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Archives: 9 March 2021

The 100$ Startup Book Summary: Part 3

Now after having a successful launch, we will see in the last part of the book how to leverage small things in our business to grow our business and take it to the next step.

Now any successful entrepreneur would vouch for this that growing the business wasn’t nearly as hard as starting the business. The first sale is always the hardest but also the most rewarding.

So how do we grow the income in an existing business?

No doubt there are a few different factors. Momentum is important, as is the ongoing attention of the business owner. The longer a micro business is around, with customers and onlookers saying good things about it, the more the word will spread. In addition to these natural factors, a series of small, regular actions is all it takes for many businesses to go from zero to hero in a short period of time. These actions are called tweaks.

The secret to improving income in an existing business is through tweaks: small changes that create a big impact. If a product typically has a 1.5 percent conversion rate and you increase the rate to 1.75 percent, the difference adds up to a lot of money as time goes on. If a business normally attracts four new customers a day and begins attracting five, the impact is tremendous. Not only is the business now earning 25 percent more income, but it has also diversified its customer base. If you grow your traffic a little and also increase your conversion rate a little while also increasing the average sales price a little, your business grows a lot. These are the most important areas on which to focus your tweak efforts, so let’s look at them closely.

Tweaks

  1. Increase traffic – Your revenue increases even if the rate of conversion remains the same because now at the same rate more people are getting converted.
  2. Increase conversion – Now if the traffic remains the same but the conversion rate increases thus you get more customers from leads and it increases your revenue. The classic way to increase conversion is through testing by measuring one copywriting attempt or offer or headline or any other thing against another and going with the winner.
  3. Increasing average sales price – You can do this most easily through upsells, cross-sells, and sales after the sale. If you shop on Amazon.com, you’ve probably seen its “related items” and “customers who bought this item also bought these items” features.
  4. Sell more to existing customers – Your existing customers are likely to respond to sales, promotions, or additional offers of any kind. By reaching out to them more frequently, you’ll almost certainly bring in additional income. You’ll want to be careful about not pushing them too much, but the key is balance.
  5. Create a hall of fame – Shine a spotlight on your best customers; let them tell their own stories about how they’ve been helped through your business. This provides “social proof” that your product or service works for all kinds of people.
  6. Institute a new upsell – The confirmation page that appears after an online purchase is one of the best and most underused places for an upsell offer. Right after a customer has purchased, they are highly inclined to purchase something else. Make a strong offer here, and your conversion rate can be 30 percent or higher.
  7. Encourage referrals
  8. Hold a contest
  9. Introduce amazing guarantees – Most businesses have boring guarantees: If you don’t like this, you’ll get your money back. But when we buy something, our money isn’t all we’re concerned with. We’re also concerned about time and validation. If I have to return something, will it be a pain in the ass? Make it the opposite of a pain in the ass and provide something beautiful.

Raise prices regularly

You might expect that a price increase has a tendency to filter some customers away from the business. Sometimes this is indeed the case, but many of the entrepreneurs in the book vouched that almost no one left after an increase. Several said that when they told their customers or clients about the increase, the response was, “It’s about time! You’re worth more than you’ve been charging.” The most common advice from the case studies in the book was to maintain a practice of regular rate increasing so that it becomes normal and expected. For example, no one expects the price of milk to be the same from year to year. We all know that over time it’s going to go up, and the same should be true for the prices you charge clients. You can have an annual date for changing prices, either January 1 or the beginning of your calendar year if it’s different. You can offer discounts for current clients, among whom the work is more familiar and a strong relationship already exists. Lastly, remember to price on the basis of value, not time. Customers pay for what you deliver, not how long you spend doing the work.

Ways to grow a business

You can grow a business in 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.

Franchising a brand/company

Buying a company’s franchise is something the author strictly says no to. This is because first of all, you have to pay about a quarter to a half of a million to buy a store. Then the company is going to tell you everything from whom to hire to what offers to serve to what to wear and literally every freaking decision is to be taken by the company. So you basically are buying a job. And 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 half a million that they have no way to repay.

Franchising yourself

A better option is building a real business of your own, something that you have ownership of and control over. Franchising yourself isn’t just do- ing 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.

As a business grows and the business owner begins itching for new projects, he or she essentially has two options for self-made franchising:

Option 1: Reach more people with the same message.

Option 2: Reach different people with a new message.

For the first option, it may be helpful to think of the “hub-and-spoke” model when building a brand, especially online. In this model, the hub is your main website. The hub is a home base with all the content curated by you or your team and ultimately where you hope to drive new visitors, prospects, and customers. The spokes, also known as outposts, are all the other places where you spend your time. These places could include social networking sites, the comments section of your blog or other blogs, actual meetings or networking events, or something else.

