• British people turn hobbies into money-spinners in record numbers

    May 5th 2017. Posted in Business Insurance

    More than two million people have started their own business over the past three years: the most rapid rise in self-employment ever seen in the UK*. A new study from business insurer AXA reveals that far from just gliding smoothly from in-house to freelance, most actually start a business in a field unrelated to their previous jobs, increasingly drawing on their hobbies for inspiration.

    Relatively few people start a business based on their current occupation, according to AXA’s study**.  For most, the story is far more complicated: 67 per cent of startups under three years old said their new business is not directly related to their past jobs. Indeed, a good chunk – 47 per cent – say their new business is in an entirely different field of work.

    Appetite for radical change rises with age, and is particularly marked among those on the cusp of retirement (over 55s), where 88 per cent of startups break into a new field of work.

    The transition is least smooth for women, who are almost twice as likely as men to branch into something new when they start up. This is perhaps related to the fact they are also twice as likely to start up after a career break/unemployment (32 per cent of women versus 18 per cent of men)***.

    This trend has been accompanied by a boom in hobby-based business over the past three years. Forty per cent of 2016 startups said they developed their business out of a hobby, compared to just 17 per cent of those who started up five years ago or more.

    BUSINESSES BASED ON A HOBBY (BY YEAR OF FOUNDATION)

    2016

    2015

    2014

    2013

    2012

    40 per cent

    36 per cent

    25 per cent

    21 per cent

    17 per cent

    Top hobbies to money-spinners

    Online retail is the fastest and most popular way to make money out of a lifelong passion, and is the route chosen by one in five hobbyist startups. Many of those surveyed had specialised in highly niche products: vinyl records, rare books, dog treats, collector’s stamps and vintage bags, to name but a few.

    After retail, the most popular hobbyist business areas are: 1. Arts and crafts, 2. Writing (typically, commercial copywriting, blogging), 3. Games development, and 4. Photography and multimedia editing.

    The hobbyist startup making most money in AXA’s sample was a vintage car restorer, who reported take-home pay exceeding £4,000 per month after two and a half years in business. Others earning in excess of £3,500 per month included a wedding caterer, games developer, carpenter and greeting card retailer.

    Despite these success stories, the study offered a note of caution to anyone thinking of ditching the day job. Just four in ten of those who started their business from a hobby in the past three years have managed to make a full-time job out of it – most remain spare cash or part-time businesses.

    The average income from a hobbyist startup is £762 per month, compared to £1,113 average across all other businesses started in the past three years.

    Gareth Howell, Managing Director, AXA Insurance comments: “British people are living through a time of great transformation in the way they live and work. The economic pressures that fuel the gig or freelance economy are well-documented, but our study highlights that there is a very real pursuit of happiness and liberty going on here too. People want to do something that gives them a sense of pride and craftsmanship, as well as to make money.”

    “Many people can eventually earn very well out of a passion or hobby that has been developed to a high level of sophistication. But, as our research also highlights, making a living wage out of such a startup is often  a long, hard road, and many remain ‘spare cash’ businesses around a part-time or full-time job.”

    AXA’s Top Tips: Turning a Hobby into an Earner

    1. Find a mentor. Seek advice from someone already working in your chosen field (preferably outside your area who won’t view you as competition!). People with a passion for their craft or trade are often very happy to collaborate and cultivate newcomers.
    2. Give yourself time to grow. It takes an average of six to nine months to turn a profit from a startup. Keeping a day job or having a part-time job too, where possible, is advisable in the early days.
    3. Professionalise. Consider backing up a self-taught skill with a formal qualification from a registered educational body, and take advice from a relevant professional body on the regulations, tax implications and financial protections you may need.

    Case study: Kelly Jones is one of AXA’s brand ambassadors and tells her story of how she went from home baker to founder of The Manchester Cakehouse: http://www.axa.co.uk/insurance/business/business-guardian-angel/kelly-jones-hobby-showstopping-business/

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    Notes for Editors 

    *  2,032,247 (185,174 so far in 2017; 657,790 in 2016; 608,110 in 2015; 581,173 in 2014 according to Start Up Britain).

    ** Data is taken from two AXA Business Insurance surveys of people who have started their own businesses: a sample of 406 people who have started up in the past three years (conducted in January-February 2017) and a sample of 808 people who have started up in the past five years (conducted in October 2016).

    *** Women make up 64 per cent of those who said there business is ‘completely different’ from previous employment, while men made up 36 per cent. Thirty eight per cent of women in the sample said they’d been unemployed/home-makers/in education before starting up, compared to 18 per cent of men.

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