Rule number one of starting a business is have a business plan. Before you spend a dime on tooling, fixtures, or even raw materials, you have to have a business plan. Otherwise you're probably throwing money down the drain. You'll probably make more and better cash pulling some OT than you will machining on the side. Another good investment might be skills improvement. Check your local continuing education facility to see what they offer to improve your metal working skills to increase the chance of promotion and advancement.
To more directly answer your question, when do you take your hobby and turn it into a side business. When your business plan says it makes sense and you'll make money. Yes it's possible to score side action from CL but it's generally not quality work. For the most part it'll be people who were turned down by local machine shops because they're to busy, or the quote was to expensive and they want you to do three hours of work for $ 25.
When does it work. When you've got some kind of niche to service. A friend of mine used to make 50 BMG bottle openers. He got the used brass and projectiles dirt cheap, the fixture took less than an hour, the endmill was $ 30. 60 seconds and done. 4 hours on a Saturday and he'd have 150 done and ready to go at $ 4 each. Easy money.