To turn a hobby into a business, all you need is desire. For this business to succeed, you need to understand the consumer, think through a development strategy and make your first investment. It doesn’t have to be big—sometimes $100 is enough.
Chris Guilbeault is an American author, entrepreneur, and founder of The 100 Startup.
While preparing the book “Startup for $100,” he surveyed 1,500 micro-entrepreneurs earning $50,000 or more per year. As a result, I came up with rules that will help build a small business that inspires and feeds well.
How to find an idea for a microbusiness
Chris Guilbeault believes that it is best to “grow” a small business from a hobby or expertise.
“[But] not everything you love and know how to do will interest the whole world, and not everything can be turned into a commodity. You can be a “professional” at eating pizza at speed, but who will pay for it? On the other hand, no one knows how to solve all the problems in the world. You can build a microbusiness at the intersection of your interest and skill.”
Skills need to be refined and expanded. Understand what new industries you can use your skills in and adapt them to the new area.
For example, teachers can not only teach, but also communicate, adapt to the situation, manage large groups of people, plan, and compare the interests of different groups.
One of the heroines of Guilbeau’s book was a teacher, after moving to another country she became a waitress, and even later she found herself in PR. Her organizational teaching skills and the ability to give the client exactly the “dish” that he really wants helped her.
If the idea seems crude, you can refine it. Here are a few areas that can provide insight:
Disadvantages of other goods or services. Where are other similar businesses weak and falling short? Make your product a better version of another, or a tool for that improvement.
Trends. How do your skills and interests fit in with new technologies and trends? Perhaps your product will “save” people from the dominance of digital messages. Or you will open a business related to the popular Paleo diet.
New life of the old. How can you use something that no one needs anymore? For example, one of the characters in the book opened a mattress store in an old car dealership.
Business development from another project. How can your side project become your main project? One business idea can become the basis for others.
Restoring old shoes and clothes
Clothing and shoe repair is not a new, but very profitable business, which becomes especially in demand during various economic crises.
Masters in this field who have the ability and desire to work have never been left without clients and stable all-season profits.
To open you will need:
- registration;
- necessary equipment;
- rental of premises;
- advertising in the form of a catchy sign;
- consumables.
A successful location of the workshop will lead to a business payback within a year; with a less successful choice, the same period can stretch up to two years, which is not critical.
How to understand the client
Guilbeault is sure:
If you start a micro-business by doing something useful for others, then you are on the right track. If something goes wrong, ask yourself: “How can I help my clients better?”
People most often want more love, money, acceptance and free time. It is also important for them to reduce stress, conflicts, difficulties and uncertainty.
There are four basic strategies that help discover usefulness:
1. Think about the hidden needs of people. Clients don't always want exactly what they say they want. For example, a wedding photographer who has been ordered to do creative photography should also take a couple of “standard” group photos - clients and their families will definitely say “thank you.”
2. Turn the client into a superhero. Make a tool that gives your customers superpower in the eyes of others. For example, an Excel training program makes working with spreadsheets so easy that anyone who learns it becomes “a hero in the eyes of managers and colleagues.”
3. Sell what people buy. Understand why your product is truly valued and sell that part of it.
For example, Guilbeault himself published the book “Ninja Traveler” with a detailed description of the work of airlines. But readers wanted to know how to search for good flights. As a result, he founded the “Community of Travel Lovers” and taught how to accumulate and use bonuses for flights.
4. Offer in a timely manner. If you give a runner a donut during a marathon, he will refuse, but he won’t mind eating an orange. But after the race, a donut might be just right.
A few principles for understanding the market:
Be interested in the problem , find a group of people who are also affected by this problem.
Make sure that the consumer market is wide enough.
Solve the acute “pain” of the consumer. Don't just talk about pain, but show consumers exactly how you will get rid of it.
Think of your actions as decisions. They must be radically different or better than existing ones.
Ask for feedback only from potential clients. Imagine your ideal client, find a real person who is like him, and talk to him about your idea.
Test on “our own people”. Invite potential buyers to test the product. Ask clients what they would like to improve. But you don’t need to respond to everyone’s comments - you must have your own vector.
