PDF Summary:The $100 Startup, by Chris Guillebeau

If you’re looking to break away from your current work arrangement and start doing something that you’re passionate about, consider starting your own microbusiness, a business run by one person. Where you once needed to have a fair amount of funding to get started, Chris Guillebeau suggests you can now do so for as little as $100.

In The $100 Startup, Guillebeau breaks down the process of starting your own business. He covers everything from finding your target audience to creating a development plan, explaining how you can find success without loaning a cent from the bank.

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• What you plan on selling
• Why people should buy it
• How you’re planning to get paid
• How you’re going to market it
• Solutions to major obstacles

Launch Your Business

Every launch is different, but they all follow the same general steps:

1. Create a launch plan. This should outline the time and date of your launch, the length of your launch cycle, any promotions you’ll be running, and a marketing roadmap.
2. Build anticipation. Slowly feed information to your target audience. This will create hype and get consumers excited about purchasing your product. For example, film studios release lots of pre-release information about movies, including teasers, trailers, interviews, and behind-the-scenes footage.
3. Set yourself up for success. Don’t allow yourself to get tripped up by things you can prevent. Proofread your launch materials (more than once), check all website links, and keep your email organized.
4. Participate in your launch cycle. Communicate with customers, share information, and solve problems as they arise. Also, your efforts to build hype shouldn’t end once you’ve launched. Share information with potential customers to get them interested in your product.

The following strategies will help ensure that your product launch is as successful as it can be:

• As you approach launch day, a variety of issues may arise that could tempt you to delay your launch. Barring absolute disaster, you should stick to the deadlines you set. Constantly pushing back deadlines looks bad to customers and may keep you from ever actually launching your product.
• If you offer a time-sensitive discount or bonus, you must adhere to the guidelines you set. If your launch went well, you will likely receive a series of emails or phone calls asking for an exception. While it may be tempting to make more money, sticking to your word tells people that you’re serious about deadlines, something they’ll remember next time you launch a product.
• Be honest about flaws. Being upfront about any limitations of your product and why those limitations exist will help build trust with your customers. If you try to hide issues or restrictions, customers may view you as untrustworthy or manipulative.
• Listen to your audience. If most people are providing positive feedback, you know your launch has been a success. However, if most people don’t agree with the valuation of your product or are dissatisfied with it, make adjustments accordingly.

Continuing Development Post-Launch

The work doesn’t end once you’ve launched your product. After your initial launch cycle, keep your business moving forward through self-promotion and ensuring profitability.

Promote Yourself

Effective self-promotion is a balance between style and substance. Style is your ability to effectively market your product, while substance is the quality of your product. If you have style, but no substance, your shoddy product or service will undermine your charm. If you have substance, but no style, people likely won’t hear about your product, no matter its quality.

If you have a quality product and market it effectively, you’ll be able to grow your client base and grow your business. As you create your promotion plan, use the following strategies to help expand your audience and spread the word about your business:

• Use the allies you already have by sending a message to your friends and colleagues about your new venture. Explain what your company does, the primary product you’re trying to sell, and the goals that you’re trying to achieve. From there, provide 1-3 ways that they can help you if they’re willing. Be sure to thank them for taking the time to read your message.
• Offer your services free-of-charge or at a low cost when you see friends, colleagues, or customers in need of assistance. Don’t put conditions onto your help or demand something in return. If you show that you sincerely want to help others, not just sell them on your product, you’ll be able to build long-term relationships that may help you in the future.
• Give away products or services. There are many ways to go about this, including a free consultation, a contest, or a giveaway. Experiment with different methods to see what works best for your business. While you’ll have to embrace a little cost or time upfront, the audience growth you’ll reap will make it worthwhile.

Ensure Profitability

Above all else, in order for your business to survive, you must be able to make a profit. While social media followers and dedicated customers are great to have, they mean very little if your company isn’t making money. Ensuring profitability can be boiled down to two basic concepts: spend money wisely and generate more income.

Spend Money Wisely

It’s often tempting to spend significant amounts of money on large ad campaigns, complex websites, or custom merchandise. However, if your purchase doesn’t build your brand or generate sales, then the cost isn’t justified. Especially in the early stages of development, keep costs low by only spending money on items that have a direct impact on sales.

Generate More Income

While this seems obvious, many companies struggle to bring in enough cash to stay afloat. To generate more income, consider the following strategies:

• When pricing your product, charge your customers based on the benefits they’re receiving, not the cost of producing the product. For example, if a single physical book cost you $1 to produce, you wouldn’t charge $2 for the product. Instead, you’d determine the value of the content of the book and charge $20-25.
• Once you know the value of your product, create tiers that offer more pricing options for your customers. If you can, price up from your base model, not down, and keep the range limited. For example, if you charge $75 for your service, you could offer a $100 advanced service and a $150 complete service. Typically, a few people will go for the basic item, and a few people will go for the premium item, but most will go for the central item.
• Create a recurring payment model. Instead of only selling a single product, find ways that your business can offer a subscription or membership service that includes a recurring payment. Recurring payments create a more reliable source of income and keep your customers coming back.

