If you are good at something, never do it for free.
People won’t take you seriously unless you charge them for your services. This is not just what I feel—numerous other entrepreneurs, marketers, freelancers, and consultants have had the same experience.
In the last few years, VC-funded companies have started offering discounts and freebies to Indian customers. The logic is justified for a funded company because they will start making money after acquiring a big chunk of the market.
But a self-funded business cannot offer freebies for a long time. In other words, it’s almost impossible to run certain businesses without VC funding.
At the same time, there is a bigger opportunity to run a profitable self-funded business. You may not have insane valuations and you may never become a Unicorn but you can earn more money than you will need to spend in this lifetime.
What a VC-funded business looks like
An entrepreneur finds a big enough untapped market (in the order of millions of potential users and billions of revenue). The entrepreneur leverages technology and comes up with a better solution than what is currently available in the market.
- To make the user habitual of their product, the startup gives something free or at a deeply discounted price
- The startup finds 10,000 subscribers or customers even when their business is running at a loss
- They excite an investor to fund their business after telling the growth story of zero to 10,000 customers in a few months
- Now the speed of execution and customer acquisition will make or break their dreams
- They spend their $1 million as soon as possible to craft a bigger growth story of 10,000 to 1,00,000 customers
- The startup keeps on raising funds and keeps on acquiring market
You have a strong story of having acquired one million users even if your books show a loss of $10 million.
You still have a strong case of market dominance. You can still raise $100 million. Investors will trust that you will be able to dominate the market and become profitable in the future.
I am not sure whether or not that VC-funded company would be able to become profitable in the future. It can be. I understand what CAC, CLTV, and hockey stick growth are. I don’t want to argue.
If you can run your business on the VC-funded model, go ahead and dominate the market. Make sure you are playing in a big enough market and that your product is worth talking about.
What a self-funded business looks like
There aren’t many big markets where you can dominate. Honestly, most people don’t even have the capability to build products that can dominate markets. Rather, you can focus on businesses that can be started under Rs 5,000 in India.
Stop reading the success stories of Unicorns. You don’t know what they have gone through just to survive their initial days. You may not be able to bear that pain. It wasn’t just luck that got them their billion-dollar funding. They died multiple times to achieve their scary dreams.
A self-funded business may start in a small market but cares about becoming profitable as soon as possible.
- They figure out at least one way of making money from side work (until they start selling their product)
- They figure out at least one service or product that a customer wants to buy right now
- They focus more on customers who will actually pay (target audience)
- Self-funded businesses believe in the organic way of growth
- Sometimes they deliberately stay small to maintain the quality of service
They may offer a product for free but never provide any free service. Time is the most valuable currency for a person who is bootstrapping. We must spend our time wisely.
The Joker from The Dark Knight said, “If you are good at something, never do it for free.”
While you should help people free of cost, never sell yourself short. I am able to help people free of cost by sharing my knowledge through my articles, but I know how to say no.
Now I am running a profitable business without any external funding. I have sufficient inflow of money to take care of my family and business.
I receive a lot of emails from people who need my help in growing their business organically. I answer each of them. I tell them to invest their time in building their skills, start small, run a few experiments online, and then come back to me with some results.
From those email conversations, I figured out a business model that most entrepreneurs, marketers, freelancers, and consultants can apply to their business.
I tried an experiment with paid VIP newsletters that became successful. More than 200 people signed up for the premium newsletter within a month. Even I am surprised to see that people are ready to pay for premium newsletters in India. I send a weekly email to paid subscribers where I share my insights on building an online business.
You can read all the internal details and challenges of running a paid newsletter, but eventually, you have to experiment to find the right pricing for the value that you want to deliver.
Vijay Anand, Founder of The Startup Centre, also started a premium newsletter and announced it via a LinkedIn post. He is also monetising his time, which he was previously offering free of cost to people.
I am running a few more experiments with premium services that everyone else is offering free of cost. I have a premium paid Facebook group where I charge Rs 50 for membership. I keep the group, which features discussions about building profitable online businesses, spam free. I charge Rs 5,000 for hourly consultations where I help startups with their content marketing strategy. I am even experimenting with a premium community of marketers and startup founders.
People are paying because they find my services helpful. The end of free services is around the corner.
You can also stop giving your services for free. You can do it if you are in a market where people value your time and services.
Important to note: My advice is applicable for people who are playing in a small market and their time is extremely valuable.