The main thing is not to interfere
DopOffice already wrote about the advertising agency “Kvadrat”, then they talked about how to correctly order corporate gifts and souvenirs. Now that the pre-holiday bustle has passed, production has become noticeably quieter. But Grigory and Vladislava are still up to their necks in work, although they found a little time to speculate on what a real technology park for a real small business should look like.
Grigory: Initially, we rented premises from the Creative Center. But soon the guys from KC decided that they needed premises closer to the city center, especially since they had a problem with the fact that the equipment they bought simply did not fit here on the second floor. They came up with an option to combine production and office closer to the city center. They did it, the step turned out to be wrong, they were asked to leave the new premises. In general, in a year they had three moves, and one move resulted in two fires... And at first we thought of moving with them, but then we stayed and were right.
- Well, what about the location? Everyone says that Maliniki is a very long way to go.
Vladislav: These are local misconceptions. Kaluga is a small city, you can get to any point in 15 minutes. Yes, we can’t drag private traders here, but wholesalers, our main clients, come to us without problems - they don’t care where we are, it’s important what and how we do.
- Well, besides the cost of rent, does anything else matter?
Vladislav: The cost of rent is important at the start. And when a business begins to grow, such points as location, ease of transportation, availability of wired Internet, etc. become important. There are all these shortcomings here, but we have overcome them. The most important thing is that we are not disturbed here. This is generally the main condition for business development - not to interfere.
Grigory: Now it is easier for officials who are involved in business development to work with large companies than to tinker with micro-businesses. Relatively speaking, it is easier to give some premises to one large company than to a hundred small ones. Either you control one or a hundred - is there a difference? Therefore, no one wants to tinker with micro-businesses - they don’t look very impressive in the reporting.
Vladislav: For micro-businesses, targeted clusters are needed so that the enterprises collected in them can be suppliers to each other. And the state would already control the cluster as a whole, and not individual micro-productions. This would be a nursery where entrepreneurs could outsource accounting, receive legal advice, organize collective purchasing and waste removal. In such conditions, entrepreneurs could do something rather than make ends meet in the hope of not closing down.
How to find a budget
It is not necessary to take out a loan to develop your business - think about how you can get by with the most modest investments.
Guilbeault analyzed 1,500 businesses and concluded that the average starting capital was $610. At the same time, 36% of respondents started with an investment of $100.
Here are some examples of businesses with a small starting budget:
1. Culinary tour for gourmets. Chelly Vitry is hosting a food tour of Denver restaurants and cafes. The initial investment in a startup is $28, annual income is $60 thousand.
2. Publishing house. Tara Gentile first blogged and then began writing books. She spent $80 to publish her first e-book, and a year later her income was $75 thousand.
3. IT consulting. Chris Dunphy and Sheri Viard opened an IT consulting agency for healthcare companies, Technomadia. Business has become international. The cost of the startup is $125, the income for the year is $75 thousand.
The main investments are launching a website, purchasing equipment, creating and launching advertising.
How to receive money
Without money there is no business. Entrepreneurs make two mistakes: they think too much about where to get the money to start, and too little about how to make a profit.
To start a business, you need a product or service, a group of people willing to pay for it, and a way to get paid. The rest is optional. You always need to understand how you will be paid for it, how much and how to do it to get paid more.
Already at the start you need to think about how to sell further. Ask yourself:
— How to interest customers with special offers and bonuses?
— What new products or services should be added to the offer?
— What special conditions should I offer as part of the prepayment?
— are there new ways to attract customers?
To set the right price and achieve a constant flow of money, Guilbeault advises:
— relate the cost of a product to its benefits, and not to production costs
— set a price range. For example, Apple offers several modifications of MacBooks - from “budget” to “premium”
— organize a constant influx of payments. Offer a subscription or regular update
So individual that there is no one to talk to
Until recently, Kirill had a neighbor who was also involved in printing and outdoor advertising. He flatly refused to speak on the record and be photographed because he is terribly afraid of attracting the attention of the state - he messed up something with his accounting and doesn’t know how to talk to the tax office. He just shrugs off stories about free consultations, preferential loans and subsidies. I've never even heard of ARB KO. The man’s very first and, to put it mildly, not the largest business went bankrupt and he was completely disillusioned with the idea itself. He only thinks about how to quickly close the IP and forget all this like a bad dream.
