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Want to Work for Free? Start a Business

by Ryan Guina

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.


Published or updated February 16, 2010.
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{ 23 comments… read them below or add one }

1 basicmoneytips.com

It is a good reminder that you have to keep the long term goal in mind. There are plenty of good websites out there, but you just have to keep plugging along.

Thanks again for the good information.

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2 Kyle C.

I am getting ready to start small local business and in planning for it I fully expect to be working for free, or even less than free to get things going. Between startup costs and general costs to run the business it is going to be a bit before I really start to see a profit. The key is to not expect to much at the outset and work your tail off to make good things happen.

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3 Ryan

Kyle, best of luck with your new business. Having the outlook that it may take awhile to become profitable will help you prepare for the ups and downs of running a new business. As long as you keep this mindset and have another source of income or large emergency fund, you should be OK financially, and will hopefully be able to turn your new business into a profitable enterprise.

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4 Ken

Thanks for the reminder that things will get better. I’ve been blogging about 3 months and my wife already told me, “It hasn’t made anthing for us.” I told her it was a long term deal…it takes time to improve and attract more readers. I’m committed to this venture.

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5 Ryan

Ken, blogging is definitely a case where it takes time to make money. One of the most under-appreciated aspects of blogging is how long it takes to create a substantial amount of archives, which are generally necessary to bring in a stable amount of traffic… and you need traffic to make money with a website.

Yesterday, Flexo from Consumerism Commentary published this article: Realistic Expectations For Making Money Through Blogging. It is great reading for all bloggers, and can also apply to non-blogging situations.

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6 Megastar

Ryan,
You are definitely correct. It takes time before you start making money. It’s just a matter of staying committed and remaining passionate.

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7 P

This makes sense. Would you like to share what other websites you working on and how are you making money? I have yet to make any money on my blog, as it is new and I do not like adsense…am I making mistake? Thanks.
Congratulations for your success.

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8 Ryan

P, the main sites I run are Cash Money Life and The Military Wallet, but I also run multiple other sites. My sites earn money through Google AdSense and other forms of advertising. AdSense is only one way to earn money, but it is not the only way. So, I can’t say you are making a mistake by not using it. Each site performs differently with different forms of monetization.

Best of luck with your sites. And remember, it takes time and work to create an income generating business.

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9 Financial Samurai

Thanks for sharing Ryan.

If I think about trying making money as a motivator for my site, I’d quit.

It’s just for fun, as well as for learning. If people want to pay me money to run some worthwhile links, fine, but I don’t look for it at all.

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10 Daddy Paul

“My goal with this site and others is to help people improve their lives.”
And it shows in your writing!
Thank you for sharing your story.

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11 Dustin @ Inzolo

So TRUE. I’m just realizing that I’ve been working on Inzolo for over a year now (as my hosting costs came due. Not only have I worked for free, but I’ve dumped money into the project as well paying for hosting, security certificates, advertising, and legal fees. So, I’m actually losing money to work… but I have the greater goal in mind and I’m confident that there will be a tipping point when my business takes off. For now, I guess I’m faking it well because friends think my site is pulling in all kinds of money :)

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12 pkamp3

Great article Ryan, I took a lot of it to heart. I hope my site can be half as successful as yours; I’ll keep writing for far below minimum wage until then!

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13 Ryan

It takes a lot of work and some lucky breaks, but it is well worth the effort. :-)

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14 Financial Samurai

Gotcha Ryan. VC funds take and take and take until mgmt stakes get marginalized to nothing. I’d be wary. Although, there is a ton of money chasing capital, so maybe you can get a better deal.

I’d rather invest with a VC instead.

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15 Ryan

I’m not currently seeking VC for any of my projects, but I’ll keep that in mind. Right now I’m interested in developing my business ventures organically and contracting out for anything I can’ do myself. :)

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16 LiveCheap

Ryan, like this article. I’ve been a software entrepreneur and now run LiveCheap. People who have never been through a startup don’t understand how precious money is. When you are the founder, you come last but you have all the upside in the equity.

