PDF Summary:The Minimalist Entrepreneur, by Sahil Lavingia

Do you dream of owning your own business but aren’t sure how to get funding to start it? In The Minimalist Entrepreneur, Sahil Lavingia says you don’t need any. In this book, the successful business owner gives detailed advice for starting your own profitable “minimalist” business without using venture capital or spending a penny on advertising.

In this guide, we’ll explain Lavingia’s business model, from identifying a business you’ll love to run by finding inspiration in your own communities, to setting up, testing, marketing, and launching your business. We’ll also discuss how to run your business sustainably, with the ultimate goal of achieving “time affluence” for yourself, and making a positive contribution to the world.

Throughout, we’ll compare and supplement Lavinagia’s advice on starting a business with that from other books like The Lean Startup, The $100 Startup, and Blue Ocean Strategy.

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1. Create a website and business email address. Your website doesn’t need to be anything elaborate or pretty, as long as it’s functional, easy to navigate, and explains clearly what service or product you offer. (Shortform note: One of the mistakes businesses make is creating a website that’s too “busy.” In Building a Storybrand, Donald Miller says the only information people need from your website is: what you have to offer and how they can get it.)
2. Create social media accounts for the business, separate from your personal ones. Depending on what your service or product is, some sites may work better than others. You might consider Facebook, Instagram, Twitter, Pinterest, YouTube, and TikTok.
3. Set up a payment system through something like Square or Stripe.
4. Have a feedback avenue. Lavingia says you’ll want to create a way to get fast and frequent feedback from customers, so you can constantly tweak accordingly.

Use Social Media as an Avenue for Feedback

Jab, Jab, Jab, Right Hook explains how to create high-quality social media content and how to use the various platforms to your advantage. Get to know the features of each platform you use, so you can get the most out of them.

A steady stream of real-time feedback is one of the most valuable assets social media can provide. Pay attention to replies and comments on your content, and take any negative feedback seriously. Any interaction with your content can tell you something, even if it’s just a “like” reaction or a “thumbs down.” Using these features, you can monitor what’s most and least popular with your audience, and adapt your content to that.

With Twitter’s retweet feature, for example, you can track how many people have retweeted your posts, to see what’s popular. Likewise, on Pinterest, you can track how many users have “pinned” your content.

Launch and Market

When you have your infrastructure set up, you’re ready to go. Lavingia says at this point you’ll launch and begin to market simultaneously.

He advises against paid advertising because it’s too expensive and too broadly targeted for a minimalist business. He says you don’t need to spend any money on marketing (Shortform note: Although much contemporary marketing advice suggests moving away from traditional paid advertisement, the US Small Business Administration says it can still be quite effective. They say in surveys, people indicate a much higher level of trust for TV, print, and radio ads, over online ones. So, if you do decide to pay for marketing, traditional advertisements may be the most effective route). You can do it all yourself because you’ve already established yourself with your target audience.

He also advises against having a launch party just yet. Instead, start by “cold calling” to educate people on your services, then begin more widespread social media marketing, then have your launch party.

Build Anticipation for Your Launch

The $100 Startup advises building anticipation before your launch. Some of the techniques you can use to do this include:

• Let people know the date and time of your launch in advance.

• Give “teasers” to get people interested in what you have to offer.

• Make sure your audience knows why your product will be valuable to them.

• Offer early-purchase or pre-ordering bonuses.

• Put out several reminders of your launch, especially just beforehand.

• Write to media sources about your launch to try to get the word out.

After your launch day, be sure to thank all of your customers. You may even want to craft a thank-you message to send individually to each customer that also lets them know what to expect next.

Spread the Word

Lavingia recognizes that most people, especially creative types, hate doing sales and marketing. So he advises thinking of sales as “education” about your product or service.

Start spreading the word about your business by reaching out individually to people in your target community, like this:

1. Connect with experts and influencers. Scour social media to find subject matter experts, such as journalists, bloggers, and influencers who have posted about businesses similar to yours. For example, if you’re creating a photo-editing app, look for people who have YouTube reviews of similar apps, or bloggers who write about photography and photo editing. Make a list of everyone you can find. Message them and offer to show them your product. You may even want to take them out for lunch if they’re local. Ask these people for their feedback and learn from them. Don’t necessarily try to sell them on your product, or ask them for reviews or promotion. Just educate them and show it off. Simply making these connections puts you in a network that can eventually generate referrals and customers. Lavingia did this with hundreds of people.

