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With the unemployment rate careening toward 9% and companies doling out forced furloughs and pay cuts, the search is on for alternative sources of revenue.

The good news is that you don’t need to look beyond your own workbench, sewing kit or crafts closet to find it. More and more people are finding that with a bit of cultivation, a favorite hobby can provide a steady stream of income, an online marketplace for handmade goods, is a testament to the trend. It took the company two and a half years of hard work to finally hit one million users by January of 2008, but only nine moths later, that number had already doubled. And in each month since, Etsy had added over a hundred thousand new buyers and sellers to its community.

Adam Brown, a spokesman for, says these days consumers are more inclined to buy homemade items.

“Lately, people are more aware of the social and environmental costs of things that they buy,” Brown says. “Handmade objects also have an intangible value…The person and story behind the item. I like to use this story: ‘If your house was on fire, are you going to run in and rescue your stereo, or the dress that your mother made for you?’ ”

MainStreet spoke to four people who have capitalized on this trend, successfully turning their hobbies into earnings:

Jessi Walter has always loved baking. When she lost her job as a vice president of credit strategy at Bear Stearns, she didn’t despair. Inspired by kitchen lessons she had given her boyfriend’s young nieces, Walter started Cupcake Kids, a small business that provides children's cooking classes (and not just on cupcakes). Now, Walter's classes regularly sell out and she is looking into opening a second location.

MainStreet: What is the most challenging aspect of running your own business?
Walter: Being in charge of everything! If you don't do it, no one else will. It's exciting to have so much control and involvement in what you are creating but it's also a constant challenge to keep up with my ideas and vision for Cupcake Kids.

What is most rewarding?
It's amazing to see the company grow. I love looking at how we're expanding each month and how we're improving in every area of the business. It's also wonderful to work on generating new lines of business.

What have you learned?
The biggest insight is that it's hard. I'm so glad that I made the decision to pursue Cupcake Kids, but it's been a lot of work. Many more hours than Wall Street. My head brews with ideas from morning to night!

What tips would you give people looking to turn a hobby into a business?
Love what you are going to do. You have to embrace the whole process (not one specific element of your business). If I only liked teaching kids to cook, I wouldn't be very happy right now. I enjoy the marketing and the business planning, etc. You have to be in it for the whole package. You also need to be realistic about your goals and whether or not they are attainable. Budgets are very hard to do but they really help!

Joe Oliveri has been collecting broken and obsolete computer parts in his basement for more than a decade. His plan was to retail them on eBay (Stock Quote: EBAY), but he quickly realized that some items just don’t sell. Three years ago he had his eureka moment when he saw a clock made from old hard drives for sale. He thought, “Hey, I can do that.” And he did. Oliveri started that year and has been making money off of discarded computer parts ever since.

MainStrreet: What is the most challenging aspect of running your own business?
Oliveri: The challenge is managing my time between my day job, family and Geek Gear. And recruiting my own customers…I recently started a mailing list to try to keep in touch with my previous customers and keep them informed on my latest creations.

What is most rewarding?
Geek Gear fulfills a few things in my life. The first is legacy. It’s the thought that knowing something I made might be around after I'm gone. Next is satisfaction. When I make a new product it’s like winning a baseball game. I tell myself when I sit down at my workbench to brainstorm, “I need a win here!” And, when a customer opens a box from Geek Gear, I want them to be happy and bring a smile to their face.

What have you learned?
The most important part to any of my business is customer satisfaction. A happy customer tells a few people about you. An unhappy customer tells everyone!

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What tips would you give people looking to turn a hobby into a business?
First and most important is to keep it fun. When it’s a hobby you do it for fun, so when you make that jump to business keep it fun!
Second, keep it simple! When I make a new product, I usually only buy enough supplies for one or two. If I can sell two, I can probably sell four, then eight, then eventually fifty or more. This way I'm only investing in parts that will be used in my products. You may come up short on stock from time to time, but it will keep your expenses down.

Cyndie Smith spent years traveling the globe as a health care executive. It was tiring and frustrating and eventually she’d had enough. Smith took a metalworking class for inspiration and, when a friend told her about, she decided to try and sell one of the bracelets she designed in class. She sold 49 of them in short order and in 2003, Cyndie Smith Designs was born.

MainStreet: What is the most challenging aspect of running your own business?
Smith: Time is my biggest challenge. People think, because it's my own business, I can just do it when I feel like it. Not so! There's marketing, updating websites, photographing, record keeping, packaging and mailing, and finally, creating.

What is most rewarding?
The fact that most of my customers keep coming back. It took about a year to create a loyal following, but I have people whose entire family has one of my designs. They've become friends, not just customers, and they come to me for custom designs. I love that, because it means that each piece has a special meaning to them.

What have you learned?
After almost two years, I've learned not to let it take over my whole life. It's so easy to get caught up in the thrill of it all, like Sally Fields at the Oscars: "They like me, they really like me!" I wish I'd known how to balance it all. I’m still learning but I'm getting better at it. 

What tips would you give people looking to turn a hobby into a business?
It can't be done half way. People considering this move need to understand that the business doesn't just come to you. It's hard work and requires hours of marketing and follow-up. When I first started, it was two hours of online marketing in the morning, and two hours late at night (to catch the West Coasters, and the international market). Also, customer service is everything. A quality product won't go anywhere if the customer isn't happy.

Traci French taught kindergarten through fourth grade for 10 years, and while she loved the kids, she wasn’t as fond of the work. When readers of her blog started asking to purchase the photos she posted, she realized that she could make a living doing what she loved best. French is now a full-time mom and a full-time photographer. She sells her work online and to companies like Urban Outfitters.

MainStreet: What is the most challenging aspect of running your own business?
French: Time management. I have the toughest time with that.  I have nobody to answer to, so many times I put everyday life in front of working on my photography. Although, it can also go the other way. Many times I feel like I should really be giving my family my full attention, but then get caught up in my photography or blog.

What is most rewarding?
Oddly, the same thing.  I love the fact that I don't answer to anyone and can spend the day tooling outside with my son if I want to.

What have you learned?
I wish I went for it earlier. I wish I had spent my 20s trying to come up with a career path that I would absolutely love, rather than something just to get by.

What tips would you give people looking to turn a hobby into a business?
As hokey as it sounds, put good things out there and they will come back to you over and over again.  I have been amazed by how kind and giving people can be and how good it feels to admire the work of others.  Also, commenting on other people's blogs is a fantastic way to introduce yourself and what you do.

Related Links
Small Biz 101: How to Start a Cupcake Shop

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