How do you take your hobbies and skills and turn them into services that people will pay for? I’ll show you in this article full of examples and scripts.

Since this is such a huge post, I’m going to start off with 2 notes.

1. Below, you’ll see how to take your hobbies and identify what prospective customers will pay for
2. I added lots of examples below, but it’s still complex. When you sign up at Earn1k.com, I’ll be going over a more structured, step-by-step program.

Related: 11 Ways to make money while you sleep

How do you take your hobbies and skills and turn them into something that people will pay for? Let’s say you have a passion for organizing, or you like to write in your spare time. How can you help that make you $200/month, $500/month, or even $5,000/month on the side?

In a survey of over 1,000 people that I recently did, the #1 reason people don’t start making money on the side is this: They don’t know what to do.

I want you to pay attention: This is the #1 barrier because it is the hardest step. It’s not some simple 1-2-3 checklist, which is what most people want: a one-size-fits-all solution that they can blindly follow to make extra money. But because it’s so challenging, the rewards are disproportionately large. That’s because 90%+ of people will wash out at this step, leaving the few, the proud, and the now-earning-a-lot-on-the-side.

You’ll have to take a leap to tailor the advice here to your own situation.

My goal is not to have you start earning money immediately after reading this post — even though we all love 1-2-3 steps, earning more successfully is much more complicated than that.

With that, let’s get started on the first steps of taking your hobbies and using them to make money.

Freelancing: The easiest way to make more money

There are a few things that we need to acknowledge up front:

• Out of the 3 easiest ways to make money, we think the easiest way to earn money on the side is to freelance. You can start earning money immediately, you can rapidly test your offerings, and you can cut through the unnecessary work of productizing and increasing your salary. Accordingly, we’re going to focus on freelancing for the rest of this article.
• My guess is that 95% of jobs could translate into related freelance work. But 5% of could not: For example, you don’t see any freelance cardiothoracic surgeons. (But you can see some doctors moving in that direction.)
• Just like dating, it will probably take repeated failures to find a good match between your hobbies and what the market wants.

That last point is very important. Sometimes people spend so much time building up a business — with business cards and websites and licenses — that when they actually launch and find the market won’t pay for their offering, they give up, exhausted and frustrated. We’ll teach you how to streamline the launch process so you can rapidly test ideas and refine them.

Related: How to earn extra money

Just like in the dating world, you probably won’t find your right match the first time, second time, or the 5th time. That’s where people give up. But if you optimize your system of learning what people want (and are willing to pay for), it’s simply a matter of time until you hit on something that matches your skills to the market.

Two examples: Turning hobbies into income

Example: How I used these principles to launch this blog and find readers

I originally started “I Will Teach You To Be Rich” as a 1-hour free course that I taught at Stanford. (I consider the blog a mix of freelance and product since I spend ongoing time writing here.) It was never designed to make money, it was just something cool that I wanted to do. When I’d hear friends complaining about money at the dining hall, I’d say, “Hey, you should come attend this class I put together…it’s free and it takes about an hour, and I’ll show you all the basics of money — banking, budgeting, saving, and investing.” The response was VERY positive. People said, “Wow, that sounds awesome!”

And then they would never show up.

Repeatedly, over 1.5 years, I struggled to have anyone show up. I would wonder to myself, “Why am I trying so hard to give people GOOD, FREE information about stuff they really need to know?” I felt like a career counselor, one of the most under-appreciated (and hopeless) jobs.

After trying all kinds of strategies to get people to attend, including emailing THEM and trying to coordinate times, I switched approaches. Instead of in-person events, I launched iwillteachyoutoberich.com so people could read it out of the comfort of their own dorm rooms. Later, I learned why this was so successful: People don’t like attending events about money because (1) it makes them feel bad about themselves, (2) the events are usually boring and/or scammy, and (3) people have to publicly admit they don’t know about money.

It was a classic mistake of not understanding my users (substitute “customers” in for your business).

Lesson learned: You MUST get into your clients’ heads. What are their fears? Hopes? What do they care about most (hint: How much it costs is almost never the first priority.) Similarly, once you get in their heads, you learn that the medium in which you serve your clients matters. (Is it an in-person event or a blog or a weekly phone call?) The way you approach your client matters. And the way in which you sell to prospects matters.

Related: Create side hustle income by teaching what you already know

Example: How I consulted for venture capital firms

Like all of us, I know how to use YouTube, Facebook and Instagram. A few years ago, during college, I was able to turn that into consulting gigs with multiple venture-capital firms who wanted to learn how young people were using consumer services on the web. This consisted of me giving them a course each week — online music, videos, social networks, etc — including showing them how guys checked girls out on Facebook. This was perhaps the greatest achievement of my life: Showing how guys found hot girls’ profiles to a bunch of venture capital partners.

