Starting a Million Dollar Business with $1,000

BY JON BEEKMAN

You don't need to burn through your life savings to start a successful company.

By August 2011, my first company had gone down in flames. We had a great team, raised over a million dollars and built some incredible technology. There was only one little problem. We started talking with customers after we'd built the product. Cue atomic fireball video. Oops.

Being a stubborn entrepreneur, it wasn't long before I wanted to go all-in and start another company. My wife, supportive as she is, was decidedly less enthusiastic about us spending our entire life savings on my next venture. We compromised, and I agreed to only spend $1,000 and start by "going out and getting real customers" for a crazy new idea called Man Crates. Turns out that's what I should have done the first time around.

Do Things Backwards

In the early stages of a startup, there's comfort in doing the things we know how to do--like looking for office space, setting up accounting software or starting to build our products. While doing these things feels like progress, unfortunately, it's the exact opposite--it's burning limited time and money on things that are completely unrelated to initially proving you may have a viable business.

With my new start-up, I decided to do things backwards. I started by figuring out if people wanted to buy what I was selling, what they'd pay, how I'd find them and how many of them there were. Anything that got in the way of that learning was just wasting resources and lowering my likelihood of success.

Sell It Before You Build It

With only $1,000 in my pocket, I couldn't carry significant inventory. So I was forced to sell a product before I had a product to sell. I cobbled together a website that was part template, part Photoshop, and part poorly written HTML. It wasn't pretty, but it'd work well enough to allow me to present the core selling proposition to potential customers--awesome gifts for men, packed into wooden crates, shipped with a crowbar.

I got up and running with a professional-sounding 1-800 number and some cheap product photos from a guy on Craigslist and started my first Google Ads campaign to drive strangers to my website. I wanted people to act, browse and buy as they normally would even though there wasn't anything behind the website except a guy working out of his apartment. It sounds crazy, but it worked: I found customer demand.

Feedback, the Breakfast of Champions

People started buying, despite how rough my website and products looked. I called every single early customer, thanked them for their business and in many cases, spent thirty minutes or more listening to why they needed what I was offering. The feedback from those early customers went straight into strengthening the products and service. I didn't waste time doing the wrong things, building the wrong product, or selling to the wrong people. I listened to the people paying me for my products and maniacally focused on better solving their problems.

Either Way, You Win

While it's true that getting real customers is just the first step towards building a real business, it's extremely dangerous to skip this step and assume people will buy when you're ready for themrather than the other way around. If you sell as early as possible and people buy, you win. Incorporate their feedback and keep selling. But if you sell early and people don't buy, you still win. In fact, you probably just saved yourself a million dollars.

IMAGE: SHUTTERSTOCK IMAGES