Partnerships

Build amazing partnerships to make 1+1=3. Here’s a list of decisions you should make at the beginning of any joint venture:

• How will the money be divided?

• What are the responsibilities of each partner?

• What kind of information is shared between partners?

• How will the project be jointly marketed?

• How long will our agreement be in place?

• How often will we touch base to discuss the partnership?

One-page partnership agreements 

Partners: Name of [Partner 1] and [Partner 2].

Overview: [summary of the project, including outcomes and expected results].

Revenue Sharing: Net income for the project will be split on the basis of [percentage] percent to [Partner 1] and [percentage] percent to [Partner 2]. If any particular cost exceeds [amount], both partners must approve the decision.

Life of Revenue-Sharing Agreement: The revenue-sharing agreement will last for [period of time], at the end of which the partners will decide if it should be continued, discontinued, or revised.

Publication and Sale: The project will be offered for sale on [websites and any other sources].

Customer Support: [Partner 1] will be responsible for [duties]. [Partner 2] will be responsible for [duties]. Project feedback from customers will be shared between both parties.

Marketing: Both parties will actively market the project to ensure its success. This will include promotion on [websites], through each partner’s online community and offline networks, and each party requesting coverage of the project from other influential websites.

TimeLine: The partners agree to complete all aspects of the project to prepare for launch on [date].

Auditing your business

As your project grows, take some time to look at the following aspects –

  1. Where do you make money?
  2. How good is your messaging in copywriting, posts, emails, etc?
  3. Are your prices what they should be?
  4. How are you marketing to existing customers?
  5. Are you tracking monitoring or testing enough?
  6. Where are the big missing opportunities?

Affiliate marketing

Chris suggests using affiliate marketing to increase the growth of the business but with the following 2 important points to be taken care of-
1) give a commission of (50+)%
2) tell your affiliates what they have to do instead of just slapping the link somewhere

What to do on a daily basis

Every morning, set aside forty-five minutes without Internet access. Devote this time exclusively to activities that improve your business—nothing that merely maintains the business. Think forward motion … What can you do to keep things moving ahead? Consider these areas:

BUSINESS DEVELOPMENT: This is work that grows the business. What new products or services are in the works? Are there any partnerships or joint ventures you’re pursuing?

OFFER DEVELOPMENT: This kind of work involves using existing resources in a new way. Can you create a sale, launch event, or new offer to generate attention and income?

FIXING LONG-STANDING PROBLEMS: In every business, there are problems that creep up that you learn to work around instead of addressing directly. Instead of perpetually ignoring these issues, use your non-firefight- ing time to deal with the root of the problem.

Monitoring your business

Regardless of your growth strategy, you’ll want to pay attention to the health of your business. The best way to do this is with a two-pronged strategy:

Step 1: Select one or two metrics and be aware of them at any given time, focusing on sales, cash flow, or incoming leads.

Step 2: Leave everything else for a bi-weekly or monthly review where you delve into the overall business more carefully.

Some of the metrics you want to track on a daily basis –

Sales per day: How much money is coming in?

Visitors or leads per day: How many people are stopping by to take a look or signing up for more information?

Average order price: How much are people spending when they order?

Sales conversion rate: What percentage of visitors or leads become customers?

Net promoter score: What percentage of customers would refer your business to someone else?

Building to sell?

In trying to decide whether you are building to sell your business in the future or not, the simple question to answer is: “What kind of freedom do you want?” One model is all about creating an entity apart from yourself and then selling it for a big payday. The $100 Startup model is more about transitioning to a business or independent career that is based on something you love to do. Neither model is better; it just depends on your goals. If you’d like to have the option of selling your business one day, you have to plan for it by taking specific steps. The most important step in creating an independent identity for the business and to create a product or service with the potential to scale.

A scalable business is built on something that is both teachable and valuable. A business that has the potential to be sold easily for a high profit offers something at the intersection of teachable and valuable.

Summary

Finally, in the last chapter, the author tells us goodbye with Steve Jobs famous saying – “your time is limited, so don’t waste it living someone else’s life”. Beginning in the journey of entrepreneurship can be very daunting and at the back of your mind you can have a lot of fears but overcoming them and going ahead you’ll ultimately find a life for which all those troubles were worthy of.


The 100$ Startup Book Summary: Part 2

Now in the previous blog, we saw how to formalize our product or service, how to think about revenue streams, and also talked about doing research on our customer base. Then comes the part where we have to launch our offer to the world & take it to the streets.

