This summary and review of the book, The $100 Startup, was prepared by Chancie Sibley while an MBA student in the College of Business at Southeastern Louisiana University in Hammond, Louisiana.
The $100 Startup is about starting a business based on value and freedom, and doing it with limited start-up capital and very few stakeholders. The author, Chris Guillebeau, discusses the results of over a thousand case studies on people who have successfully launched microbusinesses. All of the respondents met at least four of the following six criteria: following a passion, low startup cost, at least $50,000 a year in net income, no special skills, full financial disclosure, and fewer than five employees. He conducted interviews, compiled all the information, and analyzed what drove their successes. He was mainly interested in accidental entrepreneurs who chose to remain small to keep their freedom and independence. Guillebeau wants to spread the message that a successful business venture can cost less than $100 and take less than a month to create.
The $100 Startup is thoroughly researched and skillfully written. Unlike many business books, it’s a well-told story and is incredibly easy to read with all the relevant examples, interesting tales, and graphic details. It’s complete, authoritative and nuanced in its discussion of the challenges and opportunities in creating modern micro-business. Its key strength is its action-oriented structure. Packed with checklists and downloadable worksheets, you can customize this book to map out your own business.
This book primarily focuses on moving past the barriers that we have a tendency to place in front of our desires. These barriers (not enough money, knowledge, experience, demand, etc.) make it easy for us to make excuses to no go into business so as to avoid any form of failure. However, this self-preservation instinct causes up to pass up prime opportunities and fall short of success. This book encourages a quick, no-holds barred start-up because the leap is what is often the most difficult. Following the leap, there are other helpful hints in this manuscript that relate to pricing and sales. Guillebeau illustrates that sometimes income is better with slightly higher pricing, and slightly lower sales volume, than it is based on quantity alone. Other helpful points cover whether or not to hire employees, whether or not to grow, when to say no, why you might not want every potential customer, and so on.
The motivational kick in this book comes from the businesses profiled. Many of them accidental entrepreneurs, The $100 Startup chronicles ordinary people creating businesses that make a difference and provide them with a comfortable lifestyle. If you have even the smallest entrepreneurial inclination, this book will inspire you. It’s a great pragmatic guide to creating a business that delivers value and freedom. It spotlights a new way of doing business: by iterating and experimenting to see what works, where to add value, and how to connect with consumers. It is not about a specific business that you can start for $100, but rather a book about a new model of doing business that the author calls a microbusiness revolution, or a way of earning a good living while crafting a life of independence and purpose.
The Ten Things Managers Need to Know from the $100 Startup
1. Contrary to popular belief, aspiring entrepreneurs do not need an MBA, venture capital, or even a detailed plan to launch a business. All they need is a product or service, people willing to pay for it, and a way to get paid. As long they have something to offer that is valuable to people, they will be successful.
2. Ideas for successful business ventures can come from a variety of places. Many ideas come from people discovering inefficiencies in the marketplace and creating products to fill the gaps. New products on the market often encompass golden opportunities to create complementary goods. In order to come up with marketable ideas, you need to broaden your options and explore all the different opportunities out there.
3. Getting started on your business venture is easier than it seems. The hardest step is making the first move to market your product because it implies risk. Once you have come up with an idea, all you need to do is set up a basic website, develop an offer, secure a payment method, and then announce your offer to the market!
4. Lengthy business plans can be overwhelming and unnecessary. Guillebeau advises a “plan as you go” approach. Launch a product that is backed by a simple, one-page business plan that focuses only on the main points. There is no need to complicate the start-up process with specific details and unrealistic goals.
5. Business owners often make the mistake of talking about the features they offer rather than the benefits the customers will receive. A feature is descriptive and simply boosts the image of the product. Benefits, on the other hand, are emotional. They entice customers with the promise of satisfaction as well as enlighten them on the advantages they will receive.
6. There are three different icons that represent the different types of people that go into business. The first is a charlatan which is a person that is all talk but doesn’t have any credible work or ideas to back up their claims. The second is a martyr which represents a person that has plenty of hard work under their belt but isn’t capable of doing the talking needed to promote the product. A hustler is the perfect combination of the two because they can create the product and market it as well.
7. You don’t necessarily have to have the skill most required in a project; you just need to have related skills. The whole point of Guillebeau’s research was to prove that an average Joe can become an entrepreneur. He proves that you don’t have to be really good at one thing as long as you’re moderately good at a few things.
