The Details of a $100 Startup

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Recently the book The $100 Startup from Chris Guillebeau has been making some waves. With this economic climate, it’s all too common to see skilled people without work creating their own businesses to keep the bills paid. And the cheaper it can be done, the better. But starting a business with $100 is a lot tougher than it sounds, and it takes a certain kind of savvy to make it work. I’ve always said that there is a super power in low-overhead, profitable-from-day-one businesses. Not having to raise capital to pursue your ideas is a great thing, if it can be done. Here are a few ways to keep costs down when building a cheap startup:

Forget about “Business Plans” or “Financial Forecasts”

Chris Guillebeau, in his book, says “you don’t need a business plan, you don’t need to spend too much time planning, you don’t need a large amount of money to launch, and you don’t need special skills or expertise.” and he is right. I’ve seen too many people get stuck in the “paralysis of analysis”. If this is your first startup, and you do not have a lot of skin in the game, give it a shot and GO for it. People tend to learn the basics of their business sectors by being thrown into it.

Don’t Buy the Cow

We’ve all heard the adage, “don’t buy the cow if you get the milk for free,” and it applies to a startling amount of stuff in the business world. There is a lot of free software available that does just as well, if not better than for-pay stuff. Take Open Office at for example. It offers about 99% of the features of Microsoft Office and it doesn’t cost $100 per license. Anti-virus software can be had for free all over the place, and premium service for a lot less than the big names like Norton. AVG and Avast! are popular free options that offer premium service for cheap. So don’t spend money on the big names when you can get the same functionality cheaper or even free.

Invest in the Important Stuff

While you should avoid unnecessary expenses and generally be cheap when it comes to certain things, it’s equally important to spend on quality. Purchasing a quality item or service in the beginning can save a lot of trouble down the road. What’s important changes by business; if you’re a software developer then you probably will get frustrated with a $50 laptop from Craigslist, or if you’re a bicycle messenger those cheap tires will cause more harm than good. Prioritize the stuff that is integral to your operation and don’t cheap out on them.

Don’t Quit Your Day Job

…that is, if you have one. Building a business takes time, and after overhead expenses, many businesses don’t see a profit until the third month of operation, at the soonest. Having an extra source of income and taking things slow will let give you the time to make smart decisions instead of the, “We need to launch NOW!” attitude that grasps many of us. Once your business proves that it can support itself is when you can quit your regular work and focus on building your brand new money-maker. But Guillebeau notes specifically in the book, “in the battle between planning and action, action wins.” Taking action when action is needed is important, but it’s equally important to check the water before diving in head first. Products always end up launching behind schedule, and you never can perfectly judge the time a project is going to take. You don’t want your runway of cash to run short in the process, thus stifling you from growing!

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