Introductory story

Let’s first look at the story of Omar and Jen. Both of them graduated from Columbus College of Art and Design in 2008. Within a year they reached burnout from the corporate world. They decided to take a trip to New York to make themselves refreshed. They looked around for a nice map to help chart their upcoming adventures but couldn’t find one so they made a unique design and printed their own. They got 50 maps printed for 500 USD since that was the cheapest offer available and no one was printing a single map. They were left with 44 after they gave 5 to friends and family. Finally, Omar asked a crazy question: Would anyone want to buy the remaining prints? They made a one-page website with a PayPal button and went to bed and woke up to their first sale. After a week, due to a surprise mention on a popular design website all their maps got sold and they got tonnes of messages begging for a reprint. It was their eureka moment and they thought could this be the answer to their burnout? Over the few months, they grew steadily and kept introducing maps of new places with new designs(new products). So basically, Jen and Omar began with an idea, kept costs low, and didn’t wait long before stepping forward with a product. Then they adapted to the marketplace response (make more maps!) and built each new product carefully.

Learnings from the above story –

The strategy we saw is to get started quickly and see what happens instead of spending a lot of time planning. There’s nothing wrong with planning, but you can spend a lifetime making a plan that never turns into action. In the battle between planning and action, action wins especially when we are talking about micro business.

Here’s the blueprint we can figure out from Jen and Omar’s story –

  1. Select a marketable idea – A marketable idea doesn’t have to be a big, groundbreaking idea; it just has to provide a solution to a problem or be useful enough that other people are willing to pay for it. Don’t think innovation, think usefulness. Jen and Omar’s marketable idea was maybe they weren’t the only ones who loved beautiful maps.

    Now the question comes, how to know if your idea is a marketable one or not?

    Following are the 7 steps to instant market testing as suggested by Chris in the book –

    1) You need to care about the problem you are going to solve, and there has to be a sizable number of other people who also care. Always remember the lesson of convergence covered in the first part of the book.

    2) Make sure the market is big enough. You can test the size by checking the number and relevancy of google keywords related to your niche/product.

    3) The product needs to solve a problem that causes pain that the market knows it has. It’s easier to sell to someone who knows they have a problem and are convinced they need a solution than it is to persuade someone that they have a problem that needs solving.

    4) Almost everything that is being sold is either for a deep pain or a deep desire. You need to show people how you can help remove or reduce pain.

    5) Always think in terms of solutions. Make sure your solution is different and better. Is the market frustrated with the current solution? There’s no point in introducing something if the market is already satisfied with the solution. Your solution must be different or better.

    6) Create a persona: the one person who would benefit the most from your idea. Take your idea to this person and discuss it with him or her in detail. This will get you much more relevant data than talking to just anyone.

    7) Create an outline for what you are doing and show it to a subgroup of your community. Ask them to test it for free in return for feedback and confidentiality.

    Although these 7 steps are very useful, nonetheless we can never be too sure of whether an idea is marketable or not, and thus it is very important to start quickly and see by experiments so that we don’t waste enough money on planning and making it perfect.
  2. Keep costs low – the second thing we could learn from the story is to invest sweat equity instead of money in the project and we can avoid going into debt and also minimize the impact of failure if it doesn’t work.
  3. Get the first sale as soon as possible – Chris says inertia is one of the biggest enemies that entrepreneurs have to fight every day to take their business to success. People often procrastinate under the excuse of technical issues but it is their fear of failure that’s actually stopping them from making delays in taking their projects live. We have to beat that inertia and get our first sale as soon as possible as it would give us a huge dopamine rush and also be proof that the product is something that people want.
  4. Market before manufacturing – It’s always good to know if people want what you have to offer before you put a lot of work into making it. One way you can do this is through surveys or giving your beta version to people similar to your persona. We need to make sure there is sufficient demand for our product or service before spending our whole life working on it.
  5. Respond to initial results – After initial success, we should regroup and decide what needs to be done next. In this step, it is always beneficial to pay attention to what created the initial success even if it seems accidental or coincidental.

The on-page business plan

Now as we saw the importance of starting early and get going as quickly as possible. Chris suggests us to follow this one-page business plan instead of spending hours/days on planning and immediately get to work after this –

The 140 character mission statement

We should define the mission statement for our business in 140 characters or less. The mission statement consists of the 2 characteristics of any business – the product/service & the group of people who pay for it. It can be in the following format –
We provide [product or service] for [customers].
However, we have already seen that it is more beneficial to talk to customers in terms of benefits rather than features of our product. Hence the mission statement can be modified accordingly in the following format – We help [customers] do/achieve verb [primary benefit].

