Thanks to Internet, entrepreneurship is getting much easier and less risky than ever.
In the past, to create a start-up, the first steps were to put the team together, gather an initial investment, work on a prototype, test the market, and sell your vision to seed or venture capital, to fund your growth.
Now, more entrepreneurs are having a different approach, as they aim at turning an idea into a business on a low budget. This is called “bootstrapping“, and Globalization and Internet are enabling it.
Tim Ferriss, in his book “The 4-hour workweek“, gives some interesting hints to bootstrap an start-up.
1) Customers first. Select a narrow segment of customers you want to serve. Select a nich that you know weell, because of your job or because as a consumer, you are part of it.
2) Define your Product and your Unique Value Proposition, for your selected niche. Look for high margins (product price should be between 4 -8 times your cost)
3) Test the Market, before you start any manufacturing or any investment into the product
– Use eBay to test the market price. See what prospective customer would be willing to pay.
– Build a simple web page for your Product. You can find developers in www.elance.com to create a professional site. The message should get across in only 1 page. Even if not ready to ship yet, add a “order now” button to track how many of your visits would turn into an order
– Use Google AdWords to drive a test campaign – do not spend more than $500, over a short period. This will drive traffic to your product website.
Check how many visits turn into orders, and do your numbers to see if your product passed the Market Test and keeps profitable.
4) Orchestrate your Business. In case the market test flies: Outsourcing,outsourcing, outsourcing…
You should aim at no employees in your company. Outsource:
– Virtual Assistant to YMII or Brickwork
– Web design, and software development: www.elance.com,
– Contract manufaturing. See a list in www.thomasnet.comAvoid inventory, only build product once customer order is received. As the business scales, you might consider additional functions to outsource: Customer Care, Marketing Campaigns, Credit Card handling, etcThere is much more than this in Tim Ferriss book, which is a good reading for those dreaming of becoming New Riches, not only in financial terms but, more importantly, in free time.