The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future (15 page)

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. Jen and Omar started with a total budget of exactly $500. In another part of Columbus, Ohio, Amy Turn Sharp runs a handcrafted toy company. Startup cost: $300. Nicolas Luff in Vancouver, Canada, started with only $56.33, the cost of a business license in 2000. In New York City, Michael Trainer started a documentary business for $2,500, the cost of a camera—which he later sold for a profit.

Most of these people are
solopreneurs
, running a light operation by design. But larger businesses with multiple employees also opted to keep the initial costs as low as possible. David Henzell, the
agency founder in the United Kingdom whom we met in
Chapter 1
, started his new partnership for $4,000. Scott Meyer and a business partner, whom we’ll hear more about in
Chapter 9
, started a South Dakota media firm with four employees for under $10,000. The point is that the numbers may vary, but wherever possible, keep costs low.

GET THE FIRST SALE AS SOON AS POSSIBLE
. In Louisville, Kentucky, I talked with Nick Gatens, who told me about a small photography project he was working on. Nick worked full-time in information technology for someone else’s business and had been trying to break into doing something on his own for a while. The “something” wasn’t working yet, though. “I’m not sure I’ve got the right site design or the right message for visitors,” he told me in the coffee shop where we met.

I’m always curious about other people’s projects, so I flipped open my laptop and asked for the URL to take a look. “Well,” said Nick, “I don’t actually have the site up yet.”

I’d love to tell you that I gave him some brilliant advice, but I didn’t have to say anything at all. Nick stared down at his coffee cup in realization of the obvious: For the project to be successful, he needed to get started. The other people we were hanging out with encouraged him too, and he left the coffee shop determined to make progress quickly.

I was in Kentucky that day on a fifty-state book tour, and when I made it to West Virginia a few weeks later, I saw Nick again. This time, he had an excited look on his face and an important update: “I got the site up, and I made a sale!” A stranger had followed a link from somewhere on the Internet and paid Nick $50 for a print. If you’ve never sold anything of your own before, you may wonder,
What’s the big deal? He sold one $50 print
. But I understood
immediately: The first time you make a sale in a new business, no matter the amount, it’s a very big deal.

In the weeks between Kentucky and West Virginia, Nick had figured out the real culprit behind his delay. “That conversation made me think about why the site wasn’t up yet,” he said. “In my head, it was all technical: I had to tweak the design and fix some errors in the code. But being honest with myself, I realized it was really that my fear was still holding me back; the technical stuff was just an excuse. What if I don’t sell any prints, or what if nobody likes my work? After realizing why I was stuck, I went home and made the site public that same evening. Within two weeks, I had sold that first print.”

Other interviewees told countless versions of this story—about how hard it was to get started but how rewarding it was to receive that first sale. “Once the first sale came in, I
knew
I’d succeed,” someone said. “It may not have been completely rational, but that single sale motivated me to take the business much more seriously.”

“I was doing a live presentation and opened the shopping cart for our first product launch,” someone else said. “I saw orders coming in and literally said out loud, ‘Yes, this is it!’ It was huge for my momentum at the time.”

Therefore, the question you need to ask is … how can I get my first sale? Competition from other businesses is a problem for another day; the greater problem you face is inertia. Nick won the battle against inertia by getting his site up and running, and was rewarded with the sale.

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. One way you can do this is through surveys, as we saw in the last chapter—but if you’re adventurous, you can also just put
something out there, see what the response is, and then figure out how to make it.

A friend of mine did this with an information product aimed at the high-end car industry. He offered a specialty guide that sold for $900 … except he didn’t actually create it before he advertised it in a magazine. He knew it would be a lot of work to put together the guide, so why do the work if no one wanted it?

Partly to his surprise, he received two orders. The cost of the ad was just $300, so that represented a $1,500 profit if he could actually create the guide. He wrote to the two buyers and said he was developing a new and improved “2.0 version” of the guide and would love to send it to them at no additional charge as long as they could wait thirty days for it to be finished.

Of course, he offered to refund their money if they didn’t want to wait, but both buyers chose to wait for the 2.0 version. He then spent the next month frantically writing the guide before sending it to the eagerly waiting customers. Since he knew he had a success on his hands (and it helped that he actually had a product now), he placed another ad and sold ten more over the next few months.

