Is there such a thing as a free lunch?

This article first appeared in ‘Start your Business’ Magazine November 2009

Running a business, any business, whether it’s as a sole trader or as MD of many people can be, and often is, very lonely. I certainly found this when I bought my business, a multi-million pound turnover marketing agency. The freedom of decision-making, and directing the business, is the good side of the see-saw while at the other end is the pressure and responsibility that comes in maintaining a business for yourself, your shareholders and staff. And I always felt that the fulcrum, the balancing point in the centre, was where I spent most of my time – balancing the two ends – it’s a lonely place.

There are many questions you face in order to maintain that balance but most of the scenarios and problems you face as a new business are ‘new’ too. You face issues that as an employee you never lost a moment’s sleep on but now you are the big cheese, you will lay awake all night worrying about them.

Every 14 days I change my persona from ‘Secret Millionaire’ to ‘Uncle Carl’; an Agony Uncle answering questions for business owners. I receive many, many questions ranging from legal and HR issues to very personal issues – staff sleeping with clients is always a tricky one!

One recurring theme within the creative and marketing world (and I am sure within many new businesses) is ‘doing stuff for free’.  Now doing something for nothing can be important when you first set up, perhaps not desirable, but we have all started new initiatives and been asked for a ‘mates-rates’ job. Whether you’re a designer, lawyer or hairdresser I guarantee it will happen. “What should I do?” I am often asked.

I think there are three occasions when you should do it: 1. When you start your new venture. 2. When, as a ‘going concern’, you want to enter a new sector but have little experience and 3. When you have a new business pipeline that is drying up – then I say go for it!

Now before you stop reading this and start shouting at my photo ‘but I have bills and salaries to pay you idiot!’ or ‘I’m a professional and there is value in what I do’ there are some ground rules.

I have myself, when setting up, offered my services or products for ‘free’.  Now by ‘free’ I mean that no money exchanges hands at that time. The first thing I make sure I do, and advise others to do the same, is that you let the lucky recipient know the real value of what you are about to offer. That may be the full price for the product, or the hourly rate attached to the service, because no doubt what you have offered does have an intrinsic value. So if you are giving it away or discounting make sure the client knows its true value.

The second thing I do is ensure there is a time limit. So I say you can have this ‘free’ just this once, or twice, or this week or this month. But whatever it is, I give it an end point. So now I have clearly stated that after a certain amount of time the offer ends and the prospect knows what they will have to pay or re-negotiate.

The other thing I ask for is feedback. Ordinarily you will be making this free offer as an investment for the long term so in the short term what would be useful to you that isn’t money? I ask for testimonials/recommendations; did I deliver a good product or service? This may help convince other prospects – paying prospects. Will they give me access to more prospects who I can then charge for my products or services?  Will my association with the prospect make my business look ‘bigger’ and stronger? Will the offer of my free business output allow my business to gain valuable experience in a whole new sector?

Finally, is the request for your ‘free’ help only a request for free help at the present time, i.e. can they pay you back at a future point?  If you deliver a free product or service under the guidelines I have stated, then why not also suggest that if your free involvement delivers, that they pay you your ‘going rate’? In effect, you are sharing the risk or demonstrating that your offer adds real value and when that value is realised you will then receive your reward.

So what I am saying is, if you are a start-up business, do not simply offer your services freely ‘willy-nilly’ in a desperate desire to keep busy. But by the same token, do not feel insulted or immediately ignore as worthless a request to ‘do something for nothing’. Simply ensure that you ring-fence the opportunity and lay down some ground rules which ensures you can have commercial conversations once you are in a stronger trading position.

These are hard times, for everyone and favours are being asked from every quarter as many businesses struggle. Do no turn your back on these requests but look on them as another string to your new business acquisition strategy: manage the request, manage the enquirer’s expectations and manage your own involvement properly.