Create Mutually Beneficial Relationships with Influencers

People who work as “influencers” or content creators may be motivated to meet with you because they’re interested and invested in the topic, or because it could also benefit them. Although Lavingia advises that you don’t ask these people to promote your product at this point, 60 Second Marketer suggests that you can work out a mutually beneficial relationship with “micro-influencers”—those who have smaller audiences and don’t command high fees for product promotion. For example, you may offer to share their YouTube video on your social media in exchange for a video review, which could generate more followers for them, and more customers for you.

2. Target potential customers in your community. Search your internet communities for people who might be interested in your product and reach out to them individually. Message them and just tell them a little about what you have to offer. For example, Lavingia’s website Gumroad offered a way to sell digital products to people. So he scoured the internet looking for people who were selling digital products in a less efficient way, like emailing the product to every customer. He wrote a quick message to each of those people telling them he had created a more efficient way to automate the process of selling digital files and welcoming them to check out his website if interested. He did this with thousands of people. (Shortform note: This is called “cold messaging.” Tips for successful cold messaging include: Keep your message brief and authentic.)

3. Don’t get discouraged. Most people will ignore you or say no. Don’t take it personally. Remember, this is your passion, so just keep sharing enthusiastically.

According to Lavingia, this will be how you generate sales in the beginning. He advises that you always be authentic and open with your customers, creating relationships with them, so they’ll be inspired and feel part of a community.

Conquer Your Fears

This step in the business-building process can be intimidating. Lavingia says most people, including entrepreneurs, actually hate “selling” anything, even their own products. If you feel trepidation about messaging people out of the blue like this, Tim Ferriss offers some advice on facing your fears, in The 4-Hour Work Week. He says to ask yourself the following questions:

• What are the worst-case scenarios, and how likely are they to happen? Rate each possible scenario on a scale of one to 10 in terms of how likely it is to occur. This should alert you to the fact that the worst-case scenarios are unlikely.

• If the worst did happen, how would you fix it? Coming up with such solutions ahead of time may ease your fear of anything being permanent and unfixable.

• What are the most likely possible outcomes and their effects on your life? Don’t forget to include the best-case scenarios.

• What would you be potentially losing if you don’t act? Instead of dwelling on “what if” scenarios if you do this scary thing, think about what you might be losing if you don’t do it.

Set Up Your Funnel

The next step in marketing will be to set up your “funnel.” In Lavingia’s model, the funnel is made up of social media at the top and email in the middle, which will funnel your sales to you at the bottom.

What Is a Marketing Funnel?

The “marketing funnel” is a widely used concept in the business world. It refers to the pathway by which potential customers go from their first awareness of your brand to becoming paying customers. There are a number of variations on the funnel, but it generally works like this:

• The customer finds out your product exists, for example through an ad, social media, or word of mouth. This is the widest end of the funnel, reaching the largest number of people.

• Some portion of those people shows interest in what you have to offer. They might “like” your social media post, or follow your page, for example.

• Some of those will engage further and decide they want your product. They may visit your website or sign up for your email list.

• At the smallest end of the funnel, some people will buy your product.

Lavingia recommends setting up your funnel as follows:

Top of the funnel: social media

Your social media presence will be your farthest-reaching marketing vehicle. Here you’ll want to create content that will be interesting and engaging enough to generate followers. Some advice Lavingia offers for managing your social media content includes:

• Create accounts for your business and yourself separately. If people are attracted to your business, they may want to follow you personally. This way you create “fans” rather than just “customers.” (Shortform note: Forbes says turning your customers into “fans” means creating brand loyalty. When someone is a fan of a brand, they’re explicitly not a fan of competing brands. And the thing that turns customers into fans is excellent customer experience. So your customer service can be just as important as your product itself.)
• Post on your social media accounts every day.
• Share your pages in the communities your existing customers are part of.
• Generate content people can like, comment on, and share. Twitter’s retweet feature can generate a lot of exposure if someone with a big following retweets your post.
• Instagram, YouTube, TikTok, and Pinterest may work better for certain kinds of products. You have to find which sites work best for your business.
• Share content that has value, not minutiae like your meals. Post your thoughts and ideas, educational, inspirational, and entertaining content. Be personable and authentic.
• Share your business journey. People enjoy following that progress.
• Use the reactions and comments to gauge what people like and want to see more of.

