7 pitfalls to making your hobby a business
You could lose cash
It’s one thing to be a talented baker and another to establish a business. Before maxing out the credit cards to get started, take time to figure out if you can cover your costs by selling your products.
Check out this blog post on Etsy for the formula determining a fair retail price. Pricing should account for materials, labor, expenses, profit and wholesale costs. But take note: If you have to charge $150 for a pair of socks because of the cost of supplies and the time it takes to knit them, starting a handmade sock business is not a good idea.
Ann Johnson-Stromberg of the Norcal Small Business Development Center Network also cautions entrepreneurs against setting prices too low to build interest and expecting them to remain loyal when you raise your prices to cover your costs.
"You may also need to test the market by selling on a small scale first before settling on a final price," she advises.