Would you have ever thought you could turn your daily routines into a consulting gig? I wouldn’t have before I landed those gigs. But people were willing to pay for it because they had concrete needs: They wanted to understand how young people were using new technologies so they could remain sharp investors. Money wasn’t an issue, but time was: They’d rather hire someone who lived it than try to learn themselves. Once I’d established that I was skilled at these services, but more importantly that I could create an effective structure for teaching the VCs, they hired me.

Lesson learned: It’s not enough to simply be good at something, whether it’s freelance writing, dog walking, or graphic design. Millions of other young people know how to use YouTube/Facebook/Flickr far better than I do. It’s not just knowledge: You have to package your knowledge into something that clients can recognize as valuable. Usually this involves them making more money, saving money, or saving time.

Related: Do the side hustle: 5 better ways to earn extra cash

Should you pursue your passion or just make money?

People love talking about passion. Your job should be your passion! You should be a passionate lover. Eat food passionately.

Some of this is true, but passion is also overrated and used as a panacea for everything under the sun. Guess what? You get passionate when you start winning.

As Cal Newport says:

“Passion: The feeling that arises from have mastered a skill that earns you recognition and rewards.

My alternative definition claims instead that passion is the feeling generated by mastery. It doesn’t exist outside of serious hard work.

When Scott’s readers say “I have too many passions,” what they really mean is “I have lots of superficial interests.” When my readers complain that their major is not their passion, what they really mean to say is “I don’t have a level of mastery in this field that is earning me recognition.”

This is a controversial view, so don’t get hung up on Cal’s definition.

The 2 major takeaways are these:

1. Your job does NOT have to be the source of inspiration for freelancing. If you’re a project manager by day, you can be a creative writer on the side. Both share similar skills, anyway! You have to be organized, create structure out of chaos, and focus on delivering on time, every time. Now you see why turning your hobbies into income isn’t some cookie-cutter formula. Because if a project manager can earn $1,000 on the side being a creative writer, what could you do? Suddenly, it’s overwhelming.
2. Your job skills CAN be transferred, no matter how unique you think you are. So you’re a dolphin trainer at Sea World. Wow, unique job! Not really. You have skills in working with animals, obviously, which would suggest training pets. But you also have expertise in behavioral change, which many academic labs and companies would love to tap — and pay for. You can tutor children. You can help people stop biting their nails. Or 100 different options.

Don’t simply say, “I’m a process engineer! Nobody hires freelance process engineers. I give up!” (wipes face with tears and reaches for a large slab of beef). Instead, ask yourself: What do I enjoy? What am I good at?

A friend of mine left a management consulting firm to start a local events-based business because he became an expert on estimating attractive local markets.

Another friend left Deloitte to do system optimization for bloggers (integrating email, Twitter, YouTube, etc).

A third friend, who finds cleaning her room therapeutic, is starting a freelance business where she’ll be a professional organizer. Her full-time job at a non-profit has nothing to do with this at all.

So: “Think outside the box” is the sort of trite advice that I hate, so we’ll go into this in more detail later. But you really do need to challenge yourself to see what hobbies you have that the market would potentially pay for.

Related: 9 Ideas to make a side income while growing your business

Start with your goals

Too many people jump into the tactics without understanding why they’re doing what they’re doing. To be honest, I did that with iwillteachyoutoberich, and I still do it sometimes.

It’s better to do something WRONG than to do nothing at all. But if you can spend a little time planning — and still continue executing — you can save hundreds of hours of missteps.

Here’s a simple rule.

If you want to start freelancing because you want to earn extra money, identify a profitable market first, then adapt your services to it.

However, if you want to freelance because you want to take your passions and turn them into side income, first create your services that are based on your passions, then identify a profitable market.

Do you see the difference?

Example: Jack just wants to earn money

Let’s say Jack wants to earn an extra $1,000/month because he wants to pay down credit-card debt and propose to his girlfriend after he’s debt-free. Great! His first goal, then, is to generate income. As a simple rule of thumb, he should figure out the most profitable market that matches with his skills and pursue it relentlessly.

