9-step guide: How to turn your passion into profitable business

9-step guide: How to turn your passion into profitable business (Photo: iStock)

Imagine turning a beloved hobby into a thriving enterprise. That’s precisely what one of finance coach Margaret Njeri’s clients achieved, starting with handmade soaps from her kitchen.

In just one year, she moved from local markets to supplying supermarkets and homes, now even eyeing neighbouring countries. Inspired by such success, Margaret, a finance coach and advisor, offers a comprehensive guide on how you can transform your own passion into a profitable business.

Do market research

Margaret advises women to clearly define what their passion is, who it serves and how it solves a problem. Once you establish that clarity, carry out market research on who needs your goods or services, whether they are willing to pay and what alternatives exist. The business potential of your passion is tested when you offer a pilot service, run a limited product batch, or get feedback from potential customers through online surveys, social media polls or small local markets.

Set a financial plan

A simple business plan with income and expense projections should come early on in the process. This includes opening a business bank account and having a budget and bookkeeping system from day one.

Funding opportunities

Some of the best funding options for women venturing into business are personal savings and bootstrapping, table banking, chamas, or Sacco loans, crowdfunding, angel investors for early-stage support and women-focused grants and microfinance institutions like KWFT, Hand in Hand EA Kenya, SheTradesKE and the Women Enterprise Fund. Others are the Ajira Digital Programme, KEPSA grants and international platforms like the Tony Elumelu Foundation and Yunus Social Business.

Business registration

The best time to register your business is once you are ready to sell consistently or work with partners and clients. Sole proprietorship is the right structure to start with, while a limited company is better for scaling and protecting personal assets. Consult a lawyer or business advisor for tailored advice before embarking on a registration process.

Budgeting

When launching a business, Margaret urges female entrepreneurs to prioritise needs such as tools, inventory and licenses over wants. She further advises starting lean by outsourcing, using free tools and working from home. Keep 3-6 months’ expenses as an emergency buffer and track everything with tools like Wave, QuickBooks, or Excel.

Setting prices

In making this important decision, you should not undercharge because it’s “just a passion”. Pricing should be based on value, cost and market rate with consideration of time, expertise, materials, and overheads.

“Know your worth – pricing low can hurt credibility.”

In pricing, negotiating and investing, she encourages women to take financial literacy courses, join women entrepreneur networks, practice pitching regularly, have mentors and track wins.

Tracking profitability

From early on, keep clear records of income and expenses and monitor gross margin and net profit. Use a simple profit and loss statement monthly. Regularly review whether you make money or just money.

Maximise your strengths

While she applauds women for being resourceful, detail-oriented and community-driven, she says that women also tend to underprice, avoid taking risks and asking for payment. Women can start small, delegate, learn finances and profit from their passion.

Full-time, profitable business

The side hustle can become a full-time business if it pays you a reliable income, has regular profits, has a high and consistent demand, has repeat clients and covers business and personal needs with a profit margin. You should have an exit strategy and backup funds before transitioning fully.