Emphasize Your Uniqueness

In Traction, Gino Wickman says you should identify three things that make your product or service stand out and differentiate it from the competitors. To identify your three differentiators, he says you should make a list of everything you can think of that makes your product unique. You can ask others for input on this as well, including customers. When you have your list, identify three of these qualities that none of your competitors have in combination.

Once you have your three differentiators, you should emphasize these repeatedly when you’re promoting your business. At the top of the funnel, this will mean mentioning these three qualities in your social media posts. While you want to promote your product or service through your social media posts, you also need to be sure your posts are engaging, friendly, and authentic, and that they don’t come across as advertisements.

Middle of the funnel: email

As soon as you have social media followers, start collecting email addresses. Lavingia says every email subscriber is worth much more than a social media follower, because they’ve already indicated their interest, and you can reach them directly. His business has over 200,000 email subscribers, and he says this list is the business’s most valuable asset.

When you have someone’s email address, think of them as a friend and treat them accordingly. He offers some tips on how to go about compiling and using an email list:

• Create something small you can give people for free in exchange for their email addresses. For example, you might create an artwork or a pdf, and post on your social media that you’ll send the download file to anyone who gives you their email address.
• When you have a particularly popular post, respond to it with a link to sign up for your email list.
• Create a blog or newsletter, and encourage people to subscribe to it.
• Set up your payment process so every customer gives their email address when they check out.
• Set a regular schedule for sending out content to your email subscribers. Try a weekly or monthly newsletter.
• Don’t spam people or overdo it. Try out different things and if a lot of people unsubscribe, change your approach.
• Reward your loyal customers by emailing them discounts for leaving reviews or sharing on their social media.

(Shortform note: In The 1-Page Marketing Plan, Allan Dib says an email list is a low-cost and low-effort way to turn already interested people into paying customers. It’s a way to develop a relationship with your customers, introduce new products, and offer promotions. Instead of using your regular email account, he recommends you consider using an email marketing platform like MailChimp, which can help you automate, personalize, and optimize your email content.)

Bottom of the funnel: sales

When you have your funnel set up and are consistently creating content for your social media and email subscribers, you’ll start to see sales come in. At this point, you’re ready to celebrate. Lavingia says after you have about 100 customers and successful sales, it’s time to plan your launch party.

Have a Launch Party

According to Lavingia, most companies don’t use the launch party in the most effective way. He says it shouldn’t be about starting your business; it should be about celebrating its early success. And you should celebrate with your customers. He says you should invite all of your customers to your launch party, so they can feel they’ve built the business with you. Invite them to bring their friends and families. This will spread the word of your business even further, and your customers will be helping you sell to their communities. This strategy will earn you loyal and repeat customers, which are essential for a sustainable minimalist business.

(Shortform note: Since you should already know a good deal about your customer demographic by this point, be sure to consider that when planning your launch party. Think about what kinds of events people in this community already attend, and design your party with that in mind. You also may want to consider inviting a guest speaker that your community will get excited about, partnering with another local business or charity, and inviting local community leaders. These elements will give your party an air of importance, and people will be excited to attend.)

Stay in Business

Once you’ve gotten off to a successful start and have a customer base, Lavingia says there are some important steps you can take to ensure your business stays successful and profitable and continues to grow organically. In this section, we’ll explain his minimalist methods for ensuring sustainability, hiring the right people, and creating a company they want to work for. Finally, we’ll look at his vision of what the long-term goal of a minimalist business should be: improving your life and the world.

Focus on Sustainability

One of the major differences between a minimalist business and a venture capital startup is sustainability. Lavingia tells us there are just a few reasons most businesses fail: overspending, hiring too quickly, and founder conflict. In order to be sustainable over the long term, you’ll need to be careful to not make these mistakes.

Overspending and Hiring

Carefully monitor your expenses to be sure you’re spending less than you’re making. This might seem obvious, but Lavingia says many business owners don’t pay close enough attention to this.

