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.

18 comments

  1. Ok, I really like this post! Of course, no-overhead is not for everyone. But it’s something I highly prefer. The thing is, when you have no overhead, you can often provide a superior service for a better price than your competitors. Sometimes ‘no-budget’ businesses take longer to get going because people can be turned off by the ‘no-frills’ technique, but once word of mouth gets around, I find it makes up for things.

    Anyway, I’d already subscribed to your blog, but now I think I’ll have to go back and cruise around some of the archives.

  2. I disagree with the “don’t hire people for things you can do yourself” and “don’t buy things”:
    To me it’s all about return on investment – large corporations spend carelessly and have ridiculous overheads because the people doing the spending aren’t spending their own money.

    I spend my own money, so I’m more careful, but I don’t have a problem at all spending $100 if I know it is going to save or make me $150. It’s all about return.

    If I can pay a VA $7 an hour to do routine work, so I can do client work at $70 an hour, it’s a no-brainer, it’s all about return and shifting to do the most valuable things at any given time.

  3. I disagree with the “don’t hire people for things you can do yourself” and “don’t buy things”:
    To me it’s all about return on investment – large corporations spend carelessly and have ridiculous overheads because the people doing the spending aren’t spending their own money.

    I spend my own money, so I’m more careful, but I don’t have a problem at all spending $100 if I know it is going to save or make me $150. It’s all about return.

    If I can pay a VA $7 an hour to do routine work, so I can do client work at $70 an hour, it’s a no-brainer, it’s all about return and shifting to do the most valuable things at any given time.

  4. @Willie – Agreed, its all about return. But sometimes we have to look at things outside of money. We may make an extra $5 by using a VA but you also might have to waste 2hours trying to understand what they’re saying or getting them to do the project correctly. If you do it yourself the only person you can blame is yourself.

  5. @Willie – Agreed, its all about return. But sometimes we have to look at things outside of money. We may make an extra $5 by using a VA but you also might have to waste 2hours trying to understand what they’re saying or getting them to do the project correctly. If you do it yourself the only person you can blame is yourself.

  6. I love your open plan office – great photo! I like your style and though I try and spin most of my own plates just now – there are a couple of services I outsource. Accounting being one. It’s good to think v carefully about what you spend and what you need, and (as Wille says) what the return is too.

    Good work!

  7. I love your open plan office – great photo! I like your style and though I try and spin most of my own plates just now – there are a couple of services I outsource. Accounting being one. It’s good to think v carefully about what you spend and what you need, and (as Wille says) what the return is too.

    Good work!

  8. Well this was a wakeup call. I so love Aweber, but let’s face it, there’s MailChimp and other free alternatives. It’s easy to just stay busy and not plug in the little holes where money is just leaking out. I don’t run a tight ship like you; I don’t have employees either, but I sure love working with freelancers. I have to think more on the don’t pay people to do things that you can do yourself…yeah…it’s just a time thing with me. All the things that are PERMANENTLY on the back burner need to be outsourced to freelancers.

  9. Well this was a wakeup call. I so love Aweber, but let’s face it, there’s MailChimp and other free alternatives. It’s easy to just stay busy and not plug in the little holes where money is just leaking out. I don’t run a tight ship like you; I don’t have employees either, but I sure love working with freelancers. I have to think more on the don’t pay people to do things that you can do yourself…yeah…it’s just a time thing with me. All the things that are PERMANENTLY on the back burner need to be outsourced to freelancers.

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  11. Great post, Colin. Very timely for me as I’m trying to get out of my job. I always felt like it should be possible to run a business without spending money, but everyone told me I was just lazy to think that way. Hmph. I’ll point them here next time.

  12. What about the design for this blog? What about Goto Webinar or Meeting? Even Mail Chimp has costs once you reach a certain amount of leads… I like your overall point, but NO overhead? It has to work with your biz model, that’s for sure.

  13. Great post Colin. While I agree with the general idea of the post (whole-heartedly, I constantly meet my fair share of people who wouldn’t understand one word of what you wrote) I am not sure if overhead-free is actually doable. Extremely-low overhead maybe, but overhead free? Unless your assumption is that everything you use personally that can be used for business isn’t included, power to charge your laptop for example. Technically whenever you use your laptop for business purposes your business isn’t free anymore.

  14. thanks for inspiring me with this post Colin, now I run an overhead free business as well, and even more, I can have several employees now. Keep up the good work

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