How to Turn a Hobby Into a Small Business in the UK

There’s a point where a hobby starts becoming something else. Someone asks if they can buy what you’ve made. Then someone else does. You start an Instagram account, do a craft fair, take a commission or hear that first little KERCHING come through on your phone and think, hang on a minute, could I actually turn this into a business?

The answer is yes. But this is also the point where I see people getting it wrong.

They think the next step is to make more. More products, more colours, more designs, more stock. Then they think they need a logo, business cards, beautiful packaging and a website before they can call themselves a proper business.

You don't.

And having lots of products doesn't mean you have a business.

This is probably my favourite bit of business

One of the reasons I said yes to working as a mentor on the BBC's Make It at Market is because I genuinely have a passion for this bit. Taking someone who can make something and helping them work out how to actually make money from it.

There are loads of bits of that journey you don't really see on a TV programme, and that's not the show's fault. It just doesn't necessarily make great telly in the short amount of time you have.

But they're the bits I bloody love.

The first KERCHING on your phone when somebody you've never met buys something you've made. The first product that sells out. The first market where you barely sell a thing. The first epic fail where you order far too much stock because you're absolutely convinced everyone is going to want it. Realising you've priced something completely wrong. Discovering your packaging costs nearly as much as the bloody thing inside it. Making something you're convinced is genius and finding out nobody actually wants it.

That's business.

It's testing, cocking things up, changing things, listening, selling, learning and trying again.

I don't think I'll ever lose the fire I have for helping people through that stage, and it's one of the reasons I'm doing my On the Road project. Social media is brilliant and allows me to reach thousands of people, but I want to take this further than a screen. There are people sitting at kitchen tables, in sheds, spare rooms, studios and community spaces all over the UK who are bloody good at something but might never think they could turn it into an income. Some of them don't have access to business mentoring or simply can't afford it. I want to get out there and reach those people too.

Making things and selling things doesn't automatically mean you have a business

This is probably one of the biggest things I try to teach.

You make a candle. It doesn't really sell, so you make six more fragrances. Then you add wax melts. Then diffusers. Then gift boxes. Then Christmas candles. Before you know it you've got 37 products, £2,000 worth of stock and you're still wondering why people aren't buying.

The answer isn't always to make more stuff.

The question is: why does somebody want to buy the thing you've already made?

That's where I think the real difference between a hobby and a business starts.

A hobby can be about what do I enjoy making?

A business also has to ask why would somebody want to buy it?

Maybe your product solves a problem. Maybe it makes someone's life easier. Maybe it makes them laugh. Maybe it's the perfect present for a very specific person. Maybe it reminds them of something. Maybe it makes them feel part of something. Maybe they can't find anything else quite like it. Maybe YOU are part of the reason they want it.

There has to be a reason.

And "because it's handmade" isn't always enough.

Neither is "but it took me ages to make."

Your customer isn't paying you because you worked hard. They're buying it because what you've created has value to them.

Get that bit right before you spend hundreds of pounds making more of it.

Test it before you fill your house with stock

You don't need 100 of something to prove you've got a business. Make one. Make five. Make ten. Show people. Talk about it. Take it to a market. Put it on social media. Take pre-orders where appropriate. Ask questions and, most importantly, pay attention to what people actually DO rather than what they tell you.

There's a massive difference between somebody commenting "OMG I NEED THIS!!!" and somebody getting their bank card out.

Your first goal doesn't need to be £100,000.

Make £100.

Can you get someone who doesn't know you to give you actual money for something you've created?

Great.

Now do it again.

Work out what it REALLY costs

If something costs you £8 in materials and you sell it for £15, you haven't necessarily made £7.

What about your time, packaging, postage, card fees, website costs, market fees, petrol, tools, insurance, wastage and all the random little things you suddenly discover you need when you start selling?

And your time isn't free.

This is often the point where someone realises they don't actually need to sell more. They need to charge properly.