8. Guillebeau suggests that you spend 50% of your business development time connecting with people. Networking is a powerful tool for growing businesses. It’s also a lot less costly than advertising. Marketing your product through the means of hustling not only advertises your product for free; it also builds personal relationships that will prove to be beneficial in the long run.
9. The best social media strategy is to talk about yourself. Social media is a portal to create awareness and arouse attention. It’s an inexpensive way to promote your business. The more you talk about your product and what’s going on with your business, the more difficult it will be for your followers to forget your brand.
10. The goal of a good launch is to build relationships rather than to maximize sales. You don’t want to scare the customers away by overselling to them. A good launch is consisted of a mix of strategy and tactics that answer “why” and “how” questions such as timing, price, and long-term plan.
Full Summary of the $100 Startup
Chapter 1: Renaissance
There are two types of traditional business models that most aspiring entrepreneurs try to emulate. The first one is the old-school model where the bank loans you money with an inflated interest rate. The second one is the investment-driven startup which is focused on venture capital and market share. The common denominator of the two models is the myopic focus on startup revenue. This can be a daunting process and eventually leaves you with permanent liability and equity. Nowadays, people are launching their own microbusinesses without investments, employees, or even an idea of what they’re doing. All around the world, people are opting out of traditional employment and turning passion into profit. People have turned to a revolutionized method that reallocates the focus to skill sets and consumer interests rather than loans and market shares.
This book discusses the results of over a thousand case studies on people who have successfully launched microbusinesses. All of the respondents met at least four of the following six criteria: followed their passion, low startup cost, at least $50,000 a year in net income, no special skills, full financial disclosure, and fewer than five employees. The author, Chris Guillebeau, conducted interviews, compiled all the information, and analyzed what drove their success. He was mainly interested in accidental entrepreneurs who chose to remain small to keep their freedom and independence. Guillebeau wants to spread the message that a successful business venture can cost less than $100 and take less than a month to create.
Throughout these case studies, three lessons of micro-entrepreneurship emerge. The first is convergence which represents the connection between what you like to do or are good at doing and what people are interested in. The relationship between these two variables must be present for a financial transaction to take place. The second lesson is that you don’t necessarily have to have the skill most required in a project; you just need to have related skills. The whole point of Guillebeau’s research was to prove that an average Joe can become an entrepreneur. He proves that you don’t have to be really good at one thing as long as you’re moderately good at a few things. The third and final lesson presents a formula for microbusiness success:
Passion + Usefulness = Success!
Chapter 2: Give Them the Fish
“Catch a man a fish, and you can sell it to him. Teach a man to fish, and you ruin a wonderful business opportunity.” (Guillebeau, 2012) Many business owners make the mistake of involving customers behind the scenes because they think that’s what they want. However, customers are more inclined to put a higher value on something that you provide for them. Value is something of worth, created through exchange and can be interchangeable with the term “helping people.” It is important to know the value that your customers place on your products and services because it ultimately affects the success of a business.
There are three strategies to acquiring the freedom that you have always dreamed of. The first one is to dig deeper to uncover hidden needs so that you can give your clients what they really want even if they haven’t realized it themselves. It shows your customers that you are willing to go above and beyond to satisfy their needs. The second strategy is to make your customer a hero by teaching them something innovative that will impress people and make them respected in the workplace or appreciated in their household. The third strategy is common sense: sell what people buy. It may seem obvious, but many entrepreneurs have failed because they focus more on what they think people need rather than what they actually want. Freedom and value are correlated: you can pursue freedom while providing value for others.
Chapter 3: Follow Your Passion…Maybe
The most successful business ventures can be measured not by the highest gross earnings, but by the level of happiness owners experience. The best method is to capitalize on something you love to do which is why Guillebeau stresses the follow-your-passion model. However, many of these business models are built on something indirectly related because there isn’t a market for every passion or hobby out there. The key is to find a gap in the market and fill it. This could mean teaching or helping someone find their passion. You need to broaden your options and explore all the different opportunities out there. Not every passion leads to a good business model, but when your passion merges with a skill that other people value, you can truly capitalize on what you love to do!