- No, and there can be no help from the state! The only task of this state is to leave us all without pants. You need to take out a loan or sell an apartment, but still the business cannot be saved! With such taxes, with this endless reporting, there is no point in doing business at all!
And this is not a separate problem for an individual entrepreneur, but a general symptom. Individual entrepreneurs sometimes don’t even have anyone to talk to, let alone ask for help or advice.
How to start a project
It’s better to launch a product and fix bugs along the way than to spend a long time revising it and never open.
If we talk about launching on the Internet, there are general principles that are important to consider. Here are some of them (Guilbaut has 39):
1. Make sure the value of the product is clear. Set rewards for early buyers. Create a sense of urgency—a real reason to buy now.
2. Make the launch a highlight - it should be interesting to read about even for those who won't buy anything. “Warm up” the audience with announcements and teasers, just like in Hollywood. Make beautiful marketing materials to send to partners.
3. Double-check everything - from texts on the site (read out loud) to internal links (especially those affecting the purchasing process). Simplify everything again. Let someone else check it in different browsers and countries.
4. Warn the bank that money will begin to flow into your account. Connect alternative payment methods. Consider paying in installments for expensive items.
5. Thank your first clients personally and ask them to share information about you on social networks. Tell your journalist friends about yourself. Prepare your first newsletter for future clients - think about what else you can offer and what gifts you can give.
How to promote a project
You need to talk about yourself actively and honestly. If a person talks little about his business, but works a lot, he is a “martyr.” If he talks a lot and does little, he is a “charlatan.” If he speaks and does a lot, he is “attractive.” A micro-business founder needs to be engaging.
For advancement:
— formulate a message: why your business is important to people
— give strategic gifts - give small goods or services to get people talking about you
— support people - build strategic relationships
— organize a raffle for valuable goods
How to make more profit
Financial success is built on small but constant changes. If the site's efficiency rate was 1.5%, and now it is 1.75%, over time the income will increase significantly.
What you need to do regularly to make your profits grow:
— increase traffic
— increase the effectiveness of advertising texts
— raise the price
— raise the average bill
— sell more to regular customers
— tell how your product is already successfully used
— upsell (offer something else)
— encourage recommendations
— organize competitions
— provide a reliable guarantee for inexpensive products
— do not give guarantees to expensive products (so that there is no doubt about the quality)
— come up with goods for services, services for goods
How to control a business
You need to work not “in business”, but “on business”. Spend most of your time on strategy. Pay attention to:
Business development. Think about what products and collaborations will help your company expand.
Supply development. Understand how to use resources in new ways. For example, organize a sale, release a new product or offer that will attract consumer attention and additional income.
Solving old problems. There are always problems that you don’t want to solve—it’s easier to get around them. Get together and eliminate their cause.
Price revision. Change them regularly to keep them adequate. Consider upsell options.
It's impossible to track everything. Select one or two indicators and monitor them constantly, focusing on sales, profits and potential customers.
These indicators can be: sales volume per day, visitors/potential clients per day, average purchase price, conversion rate, reviews about the business. Return to other indicators once a week or once a month.
If you understand that you cannot cope with all the tasks on your own, involve a partner. But remember, you must strengthen each other, and not just add up - be like the formula 1+1=3.
If you don’t want to collaborate with a partner, outsource some of the tasks, work through barter, or hire an assistant.
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What is microbusiness
According to Decree of the Government of the Russian Federation of February 9, 2013 N 101, a micro-business entity in Russia is considered to be an enterprise with up to 15 employees and income, excluding VAT, for the previous year of up to 60 million rubles.
The emergence of micro-businesses in Russia was first discussed in 2008, when the law “On the development of small and medium-sized enterprises in the Russian Federation” came into force. Thanks to this document, it became possible to legalize “self-employment,” when a novice entrepreneur, possessing useful knowledge or skills, could legally start a business.