Jack is a customer-support rep for his fulltime job, so he looks outside to the market to see where he can generate income with his skills. He reads lots of mid-size bloggers via his RSS reader, and he realizes they might need help editing their email newsletters (such as iwillteachyoutoberich. He gets in touch about a paid freelance job. Success! 2 clients in a month start generating an extra $500 each month. Since Jack cares about generating income first, and his passions second, he simply found an easy market that would help him earn more immediately.

Example: Mary is passionate about jewelry

By contrast, Mary is passionate about jewelry. She feels like she has a lot to teach other women about accessorizing the right way. Jewelry is her passion, so she wouldn’t want to, say, start a freelance business helping CRM companies optimize their sales funnels.

Since she already knows she wants to earn income in the jewelry field, she spends her time researching different services she can offer to create that people will pay for. Will she help jewelry makers appear at trunk shows? Will she be the trusted jewelry specialist who delivers to high-end clients? Or can she be a jewelry specialist who handles return or customer-service calls? We don’t know what will be profitable yet — but Mary will find out via rapid experimentation.

Remember: Whenever possible, start with your goals, then let the tactics (How should I reach customers? How much should I charge? What software should I use?) follow.

And, as always, if you don’t know what your goals are, I’ll show you a way to get started anyway. That comes later.

Related: 4 Tips from a 26 year old who built a $10million consulting business

The simplified process: Matching your hobbies and skills to earning money on the side

This is a simplified process to turn your hobbies into side income. Later, I’ll get into it in extreme detail. But I encourage you to try to fit the general principles here to your personal situation.

It’s overwhelming to consider that you could literally have 500 potentials ways of earning money. That’s why people love simple SEO or other automatic ways to earn money on the side, which give you a repeatable formula…but rarely work.

Take it one step at a time.

1. What industry are you in? Oh, finance? Ok, you probably don’t want to be a freelance investment banker. But..hmm….you spend all day doing analyses. How can you use that? Example 1: Excel is a breeze to you. Maybe there are people (like me) who HATE Excel yet need detailed analyses for their business. Could you build models for other people? Example 2: You’re really good at doing valuations of industries. Are there pre-launch founders who need that skill? (Alert: Observant readers will have noticed a BIG RED FLAG over the last example of pre-launch founders: They can’t pay you. So if your goal is to generate revenue, you want to re-think your target market to make sure they can afford to pay you.)
2. Identify your hobbies and skills — then think more broadly. The most common thing I hear is, “I’m a really good communicator…but I don’t know how to turn that into a side income.” That’s because you can’t. Nobody hires a “good communicator.” They hire people to solve their problems. What does a good communicator mean, anyway? That’s just a lazy way of saying you haven’t spent the time doing research on the available options you have to channel your skills into something that’s worth money. Are you great at writing press releases? (I’d pay for that.) Are you great at training public speakers? (You might be able to find a specific segment of people who’d pay for that. This one is tricky, though. Can you identify why?) Are you a good communicator because you can speak Chinese? Boom, I’d instantly be a tutor for Chinese kids since their parents will love/trust someone who speaks Chinese — even when tutoring their kids for any subject.
3. If you don’t have any marketable skills, there are still options. Etsy is a perfect example of people making great side income — and many of them don’t have any skills that would commonly be considered “valuable.” Yet they do well selling niche products to a niche audience. If you aren’t some professional with software-engineering skills or online-marketing experience, that’s okay. Can you hammer something into a wall? (I’d pay for that.) Can you cook? (I’d also pay for that…infact I am.) Can you walk dogs? Tutor kids in 4th-grade math? Help moms with routine tasks? You can make money on all of these things — good money — without having to have some hard technical skill…as long as you find a market that will pay for them.

I want to go a bit deeper.

People are very bad at identifying their own skills. They’ll say things like, “I dunno….I guess I’m good at writing and communication, and, like, general organizational skills…” AMAZING!! HERE’S $4,000/MONTH RETAINER!!!

Get a life, please.

Repeat this over and over: People pay for solutions, not your skills.

For example, I was recently on a webcast where I was suggesting ways for people to earn money on the side, and I mentioned that I hate cooking, am not good at it, and would love it if someone cooked for me. I got an email later that night from someone in SF who said, “Ramit, I can help. I can teach you everything you need to know over one weekend, and you’ll know 3-5 great dishes to cook.” I appreciated the offer, but wrote back, “Thanks for the offer! But you don’t understand. I don’t want to learn — I want someone to do it for me.” He ended up sending me another proposal and I’m now working with him. (I’ll release the details, including the exact email script he used to persuade me, at Earn1k.com.

Again: People have problems. They want solutions. They don’t care what you’re “interested” in. Are they too busy to organize their closet? Do they need someone to help them redesign their website? Maybe they want someone to teach their kid how to play flute.

