The $100 Startup covers all the tips Chris Guillebeau obtained from 1,500 small businesses. Chris had completed a tour of every country on earth by his mid-30s. During these journeys, he met several individuals who had turned modest investments (mainly $100 or less) into businesses earning $50,000 or more. The common features across these successful individuals were that they were passionate about their field. They also knew how they could make money from their passions . Most of the entrepreneurs did not even have the skills but developed them along the way. The $100 Startup combines what Guillebeau learned from speaking with these successful entrepreneurs. The result is a guide to starting up a small business venture and scaling it to whatever size suits you.
About Chris Guillebeau
Chris Guillebeau is an American nonfiction author, blogger, and speaker. He is best known for The Art of Non-Conformity blog and book. The site has an Alexa ranking of under 200,000 and is among the top 100,000 most visited sites in the United States. He has also written guides for travel and small business topics under the brand Unconventional Guides.
Success Requires Customers and Sufficient Skill
“To succeed in a business project, especially one you’re excited about, it helps to think carefully about all the skills you have that could be helpful to others and particularly about the combination of those skills.” – Chris Guillebeau
Identifying How You Can Provide Value
People over-rely on their passion for a specific field. The author offers an example of traveling to exotic countries. You might be passionate about doing this. However, unless somebody is willing to pay you to do this, you do not have a business. Instead, you have a passionate hobby. The key to financial success is identifying the point where your passions, skills, and others’ needs meet. In this sweet spot, you will have the passion, customers, and skill required to outperform your opposition.
Businesses should always start their ventures by considering how they can provide value to their customers. Instead of starting your business with how you will make money, start by considering how you can help other people. It is improbable your business will directly relate to your passions. However, you can identify adjacent fields associated with your passions.
The author offers the example of an enthusiastic traveler, Gary Leff. Gary had a passion for traveling and had developed a skill set related to booking the best trips based on his bonus air miles. Many people have these air miles but do not have Gary’s skill set. Therefore, Gary was able to identify the value he could offer his customers.
Developing Your Skill Set
Crucially, you do not necessarily have to possess the required skills right now. If you know there are available customers and have a passion for a field, you can learn the required skills before starting your business. Guillebeau describes this stage as skill transformation. Skill transformation relies on you having some related skills. These skills are used as a springboard for you to pursue opportunities to develop more relevant skills. In doing so, you are transforming your skill set to being one more aligned with your business venture.
Guillebeau provides another example by describing a waitress with fantastic interpersonal skills. Kat Alder understood her interpersonal skills could offer a springboard within her passion for public relations. Subsequently, she started her own public relations company. She had no experience in this field. However, she knew her skill set would allow her to start the company and learn as she progressed.
You Must Understand Your Customers
“Value is created when a person makes something useful and shares it with the world.” – Chris Guillebeau
As stated previously, businesses must provide value to potential customers. Subsequently, you must understand your customers well. Specifically, you need to understand what your target market’s demographics are. However, Guillebeau does not believe that the generic demographics generally used are particularly helpful. Avoid purely focusing on the age, gender, and income levels of your customers. Alternatively, consider the shared passions, skills, and values among your target market. These are the factors that genuinely drive purchasing behavior.
After developing a clear understanding of your target market, you can start considering whether this target market would be interested in your product. This is where market research becomes hugely important. Guillebeau recommends starting your market research by approaching your potential customers with informal questions. These questions can take the form of questionnaires, surveys, or chats on the streets. Either way, you need to identify whether this target market would pay for your product. If so, how much they would be willing to pay for it. Finally, you can use these interactions to improve your product. Encourage your target market to identify problems and potential solutions related to your product.
After developing a verbal understanding of your target market’s interest, Guillebeau recommends taking your research to the next level. You can start by advertising your product and seeing if you receive enough orders to make the business viable. During this stage, only produce one product per order. Subsequently, you are only producing what is sold and won’t have leftovers you have decided against pursuing.
Be Cautious When Accepting Customer Feedback
Guillebeau emphasizes the importance of understanding your potential customers. However, he is also wary that customers’ opinions often differ from what they actually want. For years, airlines have received complaints about the cramped seating on planes. Airlines have tried to offer more legroom at a slightly higher price. However, they inevitably find that people prefer to fly with cheaper, cramped competitors.
Therefore, you need to address the recommended expectations of potential customers. However, you also have to dig beyond these superficial expectations. Guillebeau offers the example of Kyle Hepp. Hepp is a wedding photographer. Wedding parties often express they do not want traditional wedding photos, but she takes these photos anyway. She looks beyond their superficial expressions and realizes that these traditional photos would provide value to the bride and groom’s families.
Creative Marketing Is Essential
Guillebeau reinforces the importance of value when marketing your product. A common mistake made by businesses is focusing too much on a product’s features when marketing. Instead, you should be focusing on the core benefits provided to your customers by choosing your product. Consider how your product will help your customers and incorporate this into your marketing. Focusing on core benefits will allow you to tap into the emotional side of purchasing. Focusing primarily on features appeals to the logical side of a customer’s brain. Customers do not generally purchase based on the logical side, but the emotional side.
Marketing With a Limited Budget
After understanding the content, you have to consider how you can market these ideas within a startup’s budget. Guillebeau explains that hustling is the key part of creative marketing on a small budget. Recommended hustles include connecting with journalists, collaborating with other companies, and writing guest posts for blogs. At this early stage, paying for your advertising is not an effective approach. Hustling is generally more successful than advertising when you are a small company.
