On Friday night, I had the pleasure of joining Chris Guillebeau and other like minds on the Denver stop of the $100 Startup Book Tour. It was fun meeting people who only knew me as “@DenverEric,” and I enjoyed chatting about world travels and business adventures with a great group of people. Chatting with Chris, I started thinking about the different startup business models popular in the online world today and how to leverage all of them for a great success.
Chris Guillebeau – The $100 Startup
Chris has a unique look at starting your own business. As his book explains, anyone can start a business with very little risk if they use the right model and try to emulate the success of other “microbusiness” owners around the world.
A $100 startup is a low cost model where you just pick an idea and go with it. You don’t need a storefront and you don’t need a bank loan. You just need a couple hundred bucks, hard work, and ingenuity.
Chris’s advice is fairly straight forward. Pick a business that you are passionate about, make sure your idea is something that you like and something that other people want, and go sell. If you don’t start selling, you will always be stuck as square one.
The best part, if you don’t put a lot of money in when you start, you are not going to lose a lot if it doesn’t work out. I have a $100 startup idea in mind, and I will share more about it as I work to move forward with it.
Tim Ferris – The 4 Hour Workweek Muse
In order to have a 4 hour workweek, Tim Ferris created the “muse” model for running a business. Where Chris talks about providing a service or a product locally, Tim’s model is one where the hard work is done up front so you don’t have to worry about it for more than 4 hours a week once it is up and running.
A muse is a product that you can sell online through your own website, or possibly other retailers. His book outlines a very detailed model on how to source your product, most likely from China, have it shipped to a “drop-ship” company whenever the inventory runs low, and have that drop-shipper fulfill your orders that are placed through the website.
Once you set it up, you can take credit card orders and fulfill the order without any personal involvement. You can take care of restocking without any personal involvement. You can outsource customer service to India at a low cost and have a clear script and set of rules for those customer interactions.
You don’t handle anything yourself. You build the model and let it run itself. If your product sells well, you can live off the earnings anywhere in the world as long as you can get online for a half hour or so every day.
I also have a muse product idea, but have been stuck on sourcing it. I need to get on that and see how it goes.
Pat Flynn – Passive Online Income
Like Tim, Pay Flynn’s method is a passive one. However, it also takes a lot of hard work to start and takes some personal involvement to keep it going.
Pat has a handful of websites that promote niche products or topics. From those sites, Pat sells either his own products, someone else’s products through affiliate advertising, or earn money through advertising from a network like Google AdSense.
There are some great strengths and some big drawbacks to this model. It is a great way to make a lot of money with little maintenance, but it requires that your site ranks high in Google for certain, relevant keywords.
If you do well, the big G will send you thousands of visitors, many of whom are likely to buy your products or click through earning you ad revenue. However, if you fall in Google’s bad graces, you may lose it all overnight.
I find it risky to rely so heavily on Google, but the startup costs are about $8 (for a domain), so I had to give it a shot. Take a look at my project with Jeff at the Sustainable Life Blog, a site about elk hunting, for our niche site experiment.
If your dream is freedom, any of these could be a great way to go. If you want freedom from a cubicle or large corporate employer, any of these models could work, but I find that Chris’s is more realistic for most people. If you want location mobility, Tim’s model and Pat’s model are the best ways to go.
A key to long term success is your definition of success. If you love your business and want to run it day to day, the $100 Startup is for you. These business owners interact with their customers and get the warm, fuzzy feeling of making a difference in their community.
If you want the ability to scale up, you should not be in a service or consulting business. You would be best off going with the muse model where you can grow exponentially without changing anything more than the stockpile your drop shipper keeps on hand. However, there are bigger startup costs to selling a tangible product.
If you want an online only model that earns money while you are at home, on vacation, or elsewhere, Pat’s method is great. It can grow without any incremental investment, outside of a better hosting account if you outgrow yours. However, your success is partially out of your hands.
Pick a Model that Works For You
I am trying a niche site and have my own low cost startup business, but it is always a good idea to diversify and grow. I can’t live off of any of my businesses today, but it would be nice to have the ability to do so if I chose.
I like my job and my company, and I have no plans to leave. However, it would be nice to have the extra income to build my savings and investments and know that I could live comfortably if anything ever happened at work.
What Are You Doing?
Are you trying anything to earn your financial freedom? Are you looking to become your own boss? Are you taking any steps to do so? If yes, what have you done and what has worked. If not, what is holding you back? Please share your thoughts, successes, and learning experiences in the comments.