I’m thrilled to see a new book out by Chris Guillebeau called “The $100 Dollar Startup.” I’ve followed Chris with a lot of interest, being a fellow globe-trotting Portlander, and have enjoyed many of his books and products. This one in particular looks like it will focus on precisely the topics that I’m developing Creativindie around: supporting yourself entirely through your artistic or creative endeavors, so you can quit your job, have complete geographic mobility and financial liberty, and start making a bigger contribution.
Plus, I love the cover design.
If you don’t know Chris. G., you should check out The Art of Nonconformity; a blog where he inspires forward thinking individuals how to get more out of life.
Review of the book
I devoured the $100 Startup on my vacation in Thailand, and then took a few weeks to let it sink in. I’ve started a handful of small business with next to nothing, so I understood the basics.
But previously, working has been my hobby and I tried not to let it disturb my writing/painting.
And so, I wasn’t doing it particularly well, which means I wasn’t very efficient; I worked too hard and charged too little.
Now I’m at a place in my life where I understand the importance of making money (so that it allows you the freedom to be a bigger, better person).
And since my newest business (book cover design) has been going well, but I haven’t been able to keep up with the demand and was getting stressed, I learned some very, very valuable lessons.
Lesson #1: What clients really want
My proofreading and editing service was easy. You improve a text as much as you can, and clients are always happy, because it’s much better than it was.
Book cover design is very different. Authors want a lot of control. They want to fix and tweak and add and play, and get it perfect. And I’ve embraced this process by involving authors as much as I can. But then weeks go by and we get stuck, and sometimes they still feel something is off and aren’t happy with it. What I need to do, says Chris, is stop “inviting them into the kitchen” and just cook the fish:
“Here’s the problem: Many businesses are modeled on the idea that customers should come back to the kitchen and make their own dinner. Instead of giving people what they really want, the business owners have the idea that it’s better to involve customers behind the scenes … because that’s what they think customers want.”
Authors think they want a lot of control over the cover. What they really want is to sell a lot of books. It’s my job to make them a damn fine cover.
(This may sound patronizing to authors… but if you were building an airplane, would you tell the engineer what to do or pay him to do it right? There’s definitely room for balance… let me know what you think in the comments.)
Lesson #2: Compete on Value
I was pretty sure Chris said this in there somewhere, it’s been in my head for the last few days, “Compete on Value, Don’t compete on Price.” But I looked it up and I might have gotten that from Chris Brogan. What Chris (G.) actually said was,
“Price your product or service in relation to the benefit it provides, not the cost of producing it.“
I used to think, in the beginning, I had to compete on price to get customers.
But I was spending way too much time per product, and essentially working for free. I just couldn’t do it anymore and had to shut down to think about my pricing and services strategy.
Chris Brogan has another good tip:
“always deliver more than what people expect at that price.”
But it’s really hard to over-deliver when you charge too little, and much easier to over-deliver when you charge more, and have less clients to take care of.
Chris Guillebeau’s advice made an impact on me, because some part of me feels bad taking money for something that I know how to do well.
But remember the plumber anecdote (I think it’s a plumber…):
“$100 for one screw?”
“$1 for the screw. $99 for knowing where to put it.”
Today, when I was frustrated with being unable to do something on my blog (I was trying to get the tabbed content to look right, had spent days on it) I finally hired a programmer on elance to fix it for me. It costs me $50, it probably took him 5 minutes. Was it worth it? Absolutely.
It’s not about the time you spend, it’s about the value of what you’re providing.
That’s super, and necessary, advice for anyone building a service-business.
Lesson #3: Perceived Value and Pricing
There are some really interesting things in the book about pricing products. Often, a higher-priced product makes more money, because people are willing to pay for things. If you have low prices, you’re only attracting people who want a good deal; higher prices sometimes attract more serious clients who are looking for quality. Also, just having higher prices makes people think you’re worth them. A consultant who charges less than $100 an hour, for example, seems like an amateur to me. I’d rather pay someone who charges more but can really teach me something.
Chris also recommends not just selling one product, but three products at different price ranges – the higher priced one will make the lower priced one seem cheap by comparison.
Lesson #4: It’s OK to make money
Chris introduces us to Naomi Dunford, of ittybiz.com. Naomi is a brilliant source of wisdom for creative independents who want to start small businesses, by the way. I did a course with her and Dave Navarro (thelaunchcoach.com), but stopped paying attention after my book launch was done. Silly me. Chris says:
One of the things Naomi does well is continuously remind her clients about the need for actually making money. This may sound simple, but busy entrepreneurs can easily become overwhelmed with all kinds of projects and tasks that have nothing to do with making money. Putting the focus on income and cash flow—measuring everything else against those standards—ensures that a business remains healthy. Here’s how Naomi explains it:
“Remember that the goal of business is profit. It’s not being liked, or having a huge social media presence, or having amazing products that nobody buys. It is not having a beautiful website, or perfectly crafted email newsletters, or an incredibly popular blog. In larger businesses, this is called accountability to shareholders. Business is not a popularity contest. The CEO doesn’t get away with saying, “But look at all these people who like us on Facebook!” Shareholders will not accept that. You are the majority shareholder in your business, and you have to protect your investment. You have to make sure that your recurring activities are as directly tied to making money as possible. There’s nothing wrong with having a hobby, but if you want to call it a business, you have to make money.“
I don’t know about you, but this is really hard for me. I like to pride myself on helping people out and doing big favors. I want people to enjoy my art and writing – but I’m pretty bad at selling it. (This is a notorious problem for artists and writers, by the way – something I hope we can overcome together).
I’m definitely one of the people who has focused on blog design over the years way too much, without figuring out how to turn my art into a business that makes money.
But unlike most other people, I don’t have a day job. So I can’t really relax and enjoy my hobbies, because every few months I run out of money. And that sucks. So if I’m going to keep my independence, I need to focus on turning the profit.
This is uncomfortable for me, which is one of the reasons Chris and Naomi’s advice made a big impact.
At any rate, that’s what I got out of it.
How do you feel about making money from your writing or painting? Do you have limiting beliefs about money? Have you read The $100 Dollar Startup? What did you learn from it?