Anatomy of the Perfect Hobby Business

Woodworking is not even a hobby of mine, but damn…that looks fun.

There’s no doubt that all of us would love to turn our favorite hobby into some meaningful income. Everyone who gets the entrepreneurial bug eventually finds themselves scribbling ideas on a napkin for how to monetize your passion for X.

If you can do it well, then it’s a dream business — make money while you geek out over something that you really love with other people that love it just as much.

Yes, please.

So let’s say you could snap your fingers and magically create the dream business around your hobby. Set aside time constraints and budgets for a minute. What would be the different traits it would need to have to make it ultra-profitable, fast growing, and sustainable for the long-term? What would it need for you to make a great living off of it for 5, 10 or even 20 years?

Let’s walk through hypothetical land for a bit and piece together what the perfect hobby business looks like.

#1. It has a very narrow, niche target audience

When it comes to hobbies, there is no niche too small. This feels like a given, but it’s worth bringing up because if there’s not a narrowly defined audience, you can almost guarantee that there will be a disconnect with the product itself.

For most people, a hobby makes them feel unique. It’s this special thing that’s a big piece to their personal story. And so there is a strong element of self-identification that happens. People want to feel that they belong, and if your business doesn’t convey that same level of uniqueness, then they won’t quite make the connection.

Some of my favorite hobby-based businesses that have reached out to us over the years fit into such obscure and fantastic niches.

  • Rare gemstone enthusiasts
  • Adults who love to color as a stress relief
  • People who appreciate and love studying cloud formations
  • Rare 19th and 20th century post office box door collectors

Yes these are all real. And yes they all make money.

#2. Active community

All hobby-centered businesses should have a community of people at the heart of it, because ultimately people want to share what they are passionate about with other people who are going to encourage that thing in them. It adds a whole different level of excitement to that experience, and the people in that community will want to participate a lot (which, of course, adds a ton of value to the business).

That’s another really great thing about a business built around a hobby — the customers drive the product forward in a lot of ways. Their enthusiasm makes it all more interesting and more valuable for everyone there.

I interviewed a friend of mine who moderates a discussion forum that gets over 300,000 uniques a month and 14,000 posts per day. When I asked him about their community, this is what he said:

There are some people that deeply care about folks in this community. It’s fascinating.
If people can find some topic that they can reach out and touch and revolve around, they’re very willing to do it.
It can be anything. If you say that I’m really interested in little brown field mice, and someone else says, “Hey I’m kind of interested in field mice too.” That’s enough for a friendship. People just need something to revolve around.

That is a very true statement about humanity and you see that play out whenever people gather around a shared interest. Now when you’re talking about an online business, community can happen in several ways:

  • Discussion forums or messaging apps (e.g. Slack)
  • IRL events such as conferences, local meetups, etc.
  • Video hangouts (webinars, Google Hangout, Periscope, Blab)

These are all great ways to facilitate community naturally.

#3. Deep and wide content — take them from hobbyist to expert

People are in this to become experts. They may not want to make a career out of it or become the ultimate authority, but it’s something they love to dive into. Discovery is such an addicting part of a hobby, where learning new things and opening the doors to brand new information just never gets old. People crave it more and more, which is where a lot of that passion comes from.

The perfect hobby business would always find ways to fulfill that craving for deeper understanding and new discovery with good content. I think of that as being deep and wide content, because it gets very specific (multiple levels beyond what a casual observer would ever get) and it stretches across as much of the topic as possible.

Remember, people want to become experts at this thing. This also goes back to it making them feel unique. The more they know about it, the more special it becomes for them.

#4. Exclusivity

Now we are starting to get into how you monetize a hobby. To really make the customer experience special, there needs to be a clear line of exclusivity. Think of the bouncer holding the velvet rope at the front of a popular night club. Does that not create 100x more excitement about getting in? When you do get in, would you not feel like you really belong there?

The same goes for an online community and restricted content. Not everyone gets to see what’s inside, and there’s excitement on both sides of the door. The perfect hobby business has a velvet rope and a way to unlock that experience for customers.

This also has the benefit of being able to control the quality of your community. By adding exclusivity, you and the other members of your community get to agree and decide on what’s important. So it’s like you’re looking around and saying “right everybody? This is what we are after and this is what is important to us.” That certainly will cultivate a much healthier community in the long run than if you just let anyone through.

#5. Recurring revenue through the membership model

Niche community, deep and wide content, exclusivity. These all point to one recurring model: membership. There is no better way to monetize a hobby business right now.

No one is going to argue against the recurring revenue piece of this. You get a higher customer life time value, repeat customers (which usually means less cost on acquisition) and more predictability for your business. A membership site gives you all of those benefits and it is the perfect model for a velvet roped community and exclusivity with ongoing content.

#6. Be able to tie it to monetary gain for members

Not every business can do this, but if you can find a way to point to a monetary return for your members, you are going to have a much easier time keeping your customer lifetime value high.

Here’s a good example of that. is a membership site for people who buy and trade cards from the game Magic The Gathering. They have a private forum and restricted content that teaches members how to make more money off of the marketplace (which is huge and extremely lucrative, by the way). It’s not hard for them to make the connection in their customers’ minds on the value they get in return for being a member. With the help of Quiet Speculation, they can exponentially earn back their subscription fee many times over just by becoming more of an expert at this market.

Again, not every hobby lends itself to a direct monetary return, but if it’s there, you’ve got a major advantage.

What would you add to this?

If you’re running a hobby-centric business or you are one of the people scribbling your ideas on a napkin, what would you add to this list? What else would the perfect hobby business have?

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