Some of the ways you can avoid financial problems are:

• Pay yourself the minimum you need at first, and then increase it slowly as you’re able to. Lavingia only paid himself $36,000 per year when he started his business. He raised that as the company grew, but tied his own salary to those of his employees, meaning every employee’s salary increased at the same rate as his.
• Avoid paying for office space if you can do your business without it. (Shortform note: People are increasingly seeking out remote employment, and this trend is expected to continue. So by not having office space, you’ll not only save money, but you’ll likely also attract more applicants to your job openings.)
• Do anything that you can with software instead of hiring a person, because software costs less than paying people. Don’t hire anyone until you actually need help.
• When you do need help in the beginning, hire freelancers on a contract basis, rather than permanent employees. Think about using people who are really interested in the business, and who could learn from you and potentially become full-time employees later. (Shortform note: In their book Rework, Jason Fried and David Heinemeier Hansson suggest hiring your most attractive applicants to do a 20-hour trial project, to see their quality of work. They say this will be a more reliable gauge of their fit for your company than any degree or even work experience. They also advise that you don’t hire anyone to do a job that you haven’t spent some time doing yourself. This will mean you know how to do every job in your company, which will give you some insight into exactly what to look for in a candidate.)
• Pay attention to what your customers are saying. Negative reviews can be financially damaging, so take them seriously.
• If and when you want to invest more into expanding the company and you need more capital, crowdsource the funding from your customers and make them shareholders.

Other Budgeting Mistakes to Avoid

Some other common financial mistakes you should watch out for include:

• Not understanding business taxes: It’s crucial that you understand what taxes you need to pay, comply with all regulations, and make your payments on time.

• Not separating business and personal finances: Be sure you have separate accounts for everything, so you can effectively budget and track your business expenses.

• Underestimating expenses: When budgeting for the future, always overestimate your expenses to play it safe and account for unanticipated costs. This should include remembering to account for possible seasonal variations, if your business has an off-season.

Founder Conflict

If you’re working with a partner or thinking of it, Lavingia cautions that it’s important to avoid conflict and the potential disaster it could cause your business. He says you should treat a business partnership like a marriage, and he offers the following advice:

• Only work with people you trust completely.
• Before committing to a partnership, discuss both of your values, visions, and goals to be sure they align.
• Create detailed, written financial arrangements, so they don’t become a point of contention.
• Establish an exit plan, in case it doesn’t work out.

(Shortform note: Business relationships are similar to marriages in more ways than one, including the fact that nearly half of entrepreneurial partnerships end in a split. The vast majority say the rift was due to different visions for the future direction of the company. This points to the crucial importance of Lavingia’s advice to be sure your visions and goals for the business align.)

Create Your Company Culture

When it’s time to bring on permanent employees, Lavingia says you should first be sure to make your company a place people want to work. Create your company culture thoughtfully and intentionally, and evaluate potential employees by how well they’ll fit with that. Lavingia’s process for creating a healthy company culture that encourages long-term sustainability is:

1. Write a value statement. Think about what kinds of values you want your company to stand for, and make the value statement explicit and visible. This will set the expectations for how people should behave, including yourself, and how problems will be handled. You’ll use this to evaluate potential employees and to remind yourself and others regularly what the company stands for.
2. Be transparent. Be clear about what your intentions are as a company. Lavingia recommends sharing all company documents, including finances and salaries, to create a culture of openness and sharing.
3. State your company values in job postings. This will attract people who will be a good fit and turn away people who won’t. In the hiring process, stay focused on whether the applicant will align with the company’s values and culture. It needs to be a mutual fit.
4. Empower your employees. If you give your employees autonomy and treat them as peers, they’ll feel empowered, manage themselves, be loyal to the company, and care about providing the best service to the customers. Rather than top-down management, Lavingia says to think of it the opposite way: Your employees serve the customers, and you serve the employees.
5. Hire people who will improve the company. Try to find people who have talents or skills you don’t have, so they can contribute those to the company. Hiring others who share your entrepreneurial mindset is also a good way to bring motivated, dedicated people onto your team. Consider looking within your customer community for potential employees. Lavingia posts his job openings on his social media sites, thereby reaching out to people who are already his followers.