Making a lucrative offer

To make this process of taking it to the customers more profitable we should focus on making an offer the customers can’t refuse. Here’s what Chris tells us to keep in mind for that –

  1. Understand that what people want and what people say they want is not always the same – for example for years airplane travelers have been complaining about crowded planes and cramped seats, and for years airlines have been ignoring them. Every once in a while, an airline creates a campaign to respond to the concern: “We’re giving more legroom in coach!” It sounds great, but a few months later they inevitably remove the extra inches of space. Why? Because despite what people say, most travelers don’t value the extra legroom enough to pay for it; instead, they value the lowest-priced flights above any other concerns. Airlines have figured this out, so they give people what they want & not what they say they want. A good offer has to be what people actually want and are willing to pay for.
  2. Most of us like to buy, but we don’t usually like to be sold – An offer people can’t refuse may apply subtle pressure, but nobody likes a hard sell. Instead, compelling offers often create an illusion that a purchase is an invitation, not a pitch.
  3. Provide a nudge – The very best offers create a “You must have this right now!” feeling among consumers. Providing a gentle nudge to encourage immediate action separates a decent offer from a high-performing one.

The magic formula for a lucrative offer is –

The right audience + the right promise + the right time = an offer that can’t be refused.

Following are some questions, we as entrepreneurs should be clear in order to create a lucrative offer –

Basic questions –
1) what are we selling?
2) how much does it cost?
3) who will take immediate action on this offer(persona)?

Benefits –
1) what is the primary benefit of my product?
2) what is the secondary benefit of my product?

Objections –
1) What are the main objections to the offer?
2) how can we counter these objections in front of the customer?

Timelines –
1) why should someone buy this now?
2) what can we add to make this offer even more compelling?

Tools for an amazing offer

Now we know how to think while creating a lucrative offer. Now here are some tools to help us create a good offer –

  1. Frequently Asked Questions, AKA “What I Want my customers to Know” – The additional purpose of a FAQ is to provide reassurance to potential buyers and overcome objections. Our mission is to identify the main objections our buyers will have when considering our offer and carefully respond to them in advance. Now the objections to any offer fall into two categories: general and specific. The specific objections relate to an individual product or service, so it’s hard to predict what they might be without looking at a particular offer. General objections are typically the following – the customer may not know how the product works, the customer is not sure of the benefits, the customer cannot trust us with money, the customer is worried about his/her information, etc.
  2. The incredible guarantee, AKA “Don’t be afraid” – Regardless of what we’re selling, the overriding concern of many potential customers is, “What if I don’t like it? Can I get my money back?” A common and highly effective way to combat this concern is to offer a satisfaction guarantee. However, we should not make our guarantee complicated, confusing, or boring. We don’t want our customers to overthink it! Keep it simple and easy.
  3. Overdelivering, AKA “Wow! Look at all this extra stuff I didn’t expect” – we should make people feel good about their action of buying from us.

39-step product launch formula

The product launch is the most important step for which we might have been grinding for a few days/months. The author provides us a 39-step product launch checklist to make it a huge success –

The part towards the end of the sale is also very important to focus on because traffic usually decreases after the first 2 days, but with a little bit of effort, we can replicate the sales of the first 2 days in the last 2 days also by creating hype for the urgency of the product and making it realize to our customers that the offer won’t ever be available after this. With proper hustling, a good launch is of the following type –

During this time, it’s also important to share stories of happy customers who have purchased already.

Right before the offer goes off the market here’s where you make one final push. The message is, “It’s almost over. Here’s your last chance before you lose out.”

Hustling

Chris explains the correct form of hustling as equal talk and equal work. He suggests taking the time to make something before talking and then start with everyone we know in our surroundings and ask for feedback.

The strategic giving marketing plan

Freely give, freely receive: It works. The more you focus your business on providing a valuable service and helping people, the more your business will grow. It serves the companies interests with the customers in long term. It is about being genuinely, truly helpful without the thought of a potential payback.

The one-page promotion plan

The author suggests following this one-page promotion plan to drive customers organically instead of doing paid ads.

Money

Here Chris teaches us about 2 principles which are –
1) Businesses should always focus on profit because of no money, no business.
2) Borrowing money or investing a lot of money to start a business is completely optional.

Borrowing is no longer essential. Don’t think of it as a necessary evil; think of it as an undesirable option to be pursued only if you have a way to limit risk or are sure you know what you’re doing. Why seek investment and go into debt for something that may or may not work. It’s completely possible to start on a very low budget without hindering the odds of success.

You might expect that certain types of businesses are easier to start with limited funds, and that is correct. It’s also the whole point: Since it’s so much easier to start a microbusiness, why do something different un- less or until you know what you’re doing? Small is beautiful, and all things considered, small is often better.

The following graph shows the startup costs of all the case studies covered in this book.

What if you’ve thought it through and you do need to raise money somehow? Whenever possible, the best option is your own savings. But if this isn’t possible, you can also consider “crowd raising” funds for your project through a service such as kickstarter.com.

Parting lessons

Finally, in this section, the author tells us to remember 3 points to keep our focus on profits –
1. Price your product or service in relation to the benefit it provides, not the cost of producing it.

2. Offer customers a limited range of prices.

3. Get paid more than once for the same thing.

Now in the final part of the book, we will see how to take our business to new heights after having a successful launch.