(Passion + Skill) & (Problem + Marketplace) = Opportunity
Chapter 4: The Rise of the Roaming Entrepreneur
Roaming entrepreneurs are a universally recognized phenomena. However, few people know about them. They are characterized by six figure incomes and an extremely flexible schedule. Most of them just stumble upon opportunities and seize them! In one case study, a woman simply quit her job and created a website offering her services as a wedding photographer. Two years later, she has a substantial clientele and a comfortable lifestyle. The first step is to figure out what you want to do and to ask yourself if you would want to make a career out of it. If you can find a way to converge what you want to do and what people are willing to buy, you are one step closer to a nomadic lifestyle!
Chapter 5: The New Demographics
Demographic research is vital to a businesses’ success. It is important to know our customers and their preferences. There is a revolutionized method of assessing demographics. Traditionally, we would consider age, location, gender, race, ethnicity, etc. This might have been helpful in deciding where to open up a retail establishment, but we actually need to determine what the market is looking for. Therefore, we need to focus on people’s interests, passions, skills, beliefs, values, etc. This information provides you with the opportunity to set yourself apart from the competition. You can acquire it through surveys that target specific questions that will help you better understand customers and prospects.
Capitalizing on people’s passions will inevitably lead to latching on to a popular fad or craze. In order to satisfy a large portion of the market, you can take an up-and-coming fad, and find a way to deliver it to people in a simplified or a unique form. For example, you could take a popular diet book and translate it into a comprehensive resource that tells customers exactly what to buy and cook each week. The problem with chasing fads is that it can be overwhelming. You can create a decision-making matrix to compare multiple ideas. The matrix scores ideas according to the impact they will make on your customers, the amount of effort it will take to create, the profitability relative to other ideas, and how close of a fit each idea is with your overall mission and vision.
Chapter 6: The One-Page Business Plan
“Plans are only good intentions unless they immediately degenerate into hard work “(Guillebeau, 2012). Many of the case studies presented in this book share a similar pattern: get started as soon as possible and see what happens. Business plans can prove to be beneficial, but the problem with planning is that you can spend a lifetime making a plan that never turns into action. Your priorities should be to keep costs low and to market your product as soon as possible to avoid spending any extra money. Select a marketable idea that provides a solution to a problem and get started right away. Even making just one sale will motivate you to work hard to ensure your business’ success.
Contrary to popular belief, lengthy business plans can be overwhelming and unnecessary. Guillebeau advises a “plan as you go” approach. Launch a product that is backed by a simple, one-page business plan that focuses only on the main points. There is no need to complicate the start-up process with specific details and unrealistic goals. The same idea applies to your business’ mission statement. It should be simplified in 140 characters or less which is more than enough to narrow down a concept. Simply include what you provide for customers and how you help customers achieve the primary benefit. In conclusion, in the battle between planning and action, action wins.
Chapter 7: An Offer You Can’t Refuse
Offer people something that delivers benefits superior to its costs with an attractive pitch. However, you must tread carefully because people don’t like to be pestered with a hard sell. Compelling offers convince potential customers that a purchase is an invitation rather than a pitch. You could bypass a pitch altogether by introducing a product to a market that doesn’t need to be sold on the idea of it. To be on the safe side, you should always consider possible objections and have rebuttal arguments prepared. Making an offer that customers can’t refuse involves applying subtle pressure, provoking urgency, and providing reassurance.
Chapter 8: Launch!
You should consider doing a pre-launch of your business to arouse interest and create awareness of your product. The goal is to slowly build anticipation for what will soon be available for purchase. The pre-launch campaign will consist of a series of messages you send to your audience that communicate the importance of your product, how it will work, and other details that customers will want to know. The goal of a good launch is to build relationships rather than to maximize sales. You don’t want to scare the customers away by overselling to them. A good guideline to follow is the “Thirty-Nine-Step Product Launch Checklist” because it provides you with a step-by-step guide to a successful launch. A good launch is consisted of a mix of strategy and tactics that answer “why” and “how” questions such as timing, price, and long-term plan.
Chapter 9: Hustling: The Gentle Art of Self-Promotion
There are three different icons that represent the different types of people that go into business. The first is a charlatan which is a person that is all talk but doesn’t have any credible work or ideas to back up their claims. The second is a martyr which represents a person that has plenty of hard work under their belt but isn’t capable of doing the talking needed to promote the product. A hustler is the perfect combination of the two because they can create the product and market it as well. Guillebeau suggests that you spend 50% of your business development time connecting with people. Networking is a powerful tool for growing businesses. It’s also a lot less costly than advertising. Marketing your product through the means of hustling not only advertises your product for free; it also builds personal relationships that will prove to be beneficial in the long run.