Stop obsessing about followers and find your customer

One of the first things people ask me is how they can get more followers.

I'm far more interested in how you're going to get more customers.

You can have 20,000 Instagram followers who think your stuff is lovely and never buy a thing. I'd rather you had 800 people who completely understand what you do, love it and actually buy from you.

Who is the person buying this? Where do they shop? What else do they buy? Why would they choose yours instead of the cheaper version they've just found online?

That's marketing.

It's not posting three reels a day because somebody on Instagram told you the algorithm likes it.

You don't need perfect branding before you start

I love good branding, but I don't believe you need to spend thousands on it before you've even proved the business works.

Start. Sell. Listen. Learn.

Your business might look completely different in a year's time because you'll understand your customer better.

I've started businesses with branding I'd probably cover my eyes at now. But it did its job at the time. It allowed me to get the idea out there and find out whether it worked.

You can make things prettier later.

When does your hobby actually become a business in the UK?

This is where we get into the boring but important stuff.

You don't have to set up a limited company just because you've sold your first product. GOV.UK says a sole trader is the simplest business structure to set up and keep records for, and you can start trading straight away without registering.

However, if your gross trading income is more than £1,000 in a tax year, you generally need to register for Self Assessment as a sole trader. That's income before expenses are deducted, not £1,000 profit. There are some circumstances where the rules differ, so please don't use my blog as your accountant. Check your own circumstances with HMRC.

Check the GOV.UK guidance on becoming a sole trader

Check whether you need to register for Self Assessment

From the minute you start trading, get into the habit of keeping records. Money in, money out, receipts, expenses and sales. Future you will be very grateful you did. GOV.UK also confirms that sole traders need to keep business records to work out their profit or loss for Self Assessment. 

Sole trader or limited company?

You don't get a medal for becoming a limited company.

For lots of people starting small, sole trader is the simplest place to begin. A limited company is legally separate from you and comes with different responsibilities, accounts and reporting requirements. The right choice depends on what you're doing, so if you're unsure, speak to an accountant rather than choosing one because somebody on Facebook told you that's what a "proper business" does.

Compare sole trader and limited company on GOV.UK

And before you fall completely in love with a business name, check it. Google it, search social media, check Companies House and check UK trade marks. Registering a company name does not mean you've automatically protected your wider brand or trading name.

Check the GOV.UK rules for choosing a business name

Start talking about what you're doing

This is another big one for me.

Don't wait until everything is perfect before you tell anybody.

"I'm turning my hobby into a business."

There's your content.

Show the prototype. Show the mistake. Ask which one people prefer. Explain why you're making it. Show the first order. Show yourself packing it. Show the thing that went spectacularly wrong.

Take people with you.

That's far more interesting than spending six months secretly creating a business and suddenly popping up on Instagram one Tuesday morning shouting MY WEBSITE IS LIVE! to a load of people who didn't even know you were starting one.

And finally, decide what you actually want from it

Turning your hobby into a business doesn't mean you need to build the next Amazon.

Maybe you want it to replace your salary. Maybe you want an extra £500 a month. Maybe you want it to pay for your holidays. Maybe you'd eventually like to work three days a week instead of five. Maybe you just want something that's yours.

You decide what success looks like.

But if you want to turn something you love making into something that makes money, start thinking beyond the making.

Who is it for? Why do they want it? Will they pay what you need to charge? And can you sell it again?

That's where the business bit starts.

And if you're currently sitting at your kitchen table surrounded by something you make thinking "I wonder if I could actually make a business out of this?", you're exactly the sort of person I want to help.

It's what I've loved doing through Make It at Market, it's what I do through Pink Gorilla Media and Pink Gorilla Collective, and it's a massive part of why I'm taking this work On the Road.

Because sometimes you don't need another motivational quote telling you to follow your dreams.

You need someone to help you work out whether anyone will actually buy the bloody thing.

 

Same person 

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