When you make your offer, you’ll have to deeply understand what the market — your prospective clients — want. And then you’ll be able to turn your service offering into something so compelling….that they’ll actually pay you for it.

Let’s take a look at another example.

Case study: Identifying skills that people will pay for

This is one of the most difficult real-life questions I got from an iwillteachyoutoberich reader, so I thought it’d be instructive to tackle it.

“How would a systems process engineer earn money on the side?”

Warning this will be tough. First of all, what the hell is a systems process engineer? I dug around and discovered that they basically build and manage complex engineering systems. Perfect.

Start off by asking yourself this:

1. Do I like what I’m doing at all, or do I want to do something totally new? If not, remember, you don’t have to use your job for inspiration or passion — you could just as easily earn money teaching people to surf.
2. What if you DO like your work as a systems process engineer? Step-by-step: Is it freelance-able directly? No, most likely not.

Ok, you love your work but can’t find a freelance job that replicates your full-time work (plus, your boss might not like that). So you dig deeper into the skills you use on a daily basis: You…

• Do a little PHP coding
• Organize systems
• Automate complex processes
• Project manage
• Create technical documents that can be understood by lay audiences
• Lead a team

Don’t get stuck here. Ask yourself: Which of these skills can solve a specific problem? Brainstorm those out.

• I could do some PHP coding, but I’m not the best. Don’t censor yourself — put everything down.
• I could help businesses automate and streamline their income-generating processes. Vague, but okay.
• I could manage projects and lead teams towards deadlines / organizing. This is super-vague, any 22-year-old college grad would say he could do the same, and it doesn’t take advantage of my specific skills. Skip this.
• I could be a technical writer and help companies demystify their technical-support documents. I could even rewrite the technical portions of their websites to make them more comprehensible to normal people, especially companies in the consumer-energy field. Very promising, especially since I follow a few of these companies online.

Each of these individually is a potentially viable freelance trade – can you pick one and do it? The answer should be YES/NO to each. Put “YES” if even remotely feasible.

• PHP coding: YES
• Automate systems: NO (too vague for me to know where to start)
• Project manage: NO (too vague)
• Technical writer: YES

Excellent. Now you have a list of skills that might potentially be profitable. Optional: Combine skills together to make a more compelling, more niche offer.

You can often charge more and help clients more by packaging offers. In this case, it’s not very relevant, since technical writing and PHP coding are pretty different. But one of the people who helps on iwillteachyoutoberich pitched me to do video editing + marketing. Perfect fit. I hired him.

Next step: How can you prove to people that you’re knowledgeable enough for them to pay you?

This is something I’ve been encountering as I’ve been trying to hire a sysadmin for my blog. I’ve gotten a lot of recommendations, and the first thing I do when evaluating someone is look at their portfolio and past clients. At least half of potential hires don’t have this section. Easy solution! I move on to someone who does.

• For our systems engineer, can he point to a PHP project he did on the side?
• What about a sample of technical writing where he turned something very complicated into something totally palatable?

Having one portfolio entry increases your odds of landing a client by at least 200%. Having 5 increases it significantly more.

Related: 10 easy ways students can make money fast

Which market should he target?

People tend to think about the market they work in only. But remember, virtually every industry needs the same skills — marketing, sales, engineering, etc. Our systems engineer shouldn’t limit himself to his field (energy). With his skills, he can limit it to technical companies, since they’re the ones most likely to need PHP consulting and technical writing. But to broaden his view and find more potential prospects, he could:

• Examine the companies he follows in magazines, blog readers, and TV. Does he love reading about technical blogs about how mom-and-pop shops automate their sales? (There really are a lot of these.) They might be the perfect target to reach out to.
• Examine the community of people he interacts with. Does he have a lot of friends or professional acquaintances who are all writing code for XXX purpose? He might: It’s not surprising that people with similar interests hang out together, so if your hobby is writing PHP, you may very well have some friends who need the service.

Our systems engineer has now taken his full-time job, excavated it to find skills that he might be able to use on the side, eliminated the unattractive ones, and limited the potential outreach to 4-10 companies he can reach out to.

The next steps would be understanding the needs of his prospects — to see if there is indeed a match with his skills — and crafting his service offering. We’ll get to all of these.
But for now, notice the takeaways of how to really think deeply about your skills, which may or may not have anything to do with your full-time job, and systematically narrow them down to something that people might pay for.

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This article originally appeared on I will teach you to be rich, by Ramit Sethi .