Culture Is Crucial

Ben Horowitz, author of What You Do Is Who You Are, says your company culture is a combination of what you explicitly state—for example, in your value statement—and what is implied through your leadership style and the company’s structure. So be sure to consider what you’re communicating in every aspect of your company’s design. For instance, if your value statement says you value transparency, but the pay structure is not public information, that sends a mixed message. Horowitz says with the right alignment between your employees and your company culture, your employees will feel like they’re working together for a common purpose. This can boost performance and determine the success of your company.

To evaluate current or potential employees’ fit with your company culture, Gino Wickman suggests using a values spreadsheet called The People Analyzer. You can use this tool to evaluate applicants for how well they align with the company’s core values, or current employees to assess how well they might fit specific positions and roles within the company.

Lavingia says it’s natural that sometimes an employee won't work out. While that requires a difficult conversation, you have to be honest and straightforward. Don’t think of them as being a bad employee, just an employee who wasn't a fit. Offer them any assistance you can with finding a new position.

Improve Your Life and the World

Finally, Lavingia addresses the long-term goal of a minimalist business. He reminds us that this kind of business isn’t about getting rich—it’s about creating a satisfying life, contributing to something you care about, and being financially successful in the long run.

Building a business, Lavingia says, should be about making the world and your own life better. Working extreme hours is self-defeating. So he says you should use your financial success to create “time affluence,” or a wealth of free time, so you can enjoy life. He gives a few pieces of advice for using your financial assets to create the more valuable assets of time and life satisfaction.

(Shortform note: Lavingia’s advice aligns with what psychologists know about happiness and life satisfaction. In Happier, No Matter What, positive psychologist Tal Ben-Shahar says that time affluence is a better predictor of well-being than material affluence. He says being time-affluent would mean feeling like you have enough time to engage in activities that are meaningful and enjoyable, rather than being constantly stressed and rushed. Generating more leisure time means you can’t make money your first priority, but it doesn’t mean you can’t still be successful.)

As your business grows and prospers, Lavingia suggests you think about automating and outsourcing anything you can, to free up time for yourself. (Shortform note: The 4-Hour Workweek suggests hiring virtual assistants for tasks that can be delegated. Since VAs work remotely, you can hire someone from anywhere in the world. This can have a financial advantage because currency conversion rates mean labor costs are lower in countries like India and China.) Sometimes spending money to create free time is well worth the tradeoff. Then, he says, you can use that free time to go back to being a creator and work on projects you love, whether it’s something you want to do for pleasure or starting another business. In this way, your business should not trap you, but free you.

He also suggests using your financial success to contribute and give back to the world, by supporting other entrepreneurs, social justice and environmental causes, or whatever you care most about. In 2020, as a response to racial justice issues in the US, Lavingia decided he wanted to invest in a Black-owned tech startup. He posted this on his social media sites, inviting Black entrepreneurs to contact him. He received over 200 emails in response and ended up investing in four of these startups. (Shortform note: This is called “angel investing.” It’s different from venture capital because an angel investor uses their personal funds to invest, rather than an investment fund. Angel investors also typically expect a lower return on their investment than venture capitalists.)

And finally, Lavingia says you should always keep in focus your original purpose of wanting to help people in a community you care about. You’ll likely want to embark on a new endeavor at some point. When you do, take some time to reflect on why you originally wanted to solve the problem you did, why you align with the community you serve, and why you want to do the next thing. This will bring you back to your driving purpose and help propel you forward in a way that will continue to make your life fulfilling.

Giving Is Receiving

Joshua Fields Millburn and Ryan Nicodemus, known as “the minimalists,” travel the world helping people create simpler, more meaningful lives with fewer material possessions. In their best-selling book Minimalism, they say part of a balanced life is contributing to the world and to others. They say getting personally involved with charitable causes is more rewarding than simply writing a check, and they offer some advice for ways to get involved and give back to the world.

• Visit volunteermatch.org, where you can get matched with causes you can contribute to by volunteering. Try out different things until you find what suits you best.

• Consider starting your own charitable organization.

• Mentor someone who could benefit from your guidance.

Since you’ll already have a successful business by this point, think about how you might connect that to your plan for giving back. For example, Lavingia suggests helping new entrepreneurs by sharing your strategies and possibly offering start-up funds. Whatever you decide to do to contribute to the world, Millburn and Nicodemus say giving will help you grow and give meaning to your life.