fairs or market stalls and only want insurance for a short period of time, a claim could arise from the product being used or eaten at a future date after it was sold, so it’s important to have cover in place should something happen further down the line,” Mr Holmes adds.

A number of insurers sell business insurance, including Direct Line and Aviva, however it’s worth comparing the cost with specialist insurers and checking cover limits to make sure you have enough protection.

Paying tax on your business

The most common way to trade as a business is as a sole trader, which can be done via HMRC.

If there are other people involved, it can be set up as a partnership, a limited liability partnership (LLC) or a limited company.

While it’s most common to be a sole trader, “if the business is high-risk and the person wants to protect their personal assets then an LLP or Ltd Co format is likely to be the best option,” explains Matthew Brown, technical officer at the Chartered Institute of Taxation.

The most important thing is to keep records of all activity and income. You won’t need to pay tax until 31 January after the end of the tax year when the business started. At this point you’ll pay tax on the profit made in the first tax year, plus 50% more, which is a payment for tax due on the profits for the next tax year.

Assuming there is no other income, you’ll be taxed at 20%, 40% or 45%, depending on level of income, and class-2 and class-4 national insurance payments are paid at the same time.

Rebecca Goodman writes for publications including This is Money, MailOnline, The Sun and LoveMONEY.com.

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