Growing Your Business

Growing your business usually isn’t as hard as starting your business. If you can keep your customers happy over a long period of time, word of mouth about your business will spread naturally. However, there are three things that you can do to keep your business moving forward:

1) Make Adjustments to Increase Income

Once your business is up and running, find ways to increase your income and expand your company. The first thing you need to do is determine your model of growth. From there, the key to finding which adjustments benefit your business the most is experimentation.

Determine Your Growth Model

There are two ways that your company can grow:

1. Horizontally: widening your audience by providing different products and services for different kinds of customers.
2. Vertically: deepening your relationship with your current audience by providing more in-depth products or services.

Both models are valid, and it is possible to see limited growth in both directions at the same time. As you start to make adjustments to your business, keep in mind which model of growth you're focusing on, and how you can use your adjustments to support that model. Use the following strategies to increase your revenue based on your growth model:

• Generate traffic. The success of your company relies on regular traffic to either your storefront or your website. The more eyes you can get on your product or service, the more likely you are to make a sale.
• Generate conversions. Once you have a decent amount of traffic, focus on increasing your conversion rate, or the rate at which people make a purchase. Look to the sources of your traffic, including Google searches, social media, and referrals, and determine which are creating the most conversions. This will give you a better sense of where you should focus your marketing attention.
• Raise the average price per sale. There are three ways you can increase the average price per sale:
  • Upsell: Offer an upgraded version or an additional item with a purchase.
  • Cross-sell: Offer a product related to the customer’s purchase.
  • Make a sale after the sale: Offer a special product or discount immediately after a purchase.
• Create a product from your service (and vice versa). If you currently offer a service, see if you can develop a product that relates to that service. Alternatively, if you currently offer a product, see if you can develop a service based on that product.
• Ask for referrals. Ask your customers to write a review, share your page on social media, and tell their friends about your product. If you can, offer a referral incentive such as a discount or special item for both the customer and the people they bring to your business.

2) Franchise Yourself

Franchising yourself is the process of splitting your time between multiple business ventures to gain one or more new streams of income. Running multiple ventures can be a lot of work for just one person. For this reason, you may choose to get outside help with new projects. This allows you to build relationships with other business owners, explore new ideas, and target new audiences without having to take on all of the risk and effort yourself. There are two primary ways to enlist the help of others when franchising yourself: partnerships and outsourcing.

Partnerships

Partnerships are collaborations between you and another business owner, usually in the form of joint ventures, or single projects that both teams contribute to. For example, if you ran a makeup company, you could partner with a beauty blogger to create a new line of lipsticks.

Sometimes, partnerships create a completely new business that is collectively owned by the partners. For example, if you were a fitness instructor, you could partner with another fitness instructor to create a new private training gym.

Outsourcing

Outsourcing is the process of hiring outside contractors to help with the management of your business and the development and fulfillment of your product or service, thus freeing up your time to pursue new ideas.

Outsourcing’s usefulness varies from business to business. Its pros include getting help with meeting demand, removing pressure from the fulfillment process, and using resources or technology you don’t have direct access to. Its cons include increased costs, less quality control (as you lose direct control over outsourced processes), and increased management time.

3) Determine How Much You Want to Expand

As your business comes into its own, determine how much you want to expand. While some business-owners dream of taking over the world, others just want freedom and stability without the added stress of growing too large. To grow your business the way you want to, define the ideal size of your company and invest time into development.

Define the Ideal Size of Your Company

To make effective decisions about the future of your company, you need to know what the ideal version of your business looks like:

• If you don’t want to worry about the stress of expansion and aren’t concerned about making more money, you may want to keep your company small. This allows you to keep your stability and freedom without sacrificing your personal life.
• If you want to make more money but don’t want to sacrifice too much ownership of your product, you may want to consider a mid-sized model. This allows you to expand your business and reach a wider audience without being beholden to larger corporations or mass markets.
• If you want to make a lot of money and aren’t concerned about the ownership of your business, you may want to consider a “built-to-sell” model. Built-to-sell businesses are created with the express purpose of being sold in the future. In a built-to-sell model, your business must have its own identity and must be scalable because a potential buyer wants to be able to separate you from the brand and grow the organization according to their needs. (Note: The built-to-sell model is different from the “$100 startup” model as it usually requires more capital and doesn’t rely on passion).

As you grow your business, you will inevitably fail at least once or twice. Don’t let these failures stop you from taking action and growing your company. Instead, learn from your mistakes and use the knowledge you’ve gained to grow.