Authors: Chris Guillebeau
The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future (29 page)
There’s no point pursuing growth for growth’s sake; you should scale a business only if you really want to. Many of the subjects of our case studies said they had turned down growth opportunities in
a deliberate plan to remain small: “I just didn’t want the hassle of managing people.”
The decision on going big versus staying small is unique to each person (we’ll look at it much more in the next two chapters), but in this section we want to focus on things you can do to increase income
without
hiring additional employees or bringing in outside investors. All the tweaks mentioned above can be done by a solopreneur. Some might be easier with assistants, contractors, or employees, but none require a team. Before we close it out, let’s look at a key distinction between two different kinds of growth.
You can grow a business one of two ways: horizontally, by going wide and creating different products to apply to different people, or vertically, by going deep and creating more levels of engagement with customers. The flowchart on
this page
shows how this works.
Different businesses will find that one solution suits them better than the other, and it’s also possible to pursue limited growth in both areas. Mostly, though, you can keep moving on up, tweaking your way to the bank and growing your business. The first $1.26—or the first sale—may be the hardest, but after that, your most difficult choice may be deciding between many good options for growth.
KEY POINTS
“Moving on up” by increasing income in an existing business is usually easier than initially starting the business.
broader
by serving more customers with different (usually related) interests; vertical expansion involves going
deeper
by serving the same customers with different levels of need.
*
I’m grateful to Sonia Simone and Brian Clark for a discussion and helpful tips on this topic.
†
Corbett Barr maintains a helpful (and free) set of resources on building traffic at
ThinkTraffic.net
.
‡
John Jantsch wrote a great book called
The Referral Engine
, which is all about creating a systemized process for encouraging referrals. Highly recommended.
§
A little-known secret at Zappos is that they do cut people off who abuse the generous return policy. CEO Tony Hsieh explained to me that if a customer blatantly takes advantage of them—returning worn shoes on day 364 of the 365-day return period, for example—they’ll honor the refund once, but they’ll also gently advise that customer not to purchase from Zappos anymore. Fortunately, he also said, most people are honest.
FOR FUN AND PROFIT
.
“I’m not a businessman;
I’m a business, man.”
—JAY-Z
A
s business models go, buying a franchise that is based on someone else’s company is usually a bad idea. The basic buy-our-franchise pitch runs like this: Raise a quarter of a million dollars by withdrawing your life savings, borrowing from family members, and maxing out your credit cards. Pay most of that money up front to a company that will generously allow you to work for it. Operate the business precisely the way they tell you, with no exceptions allowed. Every decision, from whom you hire to what services you offer to where you locate your store, is made by the company. They’ll even tell you what color shirt you are required to wear in “your own business.”
If the business succeeds, you’ll make an average of $47,000 a year after scraping by for three years on the same fifty-hour workweeks you could spend at someone else’s company with a lot less stress. In this winning scenario, your ultimate success won’t be that you started a business: You’ll have bought yourself a job.
If the business fails, which happens more often than most franchise companies want to admit, the company will take back the
store from you and resell it to someone else. When they do this, they won’t count your failure as a store closure in their statistics. Thus, when you hear statistics that suggest a high percentage of franchise locations remain open, you have no idea who is operating them and who owes $250,000 that they have no way to repay.
How does that proposal sound to you? Probably not so great—which is why buying into someone else’s operation isn’t usually the opportunity it may seem from the outside. Thankfully, there’s an alternative: building a real business of your own, something that you have ownership of and control over. Buying into someone else’s franchise isn’t usually a good idea, but figuring out how to leverage your own efforts is almost always worth careful consideration.
Who says you can’t be in more than one place at one time? In fact, there are several ways to grow a business through the use of
leverage
. Franchising yourself isn’t just doing more; it’s about taking your skills, activities, and passions to a higher level to create better returns. The difference between franchising yourself and just doing more is that you take the time to be strategic. Let’s look at a couple of examples.
Nathalie Lussier was an up-and-coming software engineer. Originally from Quebec, she had interned in Silicon Valley and now had the chance to take a big job on Wall Street. Her family said it was the job of her dreams … but as Nathalie thought more about it, she realized it was the job of someone else’s dreams. Turning down the offer, she returned to Canada and decided to pursue a different idea.
Nathalie had a personal success story of dramatically improving
her health after switching to a raw foods diet. Eating only fruits, vegetables, and nuts sounded crazy at first, but the results spoke for themselves: In the first month, she lost more than ten pounds and suddenly had energy throughout the day. As she talked with her friends, Nathalie was a natural evangelist—not pushy or judgmental, but offering tips and strategies that people could use to make real improvements even if they weren’t ready to jump into a completely raw diet as Nathalie had done.
After relocating to Toronto, the idea was to build a small business helping other people make the adjustment to raw foods. Being a software engineer (and a self-described geek like Brett Kelly in
Chapter 4
), Nathalie programmed a database, set up an app, and built her own website. The first incarnation was Raw Food Switch, which correctly represented the concept but seemed a bit boring. One day Nathalie noticed that the same letters—and therefore the same website—could be rendered as Raw Foods Witch, leading to a new theme. Dressing in character with a pointed black hat for photo shoots, she rebranded the whole business around herself. Nathalie created programs, one-time products, and individual consultation sessions in the same way we’ve seen others do throughout the book. Raw Foods Witch grew into a $60,000 business after the first year.
What’s not to love? Just one thing: “From the outside,” she told me at a vegetarian restaurant in Toronto, “it looked like all I talked about was raw foods. No one realized I had done all the programming and really enjoyed the intersection of business and technology.”
The second business came about unexpectedly after Nathalie began getting tech inquiries from her raw foods clients who were also creating businesses. She decided to create a separate brand for tech consulting, operating under her own name instead of the
moniker she used in the other business. Raw Foods Witch is still a powerful brand—friends and clients report that other shoppers have mentioned her in the grocery store when they see a cart full of avocados—but she restructured the business to run on 80 percent autopilot. It still brings in a good income, but now Nathalie spends her time building the second business. Instead of doing one or the other, Nathalie effectively franchised herself.