As well as hustling, you can also utilize a marketing tool called strategic giving. One of the most effective tools is word-of-mouth. The generosity of giving your product away to certain customers and stakeholders means they are more likely to spread your product’s message. Guillebeau offers the example of John Morefield. Morefield was an unemployed architect who started an architect advice shop in a Seattle farmers market. In the beginning, he offered advice for 5-cents. After testing Morefield’s business and identifying the value he offered, these customers were then willing to pay full price.
Preparation Is Integral to a Successful Product Launch
Planning and Preparation
Meticulously planning and preparing your product launch will increase your chances of being successful straight off the mark. Your launch should be advertised well before the release date. This build-up should develop anticipation within your target market. Before starting to prepare your launch campaign, you need to hustle, though. Self-promotion and hustling should help you develop an audience that will be excited by the idea of a product launch. Developing this audience will rely on your ability to tell them about your product in an engaging way. Customer engagement can be encouraged by reiterating why your product would be valuable to them and explaining how the launch will unfold.
After creating customer interest, you need to maintain this interest. Ensure you remind these customers of the details to keep them on their toes. Finally, for your product launch, the product needs to be as easy as possible to purchase. This will increase the likelihood of these engaged customers becoming purchasers.
Specific Tools to Encourage Engagement
Guillebeau recommends utilizing specific tools to encourage customers to purchase early. You do not want your customers putting off purchasing your product. Hence, associate your product launch with a limited low price. Keep reminding your potential customers of the reduced price as the deadline approaches. If you can effectively encourage customers, this little extra nudge can be the difference between hesitation and action. Once your product launch deal has finished, then refuse to sell the product at this price anymore.
Guillebeau offers an example of one of his own business ventures. He launched his own online business course called the Empire Building Kit. When he launched this product, he was on a 24-hour train journey from Chicago to Portland. He gave customers a reduced price but set the deadline for this price as the time when he arrived in Portland. This deadline was exact but also highly compelling. The story he developed by linking his launch with a journey allowed him to bring in over $100,000 in 24 hours. In doing so, Guillebeau harnesses the potential associated with being prepared and utilizing urgency.
Stay Focused on Your Costs and Income
As stated previously, a passion without money is simply a hobby. Guillebeau recommends minimizing your debt at the start of your business. He believes it is no longer necessary to take on debt when starting a business. All you need is the cost of a laptop and a website. Some can acquire these for less than $100. This is why the book is called the $100 startup. The author provides an example of Chelly Vitry. She started her food guide business in Denver with merely $28 in startup costs. Subsequently, she is now making $60,000 per year.
However, Guillebeau does offer advice for people who need extra funding to get their business off the ground. You should avoid obtaining a bank loan and instead opt for crowdfunding. For example, Shannon Okey was able to raise $10,000 on Kickstarter for her craft publishing business. She was able to do this after being rejected a bank loan application.
You should always aim to limit your business costs. Subsequently, you should only invest in things that will directly impact your sales. Additionally, you always want to be pursuing ways to increase your income. You should be proactive about your business development. Actively follow one or two key metrics, like sales per day or average order prices. This will keep you focused on the lifeblood of your company.
Encourage Repeat Purchases
A fundamental principle for financial success is to encourage repeat purchases. One of the most effective forms of repeat purchases is subscription services. Guillebeau highlights a subscription service’s effectiveness by showing a $20-per-month subscription with 400 subscribers brings in $100,000 per year.
When developing a subscription service, you should base your prices on the benefits you provide rather than the cost of producing a service. Gary Leff charges a flat fee of $350 per booking regardless of whether it took him 5 minutes or 5 hours. This is because the benefit to the customer is the same. You should also have several price points for subscriptions. Rather than a single price point, you should offer multiple options; however, do not offer too many options. You do not want to confuse your customers. People will often go for a premium option, so at least offer a basic and premium version of your subscriptions.
You Can Choose How Big Your Business Becomes
You will have your own unique ambitions for your business. Whatever your ambition level, Guillebeau explains, it is completely acceptable. Only wanting a small business is as fine as wanting a huge corporation. If you do decide to grow your business, then this growth will either be vertical or horizontal.
Vertical growth occurs when you start offering more services to your customers related to your existing products. Comparatively, horizontal growth is when you start creating products that will appeal to different customers than you have already obtained. Growth will always require change. You will eventually reach a point where you cannot manage everything yourself. At this point, one solution is to outsource specific tasks. However, Guillebeau does not recommend outsourcing certain tasks. For example, if your business relates to customer relationships, you should not be outsourcing somebody to pretend to be you.
There are three factors you must incorporate into your business if you want it to grow considerably:
Keep Your Business Plans Simple
“Plans are only good intentions unless they immediately degenerate into hard work.” – Chris Guillebeau
You should keep your business plans simple so you can easily take action. Guillebeau explains that action will always beat planning. Many entrepreneurs spend considerable time developing complicated plans, and then they never materialize. Hence, your business plan should fit on one page. Ideally, it should include what you will sell, who you will sell to, why they should buy it, and how you’ll get paid. Additionally, include any planned marketing tactics and critical business metrics that you will follow. Finally, set yourself a deadline for when you have to launch your product.
Comment below and let others know what you have learned or if you have any other thoughts.
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