Maybe you won’t do it that way, but make sure there is sufficient demand for your product or service before spending your whole life working on it. That’s why it’s so important to get started as quickly as possible and why the first sale can be so empowering.

RESPOND TO INITIAL RESULTS
. After an initial success, regroup and decide what needs to be done next. Jen and Omar responded to demand by adding more maps and carefully creating new products. One year in, they made the decision to stop doing their own fulfillment. “Going to the post office was fun when we were first getting started,” Jen said. “But then we had to do it three to five times
a week, and it got old.” They decided to subcontract their shipping to a local warehouse and ended up saving several hours a week.

Decisions like these may sound like a no-brainer (Why should two designers spend their time making post office runs?), but implementing them can take a lot of work. In Jen and Omar’s case, it wasn’t just a matter of hiring the local warehouse to do their shipping; they also had to complete the daunting task of syncing their online shopping cart with the fulfillment house.

Finally, it’s good to pay attention to what created the initial success even if it seems accidental or coincidental. In Jen and Omar’s case, it may have been a fluke the first time they were featured on a major design site, but what if they could make that happen again? It
did
happen again, over and over, because they built relationships and pitched their new projects in a low-key, commonsense manner. This is a process we’ll look at more in the next section of the book.

In a microbusiness built on low costs and quick action, you don’t need to do much formal planning. Mostly, you need the elements we’ve discussed throughout the book: a product or service, a group of customers, and a way to get paid. Check out the One-Page Business Plan template on
this page
for a helpful tool.

As you think through the questions of freedom and value, the most important one is, “How will this business help people?” This isn’t simply about being generous, because as a business helps people, the business owner gets paid. Some people design an entire for-profit business around the social component, others shift to focus on it as they go along, and still others integrate a social project within a for-profit business.

Apartheid came to an end in South Africa in 1994, ending
nearly half a century of white-only rule in Africa’s most economically developed country. Nelson Mandela was elected the first black president the same year, and the country began a slow process of creating true equality for its “rainbow nation” of people. In addition to the negative association of apartheid, South Africa was known for many good things, one of which was its popular prize-winning wine. The wine region of the Western Cape is older than California’s. South Africa provided the royal courts of Europe with wine for over 350 years, and South African vines were used to start the Australian wine industry in 1781.

Yet because of apartheid, the $3 billion wine industry had less than 2 percent black ownership despite the fact that blacks represented 80 percent of the country’s population. Enter Khary and Selena Cuffe, a husband-and-wife team from the United States who found a way to create a highly profitable business that supports black vineyard owners in South Africa. Selena, the CEO, explains it like this: “This venture merges my passion for entrepreneurship with social justice. The greatest benefit is that my personal and business goals are identical: positively changing people’s perception of the African continent and helping to reinstill a sense of family and connectivity into the lives of the people that our business touches.”

In Tel Aviv, Israel, Daniel Nissimyan founded a paintball
distributor called Matix Ltd. The business stood out to me because of his unique client base: “We sell extreme sports equipment to enthusiasts in Israel and neighboring countries, and also to the Israeli defense establishment for training purposes.” Despite the sudden appearance of a number of competitors that sprang up in response to the growth of paintball in Israel, business was good. Matix Ltd. was clearing six figures in income and had sewn up exclusivity contracts with key suppliers, thus thwarting the new competitors.

Daniel went back and forth between Israel and the U.S., and his previous venture was a non-profit that taught karate to children with developmental disabilities in Southern California. Paintball was fun, but Daniel wanted something that combined the non-profit model he started in California with the sports business he ran in Tel Aviv. He found the answer in a new venture called Green Collar, a project that will reduce landfill waste inefficiency while also tapping an overlooked energy source. The goal is to work with municipal governments in both Israel and the Palestinian Authority in an effort to solve common problems and advance joint interests. Here’s what Daniel has to say:

Whether you follow Daniel’s model of designing a business around a social cause (and being paid for it) or find a way to incorporate a community project into your existing business, many entrepreneurs find this to be a critical, fulfilling part of their work.