Do you have a hobby or a specific skill set that you would love to turn into a full-time business? Learn how in this article.
There are few things as enjoyable as creating a business around something you love doing. But learning how to actually monetize your expertise? That can be a bit tricky for some people.
It’s one thing to have a hobby or skill. It’s another thing entirely to earn consistent money off it. If you’re a little confused about what to do first, don’t worry. We’ve outlined the first action steps you need to take as you monetize your expertise.
First, Define Your Niche
Running a business is more than creating valuable products or offering skilled services. It requires knowing who you’re selling to.
As you sit down to map out your business plan, ask yourself who you are tailoring your product or service to. Don’t try to sell to everyone. Instead, focus on the people who most want what you have and are willing to spend the money to get it.
To Monetize Your Expertise, You Must Define Your Unique Value
Now that you know your audience, it’s time to figure out your own offer’s unique value. This might sound similar to the step right before, but it’s very different. The first step focused on your audience. This step focuses on you!
Ask yourself: What sets you apart from your competition? What unique value do you and your services/product bring to the table?
For example, at Foray Business Group, one aspect of our unique value is that we offer our clients top-notch customer service as we do their bookkeeping and advise them on matters relating to business finance. We also have close connections with local CPAs, which has helped many of our clients save money on their rates.
Now Set Your Prices
It’s important that you wait to set your prices until after you’ve already figured out your ideal customers (or niche) and your unique value point. Once you have those in place, you have a better idea of what to charge.
You know what your ideal customers are likely willing to pay for your products/services, and you know what those offers are worth.
But before you set your prices in stone, you should sit down and figure out your business expenses as well as the amount of money you need to set aside for salaries. That includes you, any business partners you have, and any employees or contractors you’re hiring. Also include taxes in that number. A good rule of thumb is to set aside 30% of your business’ income for taxes.
Knowing these numbers will help you choose a good price for your offers as you monetize your expertise. Too low and you won’t make enough to cover your expenses. Too high and your customers won’t be willing to pay the price.
Set Up Your Business Officially and Legally
You don’t necessarily have to wait until you’ve set your prices to create your business entity. To get started, first decide if you’re going to set your business up as a Sole Proprietorship, a Partnership, a Corporation, an S-Corporation, or a Limited Liability Company (LLC).
Click here to read how the IRS explains the differences between these entities.
If it’s just you or just you and a partner, setting up an LLC can offer you some additional protection as opposed to operating as a Sole Proprietorship. This way, if someone sues your business, it will be much harder for them to go after your personal assets as opposed to just your business assets.
Get a Solid Accounting and Bookkeeping System in Place
This step is crucial if you want to scale your business and still keep your business legal.
The IRS requires your business to maintain clear records of all your income and expenses. That includes purchase receipts; gross receipts (your income); travel, entertainment and gift expenses; assets; and employment taxes.
This is where many small-business owners get stuck! Mustering up the self-discipline each month to maintain these detailed records can consume a lot of your time and energy when you monetize your expertise.
That’s why we’re passionate about helping you in this area! We help small-business owners keep their books organized and clean so that they can spend more time actually growing their businesses.
Interested in learning how we can help you save time and money on your bookkeeping and taxes? Schedule a free consultation today!