Turning A Hobby Into A Business

The newest generation of Indian youth is creative, driven and industrious. Not satisfied by single paychecks, they are always looking for extra opportunity to make money. With many of them now investing in what they love doing or have a passion for, there is a tremendous opportunity for Turning A Hobby Into A Business.

Hobby vs Business

A hobby usually becomes a business when there is a motive for profit and profits are earned year after year. Hobbies, on the other hand, are usually done not with profit in mind and is pursued to obtain happiness. To turn a hobby into a successful business its important to have a well-designed website, a clear understanding of the business model, separate bank accounts and necessary statutory registration.

Steps to Turn a Hobby into a Business

Have a clear objective: Running a business is a serious endeavour when compared to a hobby. So before Turning A Hobby Into A Business, have clear objective, goals and plans for the business. Also, in contrast to a hobby, business requires more resources like capital, team and advertising to be successful. Therefore, plan ahead and have a vision for the business.

Set up a website: A hobby doesn't require a website, as it is undertaken for one's own pleasure. On the other hand, the objective of any business is to have customers and generate profits. Therefore, set up a website, have social media pages on Facebook, LinkedIn, Twitter and signup for Google Business - to make your business known and attract customers.

Incorporate: As the business grows, it's advisable to incorporate the business as a Limited Liability Partnership (LLP) or Private Limited Company. Incorporation of a legal entity would add more credibility to the venture and provide the business with an independent legal identity.

Obtain Tax Registrations: A hobbyist doesn't have to worry about tax or regulations, but a businessman must. Hence, knowledge about the legalities and regulations concerning the business. Almost all businesses require GST registration. You can talk to a Business Advisor to know about the tax requirements and stay compliant - as non-compliance would draw serious complications.

Success Story - The Story of Ms Rajni Bector - Cremica

A hobby to the business success story is of Mrs.Rajni Bector, Managing Director, Cremica Limited. Born in Karachi, Rajni was married into a Ludhiana based business family at the age of 17. Soon after she got busy raising her 3 sons, it was only that her sons left for their boarding school education did Rajni feel she had lots of free time. Having a keen interest and passion for cooking she enrolled herself into a bakery course in Punjab Agriculture University. To try her new creations and recipes learnt in the course, she would very often host lunches and dinners. In no time her cakes, ice creams, cookies became the talk to the town. She was so good that her friends started telling her to make a business out of it. So just for fun, she tried it. Using a hand churner, she put up her first ice cream stall in a local fair. It was right next to the Kwality ice cream stall and she was extremely nervous if she would ever do well. But as it turned out, her ice cream was a super hit and the Kwality Manager came to her stall to taste it himself. After this people started asking her - if she would do catering and that's how it became a 'business'.

Operating from her home kitchen, a small oven and initial investment of Rs.300 she started her catering business. Soon orders started flowing in and she started doing parties and weddings. However, as the business was not organized, though orders were pouring in, she was selling below cost and was incurring losses. This is when her husband Dharamveer joined in. Despite working hard, she needed to see it as a business, make commercials and do things properly.

Thus in 1978, with an initial investment of Rs.20,000, she set up her first ice cream manufacturing unit in the backyard of her house. Although she employed more staff, she still believed in doing things herself, working over 12 hours a day. Later, Rajni's eldest son joined after his college graduation followed by the other two brothers. With the involvement of the entire family, the passion led business started by Rajni flourished into a professional and ambitious one. Soon the business grew into a whopping 20 crore organization.

It was at this time, a very big opportunity came knocking to Rajni's doorsteps. In 1995, McDonald's decided to enter India and was scouting for local suppliers and zeroed in on Cremica for buns. Keeping high standards was tough but opened doors for Cremica to start supplying to big MNCs. Ceramics' factory in Phillaur started making biscuits sod by Cadbury's and ITC Funfest. Cremica also made biscuits, sauces and condiments under its own brand name 'Mrs Bector's Cremica Foods'. From there, the scale and size of the business expanded rapidly. By 2006 Cremica was 100 crore company with a 30% growth rate year on year. Goldman Sachs took a 10% stake in Cremica for 50 crores. The funds were further rolled back into the business to expand n strengthen it.

Now with fully automated plants in Greater Noida and Mumbai and another 5000-ton plant coming up in Una in Himachal Pradesh, Cremica employees over 4000 employees across its various locations. In 2011-12 Cremica crossed an annual sales of 650 crores. Now with highly professional staff and her 3 sons taking over charge, Rajni has limited herself to finding new recipes and products at 71. As she fondly recalls her journey, various awards and accolades, she particularly mentions the one received by the Late President of India, Shri. Abdul Kalam in 2005, where he very friendly asked 'Oh..you are the ice cream lady, na?'

No matter how big Cremica becomes, this is how Rajni will always be remembered: "The lady who stepped into the kitchen, yet stepped out of the boundary. Because evolution is a revolution. And it can quietly start, wherever you are.

So want to turn your hobby into a business? Get in touch with an IndiaFilings Advisor.

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Frequently Asked Questions

Common questions about Turning a Hobby into a Business in India.

Hobbies are typically pursued for pleasure and enjoyment without any intention of making a profit, while a business is an activity undertaken with the primary goal of generating revenue and earning profits. A hobby becomes a business when there is a consistent motive for profit and profits are earned year after year.

The key steps to turn a hobby into a successful business include having a clear objective, vision, and business plan, setting up a professional website and online presence, incorporating the business as a legal entity (LLP or Private Limited Company), obtaining necessary tax registrations like GST, and ensuring compliance with relevant regulations.

A website is essential because, unlike a hobby, the objective of any business is to attract customers and generate profits. A well-designed website, along with a strong social media presence, helps to market the business, reach potential customers, and establish credibility and professionalism.

Incorporating the business as a Limited Liability Partnership (LLP) or Private Limited Company provides several benefits, including adding credibility to the venture, giving the business an independent legal identity, and offering liability protection for the owners or partners.

Unlike a hobby, a business must comply with various tax laws and regulations. Failing to understand and adhere to these requirements can result in serious complications and penalties. Seeking advice from a professional Business Advisor can help ensure compliance and avoid legal issues.

Rajni Bector's story highlights the importance of passion, hard work, and perseverance in turning a hobby into a successful business. It also emphasizes the need to treat the venture as a professional business, develop a commercial mindset, and involve family members or partners to help the business grow and flourish.

Rajni Bector's business, Cremica, grew from a small home-based catering operation to a 20 crore company by involving her family members, securing contracts with major companies like McDonald's, and continually reinvesting profits into expanding production facilities and automation. Strategic partnerships and funding from investors like Goldman Sachs also contributed to Cremica's growth.

Rajni Bector's passion for cooking and baking was the driving force behind her initial hobby, which eventually turned into a successful business. Her dedication to creating high-quality products and experimenting with new recipes helped establish Cremica's reputation and attract customers.

Consulting a Business Advisor can provide valuable guidance and insights when turning a hobby into a business. Advisors can help with developing a solid business plan, understanding legal and tax requirements, ensuring compliance, and making informed decisions to support the growth and success of the venture.

IndiaFilings, with its team of experienced Business Advisors, can provide comprehensive support and guidance to individuals looking to turn their hobby into a successful business. From advice on business planning and structuring to assistance with legal formalities like incorporation and tax registrations, IndiaFilings can help streamline the process and ensure compliance.