Page 151 - The $100 Startup_ Reinvent the Way You Make a Living, Do What You Love

The distinction Heather points out at the end is important: She’s not reluctant
to spend money on things that will (1) build her brand and (2) boost her sales.
This kind of spending can grow a business. If you can spend $100 and create
$200 in value from it, why wouldn’t you? It’s the other kind of spending—the
unproven ad campaigns and unneeded custom websites—that Heather learned to
stay away from. Lesson: Spend only on things that have a direct relationship to
sales.

The stories from Naomi and Heather illustrate two important principles, both
related to money. The first principle is that a business should always focus on
profit. (Always remember, no money, no business.) The second principle is that
borrowing money or investing a lot of money to start a business is completely
optional.

This doesn’t mean that there are no examples of businesses that have done
well through traditional methods; it just means that 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.

If you don’t know what you’re doing when you’re starting out, that’s OK,
you’re in good company. Almost every entrepreneur pursues projects with a
much-trial-and-much-error system. But since it’s easy to try things without
losing your shirt, 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. Consider the reports of many in our study group:

• Chelly Vitry started a business as a tour guide for Denver food lovers,
connecting them to restaurants and food producers. Startup costs: $28.
Recent annual income: $60,000.

• Michael Trainer started a media production company for $2,500, the cost
of a nice camera, which he later sold to recoup the cost in full. He then
went on to work with two Nobel Prize winners: the Acumen fund and the
Carter Center.

• Tara Gentile started her small publishing business for $80, hoping to earn
enough money to be able to stay home with her daughter. One year later,
she earned enough money ($75,000) that her husband could stay home as
well.

• Chris Dunphy and Cherie Ve Ard started Technomadia, a software
consultancy for health-care providers, for $125. The business now
produces net income of more than $75,000 as Chris and Cherie travel the