For Free or Cheap: The First Rule of Meeting Needs for Smart Startups

"How can I pay absolutely nothing for that?"  That's the first thing a smart startup business owner needs to think when they identify a need within their business. 

Defining Business Needs

Actually, it is probably better to start this story a page sooner, and to say that startup business owners need to really think about what they "need" in terms of how fulfilling that need will translate into generating cold hard cash. If you love to cook healthy gourmet meals, and it is something you want to do every day:

• You can define a business around "needing" a restaurant in an expensive part of town and a big marketing budget to find your customers so you can fill tables every night and, or
• You can define your business around "needing" a bunch of elegant, intelligent people in a small area who would like to eat healthy, attractive gourmet meals in their home five days a week and are willing to pay to have them delivered.

The second option is probably an easier need to meet free, and it probably will take less time to meet, which means your business will be up and running and profitable sooner if you decide to meet the second need.

Once You've Identified a Need, Find a Way to Meet it Cash Free if Possible

It is a core truth of the human condition that we usually find what we look for. It is not always the case. Cures for cancer and the common cold are illusive. The Fountain of Youth, El Dorado and Perpetual Motion have also proven to be a challenge.  But, generally speaking, a man who sets out to find an "expensive gift" for his wife on their twenty-fifth wedding anniversary and a man who wants to buy his wife of twenty-five years some "beautiful jewelry" will both end up with what they want.  In fact, they may both end up with a diamond necklace.  Its just that the second guy may buy from an estate jeweler and may pay one-quarter of the price for a gift that is arguably better for also being antique.

So setting out to find an "accounting system" is not the same as setting out to find a "free accounting system". Searching for "email marketing tools" is not the same as searching for "free email marketing tools". 

These days, you should always assume that what you want can be had for free, because the few days you invest in that search are likely to "buy" you a better, more cost effective solution than just laying some cash on the table for something that costs thousands more than it should.  Frankly, most of the free solutions these days tend to be better than the solutions you pay for.

Don't believe me?  Try GMAIL. It is hands down the best personal and corporate email services provider in the world today. At least in my opinion.  And it costs nothing.  YouTube is the best and most reliable server for video in the world. It's free.  What's the best tool for creating interactive, easy to launch, easy to support websites? I'd say Word Press.  It is free too.  Free is the place to start your search for the best solutions in the business world.

And if free doesn't pan out, you can step "down" to cheap.  GoDaddy isn't a free place to register your business domain name, but its cheap, and it does have good hosting solutions. Most of its free competitors have some uncomfortable strings attached that make it hard to move your website when desired. So, on balance, it might make sense to go with someone who charges just a little, but delivers great value for tens of millions.

Only after you've exhausted "free" and "cheap" should you look at something you have to pay lots of cold hard cash for.  And then your job becomes making absolutely sure that you get what you pay for and that it is worth that unusual investment.   Often that due diligence turns out to be the most expensive part of the process.  For example, paying top dollar for a business attorney means that you turn to him less frequently than you should, and he has less time to work with you than he should.  Does that really translate into the best solution for guidance in business legalities for your enterprise? That's something to carefully monitor.

Exploitation . . .

Actually, there are things I do feel it is important to pay for. School for Startups hires its apprentices and almost always pays its interns something. Why? Because exploiting the individuals you work with turns out to be a pretty expensive thing for both them and you.  They may end up being "paid" in the customers they disaffect from you through bad service or actively cannabalize from you after they leave to work for a competitor because they do not value any future business relationships they have with you at all. This holds true for exploiting other business owners you work by refusing to pay what you owe when your mistakes cost them money. 

If a company innovates a business model that makes it possible to provide a service that you want free as Google and so many other businesses have, then using their service is of benefit to them. Getting things for free and cheap is an exercise in looking for businesses and individuals that have needs you can meet without paying much in cash.  It is not an exercise in finding people and businesses you can exploit to their detriment

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