Posted on March 11, 2010 by Colin

Running an Overhead-Free Business

 

My Competitive Environment

I compete with some pretty big studios for business.

These studios have a lot of advantages over lil’ ol’ me. They have heaps of tech to make use of when they’re completing a project. They have a million people to handle the work. They have bushels of money to take clients out to lunch and they have the prestige of a beautiful office to have meetings in.

I have a pretty sizable advantage over them as well, though. And my advantage is that I DON’T have all those things I just listed.

I’m running an overhead-free business, and in doing so I’m able to compete with and beat the top dogs at their own game, and I’m loving it.

My Method

When I tell most people that I operate with no overhead, they assume I mean low-overhead, or I just don’t hire people, so I don’t pay salaries.

That second part is certainly true – I don’t hire people so I’m not burdened with having to sign other peoples’ paychecks – but my overhead is literally zero. Zilch. Nada. Beyond my own cost of living, which is minimal (and something that everyone has outside of and separate from business), my expenses for running my business are non-existent, and I work hard to keep them that way.

What’s the trick?

It has a lot to do with minimalism.

Take a second to think about your office or place of employment. How much of what’s there is necessary? What do you NEED to operate. Rephrased: if you had to run your business without anything in there, could you?

For most businesses, you couldn’t You’d need SOMETHING to operate, even buskers need their instruments, even if everything else is optional. And truthfully I need a few things, too. Without my computer, I wouldn’t be able to connect with my clients or do a good deal of the work I do.

Fortunately, I would own a computer even if I wasn’t running a business. Personal expense, buddy. Just like food and shelter. Still zero investment, business-wise.

This is how I approach every new business opportunity that comes my way. I ask myself a series of quick questions, and if the answer to any of them is ‘No,’ then I move on.

Do I already have the materials I need to operate this business? Would any kind of up-front investment be necessary? Do I possess the skills necessary to start a business like this? Will I be able to make this business profitable within a year?

These are important questions, and ones that you need to answer if you’re planning on starting an overhead-free business.

Other Things to Keep in Mind

Don’t hire people to do things you can do yourself. The ideal overhead-free business involves only skills that you already possess.

Don’t pay for things that you can get for free (or if there is a free, passable alternative available). This means making use of Open Source alternatives to popular software, using freemium versions of services instead of a paying model, and opting for extras when the basic model will do.

Make use of what you already own when you can. I already own a computer, so the one piece of expensive equipment that I use to run all my businesses is already bought and paid for.

Keep out of the physical world as much as possible. This means if you make a product, make it an electronic product (or a physical product that is completely handled by a third-party). Use emails and note-taking software instead of letters, fliers and scribbled notes.

Pass the benefits on to your clients. One of the largest advantages you’ll have by running this kind of business is that you don’t have to pay for salaries, paper and ink for the printer, or a brick-and-mortar location. Undercut your competition and provide comparable or superior work, and you’ll be golden.

If the costs start to increase, take a good, hard look at what you’re doing and figure out if it’s a business you want to stay in. There’s nothing wrong with having expenses, but there are so many opportunities out there that don’t require any kind of investment at all that you may want to jump ship and start fresh if the overhead becomes a burden.