Chapter 10: Show Me the Money
The number one priority of any business is profit. Therefore, you should focus less on where to get the start-up money and more on where the income is going to come from. The obvious solution: spend as little money as possible and make as much money as you can. Make sure you consider all your options before accepting outside investment or borrowing because going into debt is completely optional. Many of the case studies had less than $100 invested in their business when they started off. If your business requires more start-up capital, you could consider “crowd-raising” funds to avoid debt. Being frugal decreases the risk on your principal investment. Only spend money on things that are directly correlated to sales and avoid spending money on extravagant campaigns or other frivolous purchases that are difficult to quantify.
In pricing your product, base the sales price on the benefits rather than the cost of production. By considering the value that customers place on your product, you will be able to maximize the sales price to what they are willing to pay rather than simply making a percentage gain. You should offer a range of prices to provide customers with options. Higher quality products will entice existing customers, and lower price products will attract new customers. Another pricing strategy is to ensure recurring payments. There are several ways to achieve continuing payments such as subscriptions or membership programs. Offer programs that provide ongoing access or regular delivery of your product. These pricing strategies will ensure that you get the full face value of your product and maximize your bottom line.
Chapter 11: Moving On Up
Growing the company is far less difficult than starting the company. Altering operations, even in the slightest, can create a big impact on a company’s income and customer base. There are certain areas of the business that can be adjusted to maximize profits. You need to increase traffic, conversion, and average sales price. Guillebeau advises business owners to never stop tweaking because there is always room for improvement. For example, if you are a service based business, you could create product offerings to boost sales. Growing the company also involves periodic price increases because even though it pushes some customers away, it makes up for the loss with a higher overall income.
The business world is fast-paced and geared towards growth. However, not everybody aspires to run a multi-million dollar corporation. It’s okay to deliberately remain small to avoid the workload and the responsibility. You can also increase income without hiring additional employees or gaining equity. There are two different kinds of growth. Horizontal expansion is serving more people with different interests while vertical expansion involves serving the same people with different levels of need. There are several options for growth that a company can choose from depending on their individual situation.
Chapter 12: But What if I fail?
The best piece of information that I have gotten from this book is to take action and pursue your dream. Advice can be helpful, but you need to trust your own judgment and realize that you don’t need permission. Aside from peers and loved ones, fear will be the biggest obstacle to launching your business venture. Failure is not always a bad thing because it teaches us lessons and allows us to learn from our mistakes. The sooner you can accept the idea of failure, the sooner you can market your product and begin living the independent lifestyle you’ve always dreamed about.
“Your time is limited, so don’t waste it living someone else’s life.”
The Video Lounge
This clip is an interview with Chris Guillebeau about how he started off and how he became so successful. In his first venture, he learned how to do web design and became knowledgeable of Google AdWords and AdSense. This skill set proved advantageous to his subsequent ventures. Guillebeau also discusses the importance of loving what you do and having the freedom and independence to do it.
Why I think:
- The author is one of the most brilliant people around…or is full of $%&#, because:
Chris Guillebeau’s unconventional ideas and farfetched case stories have inspired me to try and find my passion. I never realized how simple and inexpensive starting a business was. Initially, I was apprehensive about the idea that you could launch a business with $100 or less. However, this book presents a lot of valid concepts and case studies that back these claims. Guillebeau succeeded in creating a masterpiece that is pragmatic, inspirational, and relatable.
- If I were the author of the book, I would have done these three things differently:
1. I would have made some parts of the book more interesting. There were several parts that were hard to get into because they were about dull business concepts that are basically common sense. Once you start to lose your audience, it’s hard to get their attention back.
2. Personally, I believe the best way to get your message across is to make it short and sweet. The key points at the end of each chapter do not do the information justice. I would have shortened the explanations without sacrificing the integral details and organized the information to make it an easy read to maintain my audience’s interest.
3. I would have incorporated more graphics to illustrate the information. It would help readers to further understand the concepts. The illustrations could serve as references that they could refer back to. The readers are more likely to remember a concept that is illustrated in a graph rather than in a paragraph format.
- Reading this book made me think differently about the topic in these ways:
1. Before I read this book, I had no idea that such a small start-up investment could be so successful. It seemed implausible, but I am now convinced that you can launch a legitimate business with less than $100. Starting a business always seemed risky and volatile but with a small principal investment, there wouldn’t be much to risk.
