I’m working on this concept for a longer project, but for now, here’s the basic principle:
Just as you don’t need someone else’s permission to be happy, you also don’t need a lot of money to start a business.
In fact, to start a very small business, you don’t need any number of things that are frequently thought of as prerequisites or first steps:
- Venture capital
- Other outside investors (no need to beg family members for money)
- Employees or outsourced contractors
- A 50-page business plan (or any business plan at all)
- An MBA (or any formal business education)
- Credit card debt
- Business cards or office supplies
- A complicated legal structure
- Costly memberships in trade associations or networking groups
- A physical office
To be more precise, I think most small businesses can be started for less than $1,000, and many of them for $100 or less. I know this in part because I’ve done it several times, but I also know countless other people who’ve had the same results.
I understand why someone might object to the $100 business model, but I want to emphasize the fact that there are always alternatives. If you really do need a physical office, can you use a shared one? Look on Craigslist or check out a service like ActivSpace.
Do you just need an address? Get a mailbox. If it’s important for you to go to networking events, then do so.
But really, a lot of these things are unimportant to what most small businesses actually do. You don’t need most, if any, of the things on the list. Here’s the one, absolutely critical thing that you definitely need to have:
You need something to sell that other people want to buy.
That’s it. Perhaps this is rudimentary, but a lot of aspiring entrepreneurs get hung up on very basic things. (They have great ideas, but get stuck in the all-important first steps.) Let’s break down this simple idea further:
STEP ONE: You need something to sell. Don’t wait too long! Better to fail early, if necessary, than to spend years perfecting something no one wants to buy.
STEP TWO: You need customers who are willing to buy. I hear a lot of business ideas, and I never want to discourage an aspiring entrepreneur. However, I do think it’s fair to take a hard look at the product or service idea and clearly identify the market of buyers. Some of the ideas I’ve heard recently include a memoir of a trip across the country, a new kind of poetry, and an alternative search engine.
All of these things may very well be interesting and worthwhile. I’m not judging their value as art or meaningful experiences; I’m just asking, who will pay money for them? That is the key question that any new business venture has to clearly answer.
Cash flow is the lifeblood of a business, and first and foremost, the business must be profitable. That’s just how it works. This does not mean you have to sell out and start busking in the subway (most buskers don’t make that great of a living) or become a spammer– it just means that you need to find the sweet spot between what you love to do and what people are willing to pay for.
Free Ideas on $100 Startups
Every business I’ve started (five so far) has cost me less than $1,000 in startup expenses, and before I had spent the first $100 I knew it would be at least a partial success. I know I’m not alone, so this morning I used Twitter to ask, “What kind of business can you start for $100 or less?” As expected, I received a broad range of responses.
The largest group of responses had to do with setting up a web site (less than $10 for a domain name and $10 a month for hosting) and either creating an information product or offering some kind of consulting service. This would be my vote too– you can’t beat the price– but I know that some people struggle with this option and feel like they don’t know where to start.
The second largest group of responses had to do with buying and selling things through various online outlets like Craigslist, eBay, and etsy. This is an easy, low-cost, set-it-up-in-a-day idea. If I had no money and needed to make at least $20-30 an hour for 30 hours a week, I know I could do this and be just fine. I wouldn’t want to do it because I’m focused on other things right now, but I know it is entirely possible at least in the U.S. and Canada.
In addition to numerous comments about those two strategies, I also heard these ideas earlier today:
- I started a print magazine w/ $68 on a PO box & business cards. (@peterselsays)
- You can start your own Pampered Chef business for as little as $65US. (@mllethibeault)
- Bowling league. Partner with local bowling alley, promise to bring in large numbers of people. Be different, fun, market. (@calebhicks)
- I would spend the money buying coffee for prospects while meeting with them to see where I could help them. (@brodybond)
- Small batch specialty food production to sell at farmer’s markets.(@kchrist)
- I once ran a biz making purses out of album covers. took about $50 to get it started + legwork to get stores to sell them (@madgeylou)
- Build and sell cigarbox guitars. It’s about $10 in parts (or less), most already have the tools, a couple hours to build. (@weareeverywhere)
- Lots of craft enterprises (online or craft fairs) can be started for under $100. Screenprinting cards, recycled jewelry. (@anniesmidt)
- domain & hosting for a year (under 60). WordPress (free) for content. Internet presence alone can create a business. (@gabrielnovo)
- You could feed yourself for a month with pasta, while working on your idea! (@alextoussaint)
- Posting a profile on guru, elance or odesk and offering design/coding services (@ericmueller)
Finally, a few other questionable suggestions included window-washing, starting a BBQ stand, buying $100 of lottery tickets, becoming a professional assassin (I’m not sure what the startup costs for that one are), and becoming a squeegee man.
Side Note: I love crowdsourcing on Twitter. The other day I asked for personal finance quotes, and I got a range of responses from sources including Ayn Rand, the Bible, and Pink Floyd. You guys are awesome! I love that.
Big thanks to everyone who wrote in this morning. Here I am if we haven’t connected yet.
Important Note on Not Complaining
It’s very easy to look at some of the suggestions, or the $100 business idea in principle, and think about all kinds of reasons why something wouldn’t work. I’ve probably heard most of the objections, and so have all the other people who found a way to make it work for them.
My response is: don’t rain on the parade! It’s just $100. It’s an idea. Come up with a better one if you don’t like any of the above.
Also, just as I said the last time I wrote about things you don’t need, I don’t mean to imply that money to invest in your ideas is unhelpful; I’m just saying that you don’t need it. When it comes to some small businesses, more money really does equal more problems.
You might see it differently, and that’s okay. Feel free to share your responses and other $100 business ideas if you’d like.
$100 Image by Gisela