The $100 Startup
The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future by Chris Guillebeau
Microbusinesses are small, private businesses that provide a good living to the owner while allowing them to retain their independence and pursue work that interests them.
These businesses, and the lives they cultivate for the owners, are built around freedom and value. Freedom is what we're all searching for, and value is the way to achieve it.
Freedom is highly personal. It's about being free from the things that weigh you down. It can be freedom from a schedule, from a boss, from office politics, from meetings and time sheets, or from anything else that makes you want to put in your two week notice.
Value is generated when a person shares something useful they have created.
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This book is about how to create a business that provides you with a sustainable income and work you enjoy. It isn't about creating a multi-billion dollar corporation, nor is it about creating the next high-growth startup. It's about how to live your dream and make a good living from something you care deeply about.
You're not just creating a job for yourself, you're crafting a legacy.
Microbusinesses are businesses typically run by only one person, one renegade entrepreneur. If you want to start your own business and start living by your own rules, now is a great time to start. Because of new technology, anyone can start a business and reach a group of customers faster and more cheaply than ever before.
If this is something you've thought about before, this book is the blueprint to help you start.
Freedom isn’t something to be envisioned in the vaguely distant future— the future is now.
The $100 Startup Model
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Lesson 1: Convergence
Convergence is the intersection of something you care about with something other people are willing to spend money on.
Not all hobbies can be monetized. Similarly, not every personality is fit to run every new business opportunity. Find what you like that will also make you money.
Where passion or skill meets usefulness, microbusinesses can thrive.
Lesson 2: Skill Transformation
Businesses are often started by people with related skills but not necessarily the skill most used in the project.
Every skill has associated skills. For example, teachers have many more skills than just teaching. Teachers often have skills like communication, adaptability, crowd control, and lesson planning, among others.
Many businesses and side projects begin when you can apply your knowledge and skills to a related field.
Lesson 3: The Magic Formula
Passion or skill + usefulness = success
Starting a business requires three things:
- A product or service,
- A group of people willing to pay for it, and
- A way to get paid.
Everything else is completely optional.
Give Them What They Want
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There's an easy way and a hard way to start a business:
- The Hard Way: Fumble along, uncertain whether your ideas will resonate with customers.
- The Easy Way: Find out what people want and find a way to give it to them.
How to Provide Value
Value is what your customers get from your product or service. Another way to think about it: providing value means helping people.
If you're starting a business and you get stuck, think: How can I help people more? Businesses succeed when the founders are focused on providing value above all else.
Most simply, people want more of some things and less of others.
- People want more love, money, acceptance, and free time.
- People want less stress, conflict, hassle, and uncertainty.
If your business focuses on giving people more of what they want or taking away something they don’t want (or both), you’re on the right track.
This brings up an important caveat: What you think the customer wants isn't always true. Give people what they want, not what you think they want.
If you don't know exactly what customers want, ask.
How to Ask What They Want:
Spotting business opportunities can be tricky. You may think of a business idea that people won't want, or you may think of an idea that people want but aren't willing to pay for.
In many cases it makes sense to ask potential customers how you can help them. It helps to be specific. Asking people if they “like” something isn’t very helpful. Since you’re trying to build a business, not just a hobby, a better method is to ask if they’d be willing to pay for what you’re selling.
Start with questions like these:
- What is your biggest problem with _____?
- What is the number one question you have about _____?
- What can I do to help you with _____?
Ask only what you need to know. Keep surveys under 10 questions. People are busy but doing this can increase response rates to 50% or higher.
Since you're limited on questions make sure whatever you ask is something you actually need to know.
The Customer is Often Wrong
Pay close attention to the feedback because the information is valuable, but also remember that the majority opinion isn’t everything. Sometimes the customers are wrong.
This section of the book reminded me of a quote by Henry Ford: "If I had asked people what they wanted, they would have said faster horses.”
Sometimes customers will say they want one thing but they actually want something else. Think about airlines. People say they want extra legroom but they don't. Most travelers don't value the additional legroom enough to pay for it. What people really want are lower prices.
What people say they want are declared preferences. What they actually want are revealed preferences. There is often a large gap between the two. This is talked about in greater detail in Think Like a Freak by Steven Levitt and Stephen Dubner.
What people want and what they say they want are not always the same thing; your job is to figure out the difference.
How to Choose an Idea
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When you have multiple business ideas it's a good practice to write them all down. You won't be able to act on all of them at once so having a list will allow you to choose from them as opportunities arise in the future.
Most of the time entrepreneurs have plenty of ideas. The problem is evaluating which idea to pursue.
Create a decision making matrix that ranks each idea on different factors so that you will hopefully end up with objectively the best business idea to pursue.
- List your different ideas for projects or businesses
- Create different criteria on which to rank these ideas. Examples: the impact, the effort it will require, profitability, and its fit with your overall mission and vision.
- Rank each idea based on these criteria.
By comparing each idea on the same criteria you should be able to see trends as well as the strengths of each idea.
You may find that one idea ranks first in ease, impact, and profitability, making it likely your best choose to continue. You also might fall in love with an idea that simply proves too hard, or not a good fit, which would put it on the backburner.
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Friedrich Engels said: “An ounce of action is worth a ton of theory.” Choose the ounce of action today.
There’s nothing wrong with planning, but you can spend a lifetime making a plan that never turns into action.
1. Select a marketable idea
A marketable idea doesn’t have to be big or groundbreaking. It just has to provide a solution to a problem or be useful enough that other people are willing to pay for it.
Don’t think innovation; think usefulness.
2. Keep costs low
By investing sweat equity instead of money in your project, you’ll avoid going into debt and minimize the impact of failure if it doesn’t work out.
3. Get the first sale as soon as possible
For the project to be successful, you need to get started. The first time you make a sale in a new business, no matter the amount, it’s a very big deal.
“It may not have been completely rational, but that single sale motivated me to take the business much more seriously.”
4. Market before manufacturing
It’s good to know if people want what you have to offer before you put a lot of work into making it.
This can take the form of surveys or even a crowdfunding site like kickstarter. Products on Kickstarter are being marketed and sold before the products are even manufactured.
5. Respond to initial success
After an initial success, regroup and decide what needs to be done next.
It's good to pay attention to what created the initial success even if it seems accidental or coincidental.
Business Plan and Mission Statement
This chapter also provides free resources for creating a business plan and mission statement.
Use the One-Page Business Plan to outline your business ideas quickly.
To avoid overcomplicating things, explain your business with a 140-Character Mission Statement.
Where to Buy
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Even More Great Stuff In This Book:
- How to create an instant consulting business
- How to become a digital nomad
- How to self-publish a book
- Seven steps to instant market testing
- Create a one-page business plan
- The 140-character mission statement
- How to launch a product or service
- How to franchise yourself
- What happens if you fail?
- And much, much more!