Raise your hand if you would show up to work everyday, work hard, and go home without receiving a paycheck or any other form of monetary compensation. A pat on the back is great and all, but let’s face it, a nice word or two doesn’t pay the bills. Cash pays the bills.
While you normally wouldn’t volunteer to work for free, that is often exactly what happens when you start a business. It usually takes some time to get things going to the point where you are not only receiving positive cash flow, but enough cash flow to turn a nice profit and pay yourself a decent hourly wage.
I worked for free for months
I will use this website and the other sites I run as an example. It took me about 7 months to earn enough money through Google AdSense to qualify for a payout ($100). It took almost a year before I earned my first $1,000. In that time I wrote 5 or 6 articles per week, and spent an untold number of hours writing, editing, reading and responding to e-mails, and other work related tasks. My hourly wage for the first year was lower than the hourly wage in many third world countries.
But I took a long term view with my business. My goal with this site and others is to help people improve their lives. I enjoy writing about personal finance and career topics, and I enjoy the learning, sharing, and interacting that come with running websites. And somewhere along the way my hobby turned into a business. I began earning more money, and now, three years after I started this site, I can say that not only do I not work for free, but I earn a decent hourly wage.
Working for free is a normal part of starting a business
Running websites is not the only place where you might work for free. When I was in high school I worked part time for my best friend’s neighbor who had recently started a business. He worked all day at his company, but didn’t draw an actual salary or hourly wage. For the first few years he basically lived off whatever profits he made that he didn’t need to funnel back into his company. It made for some lean months and some very lean months, and I learned a lot by seeing this first hand. As the old adage goes, success doesn’t happen overnight. It takes time to build a successful business.
Chris Guillebeau, from The Art of Non-Conformity, wrote an eBook called 279 Days to Overnight Success. In his book, Chris addressed the issue of taking the long term approach to your business and mentioned that yes, sometimes entrepreneurs need to work for free in order to build the trust and equity needed to produce a viable business. Here is a quote from page 66 of his ebook (which you can download free through the link above):
…I also noticed a disturbing trend in some of the other emails. Several people all said that they were insane to work for free when first starting their business. When I read those comments, I thought, “Am I missing something here? I thought everyone works for free when they are starting something new. That’s the whole point of risk and reward.”
Working for free may be insane in the outside world, but with most small businesses it is actually quite normal. (…) I don’t mean to deter you in any way. If anything, your chances of success will greatly increase as long as you understand what you’re getting into.
What a great quote. I agree with Chris’s statement and I would like to add something that I think he hints at, but doesn’t explicitly mention…
You are working for free, but with a greater goal in mind
There is a light at the end of the tunnel, and even though you may start a business and work for free for an indeterminate amount of time, you are working toward your ultimate goal, which is building your business.
Entrepreneurship is about believing in yourself and your ideas. If you are truly passionate about your business, then working for free is not only recommended for success, it is essential for success. If that means working long hours to see your project or business succeed, then so be it. Your hard work and dedication are required to help your business reach the critical mass it needs to be successful and hopefully become self-sustaining. It takes time and it takes work. But the long term reward is worth the early sacrifices.