Just having this conversation with another senior-level executive discussing a new venture. The question that we all ask us on a new startup is how long can we go not drawing a salary. Ideally if you live cheaply, you can do this for a year or more because the ramp to cashflow positive always takes longer. If you can’t go more than a few months, you don’t have enough “runway”.

Anytime you are drawing a salary early in a startup it’s likely you took money from someone. Money means that you gave up control. So if you want to keep full control, you get paid nothing. With blog type websites, nobody is going to write you a check since they don’t generate that much money.

I got my first $100 plus ad check after 3 months. Apparently this is good, but it felt like forever and required a lot of work!

To give readers an idea of how long it took on a software business, we got our first $5,000 sale after 7 months and didn’t break even for 18 months. So for 7 months, we didn’t earn a dime. And that was a ton of 14 hour days and was considered very fast. I had a salary at the software company but it was reduced for a long time. So even if you aren’t working for free bet on taking a serious pay cut that might set you back 5 to 10 years in salary.

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17 Ryan

I like how you mentioned taking on venture capital and giving up control. This isn’t something most bloggers face, but it is common with other start ups. This is a topic I don’t have much experience with, so I won’t cover it on my site, but it is a topic many entrepreneurs must face at some point. The decision deals with taking on funding to get the necessary working capital to develop the software or infrastructure, vs. bootstrapping your operations and building everything organically. The difference can boil down to time and efficiency. Sometimes it’s better to give up some control in order to be first to market, and other times it’s best to do it on your own to retain full control, and thus full profits once they start rolling in. Definitely a case by case situation!

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18 Financial Samurai

In venture capital, you have to believe in the idea, and invest in the MANAGEMENT. That is my #1 criteria. I’ve got one VC investments in the making, and it should be good.

The issue with VC is that you need to be a “QI” or qualified investor. There are some criteria such as having X amount of investable assets, and make X amount of money. It’s good to have a wall, b/c you can easily lose everything in VC!

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19 Ryan

I was coming more from the perspective of taking on VC funds to get your company off the ground, but looking in from the side of buying into a startup is important too. I’ve not dealt with this topic too much, but I’ve seen a little from the outside. It’s a very interesting sector of the market and one I enjoy reading about.

20 Kristine

What is it called…sweat equity….when you start off a business working for free? Starting your own business centered around your passion will take a lot of work, but work to enjoy along the way. Keeping the big picture in mind, the goal(s) of starting your business will keep you going.

We have read many successful stories of how people have made it blogging or creating their own websites. Learn from them. Study them. There’s no need to re-invent the wheel. When we focus on giving quality material of high value to the reader, the return on the time and effort invested will return indefinitely!

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21 Pam

Amen. I totally agree that if you want to be a successful entrepreneur you need to be willing to put a lot of hours in without getting paid. It’s all part of the process and if you can continue to work towards your goal and persevere despite all odds, you will eventually reap the rewards. The key for me is to take on projects that I really enjoy doing so they are more like a hobby than a business venture. Then, if they end up producing money in the future, great, but if not, I feel like I’ve still accomplished something. The most important thing is not to give up. Thanks for the insightful post.

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22 Kevin Khachatryan

I’ve been working for myself for the past 2 years and I must say that the number one obstacle is the slow beginning that you referred to as well. There seems to be a sort of plateau whereby passing it almost propels you into stability. As a web designer, it took me a few months before my business started getting any traction from word of mouth and returning clients.

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23 Rebecca

Ryan – yes, many thanks for the reminder that working for free is not for fools. Building a website takes a lot of time, energy and hard to work and nice to be reminded that there is a light there at the end of the tunnel which may be hard to imagine when you look at your hourly wage.

I also, look at my year of working for free as a free education. Where some people spend hundreds of thousands on business school, I’ve been gaining real world experience and have learned so much in the last 7 months, it has made it all worth it. Some risks are worth taking.

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