Hobby Business Basics

Starting a Hobby Business is a fun and profitable way to engage with your collectibles hobby. Whether it is comic books, Pokemon cards, figures, or tabletop games - if there is a online community that supports what you like to collect, there is an opportunity to launch your very own Hobby Business.

 What is a Hobby Business?

A Hobby Business is a business that centers around and supports a personal hobby.  In other words, it is a business that helps pay for your participation in the hobby. It can be as simple as scaling: buying in bulk to get a better price, selling what you don't want or need and keeping what you do.  Another application of this type of Hobby Business is to have your collectibles listed on a sales platform like eBay. In this way, you can enjoy ownership of your collectibles while creating an opportunity for profit. The business itself can also be the hobby - a discussion I will save for another time.

What makes it a Hobby Business?

Size nor scale defines a Hobby Business. It is a mentality and mindset.  The short answer is that a Hobby Business is fun. It is a different way to participate in a hobby and justify the time and money you commit to it. If you want to go all in and start a fully-fledged business in a collectibles niche, then there is plenty of content on online about that.   There is similarly a lot of content advising against it. The moment you begin to rely on income from a business is the moment that business stops being fun; thus, no longer a hobby.

Tips for starting a Hobby Business:

1. Sell what you like.  You will get significantly more satisfaction from your Hobby Business by selling something you enjoy and are passionate about. If you like hockey but not baseball, then don't sell baseball cards even if it is a bigger market. If you strictly only like vintage comics, don't sell modern even if they are more accessible. Pokemon might be the king of the TCG world right now, but if you play One Piece, then stick to One Piece. Being able to enjoy and interact with the product you are selling is one of the greatest rewards of a Hobby Business.
2. Your start up costs are disposable income. Under no circumstances you should leverage debt for a business in a collectible niche, but that especially holds true for a Hobby Business.  Start with an initial budget amount no more than you are comfortable to lose. As already mentioned, a Hobby Business stops being fun when you rely on the income. When the financial commitment exceeds what you can comfortable lose, the stakes and pressure increase dramatically. Financial anxiety is one of the least fun things there is.
3. Don't be obsessed with profit in the beginning. Establishing Proof of Concept and a consistent revenue stream are part of establishing a Hobby Business. At the most basic level, you will need to connect a product with sales channel, in a repeatable way, and in an acceptable length of time. Assessing the viability of a product is a discussion for another day, but the first step is making generating sales revenue. Expenses, scalability, and profit come after. Don't be afraid to take a loss on a product line that seems unlikely to produce your desired results and reinvest your capital into something else. Businesses in collectibles markets have a high barrier to entry.  You are going to spend money before you make money.
4. You time is worth nothing. As a hobby business, you are competing with traditional businesses that will have many key advantages over you.  Perhaps the most obvious advantage is that they have is access to wholesale distributors, which means their sales margins will be higher.  This does not necessarily mean that they have a higher profit margin.  One of the only advantages you will have is that your time costs nothing.  I don’t mean to say your time is worth nothing, which I will get into as well, but there is no explicit cost for your time, nor is there implicit (or opportunity cost) since this is something you are doing for fun. 
5. Your time is not a limitless resource. A corollary to the previous point that your time is limited.  It might not be an expense, but it is scarce commodity. Many hobby businesses fail because the person gets too caught up in the minutiae of the business, and it either stops being fun or takes up too much time - or both.  My example here is building an inventory.  People naturally gravitate to organizing inventory alphabetically. That is seldom the best approach because it is too refined and inefficient.  Start with the simplest, easiest way to manage your inventory and then further refine it as you grow.  
6. It's ok to not have a plan. A generally accepted axiom for business is: A business that fails to plan, plans to fail.  This may hold true for a traditional business, but in a hobby business, discovering your opportunity within a niche is part of the process.  My most successful hobby businesses resemble little of what they started as.  I began with a concept and a direction, then as I learned more about that particular niche and connected with that niche's community, I discovered new opportunities.  Everything is education if you are open to trying new things and learning from your successes as well as failures. 

A Hobby Business can be a gratifying and lucrative venture if executed with care. A Hobby Business also does not necessarily remain a hobby. For many people, it can be a low risk entry point into the business they always dreamed about. My current financial independence is solely attributed to a business that I started over 10 years ago as a hobby and now supports a comfortable lifestyle where I can work whenever and wherever I want. If you are ready to start your own Hobby Business in a collectibles niche, then please consider subscribing to my newsletter so I can share my experience and tips for your success.