Table of Contents
Thanks to the internet, it is now possible to build a micro-business. You can either consult, build software, or create educational material through books or online courses for very little money. The other big advantage is that you can do it from anywhere.
The catch is that you have to double down on effort and be smart about how you’re going to promote your project. Look for ways to advertise that don’t cost much money. Try many techniques, you never know which one might work. Your priority should be clear, make your first sale.
Everything else is a waste of time.
When thinking about a business idea, always keep in mind how much income you can make, and what it’s going to cost you.
Focus on the intersection of 3 things.
- Passion
- Skill
- Market Need
When all 3 intersect, you have a viable idea. The insinuation here is that it’s easy for people to get carried away with only 1 or 2 things on that list.
- If you build a business without passion, you’ll probably lose interest somewhere along the way.
- If you build a business without skill, you’re not going to offer a high-quality solution to the problem you’re trying to solve.
- If you build a business without market need, you’re not going to make money.
Sometimes it is the combination of multiple skills that allow you to create a successful business. You don’t need to be an expert in everything. It’s often the unique combination of a set of competencies that allows you to add value.
Important questions to ask about your hobby:
- Would you enjoy doing your hobby 20 hours a week?
- Do you like to teach people about it?
- Do you like all the ins and outs?
- If you had to do administrative work, would you still like it?
Important questions to ask about the market:
- Have people asked for your help?
- Would people pay for your expertise?
- Are there other businesses serving the market but no how you would?
Passion + Good Business Sense = Success.
You need to find out how to turn your passion into a market opportunity.
Since you’re going for a micro-business, your approach should be cautiously optimistic. Don’t throw a lot of money into whatever you’re going, otherwise, it’s not a micro-business, and even if you do end up making money, it’s likely not going to be that much money.
There’s a clear upper limit to what you can accomplish with a low budget. You can make enough money to survive without a day job, but you’re probably not going to make enough to go around buying yachts for fun.
Keep your expectations realistic, and be disciplined with how you use your money.
Don’t strategize too much. It’s wiser to do rather than think.
There are a few key things you need to know before selling a product or service.
- What are you selling?
- Who is your customer?
- Why are they buying from you?
- How are you going to get paid?
If you can figure those things out, you have a good working plan.The more focused it is, the better. The more general it is, the more useless it is. Your micro-business doesn’t need a long, detailed plan because you’re not going to raise money from VC’s, or anyone else. Just make sure you have deadlines and clear answers to the few most important questions.
The business model canvas is probably the best resource you can use for that today – https://strategyzer.com/canvas
Decide when you’re going to launch. If you decide you’re going to launch in 6 months, that’s how long the work is going to take you. If you decide to launch in 2 weeks, then it’s going to be done in two weeks. This is a powerful idea that Tim Ferris also talks about in “The 4 Hour Work Week” called “Parkinson’s Law”. I think it’s powerful because it’s self-evident, yet few people think about planning that way.
When you’re selling to your customer, don’t sell features. People don’t care about technical sounding words or boring descriptions. They want to feel a certain way. Your job is to cater your marketing message to that feeling.
People think that the customer needs to co-create their business. That’s not true. You don’t go into a restaurant and help the chef prepare your meal. You don’t have time for that. Neither do your customers. They want the final product that works and makes them feel good or happy or confident.
Always create hype before you launch your product. Don’t just sell your product, but create some kind of offer to draw in more people. You need to hustle to get customers.
Your business model will have tradeoffs. If you want to make money from advertising, you might need to sacrifice control or recurring passive income. If you sell your product/service at a one time free, you gain control at the expense of recurring passive income.
Don’t price according to cost, price according to value. If you build a software for $10,000 that can save a company $1,000,000 in costs a year, it would be stupid to price your product at $15,000. Technically, yes, you made a profit, but you are anything but maximizing your time.
There are two ways to grow your business. If you want to add more value to your existing customers, you’re growing vertically. If you want to offer different products to more customers, you’re growing horizontally. Your decision will depend on what type of customers you have.
Consider whether you want to add more people to your team of one. Adding more people means adding more complexity, and will require more skills. It’s not always the best thing to do, especially if you’re not skilled in handling people. It’s okay to be honest with yourself about what your strengths and weaknesses are, in fact, it’s imperative.
If your ideas aren’t panning out, think about how you can help people. Adding value really just means “helping people… “ You can fill in the blank with whatever you want, but thinking in those terms is always a great starting point.
Don’t overcomplicate things. “An ounce of action is worth a ton of theory”. Don’t overthink your business, keep it simple. Business is not neuroscience, rocket science, or any science. Especially a micro business, you don’t need a Ph.D. thesis to start making money.
Sometimes it’s a good idea to scratch your own itch. One of the cases talks about a music teacher named Brandon who combined technology to help himself organize his work. He created Music Teacher helper, charged hundreds of dollars for the premium service, and built a successful business. He makes around $360k a year and counting. There are tons of examples of different people who find ways of making money from what they love doing, but I think a good point made in the book is that it’s important for you to figure out if turning your passion into a business is what you really want in the first place. To some people, working on their passion is a welcome distraction from everyday life that keeps them sane. It’s not always wise to be a professional in what you’re passionate about.
For some kids, football might be the best part of their day. It’s what they do after they come back from school and gives them an hour two of pure joy. When they grow up, they might think that becoming a professional football player is the most logical thing to do, since they’re passionate about it and skillful, and teams are willing to pay for their services. What they don’t realize at the time is that when you take your passion to the next level, you’re also adding stress, discipline, consistency, and even pain.
Becoming a professional at anything is not something to be taken lightly, and it’s important to really understand what you’re getting yourself into before you make the leap.
Look For Smart Bets
Chris is an entrepreneur who has compiled a lot of case studies of other entrepreneurs who have chosen to share their experiences. He relates a lot of the concepts above to those experiences, so reading the book is a great way to give these concepts some more context.
It’s an easy book to read, and it gives you a lot of insight into different paths people have taken towards entrepreneurship. Sometimes they were accidental, sometimes they were more purposeful, but most of them ended up being better off because of taking the leap. Of course, for every success story, there are hundreds of flops. It’s not always a pretty picture. But we do live in a time where building a micro-business is incredibly easy.
What I like about this book and its focus on micro-businesses is that it captures something that always attracted me personally to entrepreneurship.
To sum it up in an equation:
Great Effort + Low Risk = Massive Results?
A lot of people don’t like that question mark at the end of that sentence there. For me, I don’t mind it so much.
If you’re given an opportunity to learn difficult and important things at close to no risk for the chance to win big, take it!
There aren’t many better deals than that.
I think “The $100 Startup” is a very useful book for people who are uninitiated in the world of business. If you haven’t thought about starting your own business before, this is a great guide to get you going.
Evaluation
- Durability (I Will Read This Again): 14/20
- Originality (This Taught Me Something New): 14/20
- Experience (This Was Enjoyable to Read): 16/20
- Efficiency (This Was Concise): 16/20
- Shareability (I Will Recommend This Book to My Friends): 17/20
UW Score: 77/100
A lot of the advice given is conventional, and anyone who has read a book or two about business will not find any of these ideas groundbreaking or refreshing. The author also doesn’t invest too much time in talking about the flip side of investing a long amount of time in a project that will most likely fail. The idea being able to be an entrepreneur cheaply is nice, but time is not cheap. And the less money someone has when starting out, the more time they will need to get their idea off the ground.
A really good book for people who want an introduction to entrepreneurship, and a way to start a business without getting themselves into a financial mess.
Read The $100 Startup