“In the Russian Federation, as of 2013, micro-enterprises with up to 15 people included 1 million 700 thousand enterprises, which employed 4.6 million employees. Based on the most recent statistical data (May 2014 - ed.), this figure is 1.8 million enterprises, and they employ 4.7 million workers,” said Tatyana, deputy head of the department of wages, labor relations and social partnership of the Ministry of Labor Malenko at a meeting of the public council under the ministry on May 14, 2014.
And so, microbusiness in Russia continues to develop, becoming a support for the development of small and medium-sized businesses. What niches has it already occupied, and what areas are promising now?
Service sector - business without costs
One of the most common areas for microbusiness development is the service sector. Having certain skills and knowledge, you can start a business with minimal start-up capital without unnecessary investments. These are consulting services for lawyers, doctors, teachers, hairdressing services, individual tailoring, repair of household appliances and apartments, organization of joint purchases. One of the fashionable areas with development prospects is services in the field of Information Technology.
“The main “growth point” of the Russian economy should gradually become the service sector, since industrial development has now almost reached the ceiling of demand within the country and among foreign trade partners. In my opinion, business in this particular area will develop at a faster pace in Russia. First of all, we are talking about IT business,” says business analyst Timur Nigmatullin, voicing his point of view in an interview with Rossiyskaya Gazeta in the material “Business Saw Prospects.”
The service sector, for obvious reasons, is developing in large and medium-sized cities, making it possible to solve issues with employment and income of the population. Microbusiness, initially as a means of free income, can, with a skillful approach, develop into a small family business or a small and medium-sized enterprise. With the gradual filling of micro-business niches, the quality of services improves, which is an undeniable advantage for consumers.
Promising directions
If we talk about promising areas of micro-business, then it is necessary to understand that investing some funds will allow you to develop niches related to the sale of goods or small-scale production. Microloans for beginning entrepreneurs open up ample opportunities for the development of small ateliers, souvenir production workshops, and online stores. However, among the ready-made business ideas offered on the Internet, the following areas stand out:
1. An online store with delivery of goods for children has good prospects for development. In the absence of costs for renting space, this type of business is highly profitable with a well-created website and product demonstration, sufficient assortment and fulfillment of obligations to customers. The popularity of online stores is evidenced by the number of requests to the “creators” of sites.
“80% of the latest orders are from online stores. But this despite the fact that business on the Internet is developed only by 20% in Russia. Can you imagine the prospects?!” — comments the head of ABP Company Yuri Kolesnik to the online publication “Chronicles of Business”.
2. Vending business is a fairly young area of micro-business selling drinks (coffee machines) and snacks through vending machines. According to experts, the payback period for a network of four machines selling an average of 40 cups per day is a year and a half. It is worth noting that the vending niche in Russia is practically empty. If in the West - the USA and Europe, on average there are 35 and 110 buyers per coffee machine, then in Russia there are 2,500 buyers. The ideal combination of installing a snack machine and a coffee maker.
“Vending is a very individual business. The vending machine can be placed almost anywhere - in a hospital, at school, in an office... Moreover, you can sell not only coffee or snacks - anything, even cosmetics,” said Fedor Kuprichenkov, CEO of SuperVending, in an interview on the topic “ Prospects for the development of vending in Russia."
3. Photo studio . Another promising area that can generate sufficient income with a small investment is a photo studio. Here the main factor for development is a creative approach and knowledge. Backgrounds and space for filming do not take up much space and can be located in an apartment, thereby eliminating the cost of renting premises. At the same time, a large field of activity exists for working at weddings, children's parties, school events, etc. According to experts, for the first 3-4 months of operation, the photo studio will work for a maximum of 3-4 hours a day. However, after a year, the workload will be at least 12 hours. By the way, practicing photographers have noted an increase in demand for studio photography with the growing popularity of social networks.
The Importance of Micro-Business
Despite the fact that the contribution of microentrepreneurs to the state economy is not very large, the social significance of microbusiness is enormous. It makes it possible for some categories of citizens to improve their family’s well-being and acquire some immunity to financial crises, since there can be not only a basic income, but also an additional income. In general, microbusiness can be considered as a test of the pen for further individual entrepreneurship and the opportunity for further growth to the status of a small and medium-sized business.