2. My undergraduate degree has convinced me that every successful business is backed by a detailed business plan and a strong mission statement. Guillebeau stresses that the key is actually hard work and a seized opportunity. No matter how lengthy or detailed your business plan is, it won’t mean anything unless you take action. You can’t just focus on planning because in a battle between planning and action, action wins.
3. I never really understood how I could possibly capitalize on something I love to do. For example, nobody would pay me to read books or to just lie around. There isn’t a market for every passion or hobby out there which is why many business models are built on something indirectly related. The key is to find a gap in the market and fill it. This could mean teaching or helping someone find their passion. You need to broaden your options and explore all the different opportunities out there.
- I’ll apply what I’ve learned in this book in my career by:
1. This book has motivated me to pursue my dream of hospitality management. It’s a difficult field to get into without experience or personal relationships. However, I realize that the possibilities are endless and that I can create my own path with a hundred dollars and a seized opportunity.
2. Guillebeau has inspired me to take measured risks when it comes to my career path. You must take risks in order to reap the rewards. There are so many opportunities out there that people fail to take. I plan to follow the guidelines provided in this book in order to discover my passion and to find a way to capitalize on it. Microbusinesses are a widespread phenomena that start with a simple action.
3. Whether I’m working for somebody or living the nomadic lifestyle, I want to make a career out of doing what I love to do. The case studies in this book are proof that you don’t have to settle with a mundane job. In this economy, the job market is unfortunately struggling so now I can feel much more confident about my future.
- Here is a sampling of what others have said about the book and its author:
The reviews for this book were varied, ranging from positive to negative on sites such as amazon. After further research, I discovered that the official book reviews had relatively positive things to say. The ones that I read were mainly blog sites. One of the bloggers had some really good insight and outlined her favorite points of the book. She highly recommended it and compared reading it to “having coffee with a friend.”
Another blogger, Aaron, has been a fan of Guillebeau’s blog and has only good things to say about the book: all the different case studies are inspiring, the advice is pragmatic, and the information is enlightening. He said that between the examples and the brainstorm exercises, he had all kinds of small business ideas. Considering Aarons desire to create a small business halfway through the book, I would say he has an overall positive outlook on it.
The last blogger, Andrea, takes a different approach and talks about both the positive and the negative aspects. She likes it because it provides you with a great deal of options and methods of doing things. Everyone’s situation is going to be different; business is not one-size-fits-all. The case studies are truly motivating because they are real and honest. Not all of them succeeded on the first try. She also likes it because it’s easy to read!
However, Andrea does not like the fact that it’s not very detailed when it comes to actually starting the business. Guillebeau simply gives you an outline that you must fill in when figuring out each of the steps. Andrea recommends this book to people trying to start a business, people still in the startup phase, and people who need motivation. After assessing Andrea’s review, I’ve concluded that she ultimately approves judging by all the positive comments about how inspirational The $100 Startup was.
Aaron. A Review of the $100 Startup. Retrieved February 20, 2013, from http://www.themastermindproject.com/a-review-of-the-100-startup-reinvent-the-way-you-make-a-living-do-what-you-love-and-create-a-new-future/
Andrea. Book Review: The $100 Startup: How to Start Your Own Business. Retrieved February 19, 2013, from http://www.takeasmartstep.com/100-startup-how-to-start-your-own-business/
Dykman, A. Book Review: The $100 Startup. Retrieved February 22, 2013, from http://www.getrichslowly.org/blog/2012/05/08/book-review-the-100-startup/
Guillebeau, C. (2012) The $100 Startup. New York: Crown Publishing Group.
Guillebeau, C. (2012, September 10). Lessons from Illustrating the $100 Startup. The Art of Non-Conformity. Retrieved February 20, 2012, from http://www.easybib.com/reference/guide/apa/website.
Contact Info: To contact the author of this article, “A Summary and Review of the $100 Startup by Chris Guillebeau,” please email firstname.lastname@example.org.
About the Publisher
David C. Wyld (email@example.com) is the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, and executive educator. He also serves as the Director of the Reverse Auction Research Center (http://reverseauctionresearch.com/), a hub of research and news in the expanding world of competitive bidding. His blog, Career News 24/7, can be viewed at http://wyld-about-careers.blogspot.com/.