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Weekly Thoughts from Godwin Start-Up School

As an entrepreneur, and specifically as a start-up owner, you're going to encounter someone asking you to do something for free. It might be a family member; it might be a friend; or it might be someone who thinks you're too small to tell them no because they're a big, bad, businessman and they deserve it. It may go something like this:

I love Mad Men. This scene really makes me smile because as a member of the Knowledge Force, I have been through this very thing many times. You get this prospect who COULD be the biggest client you ever worked with, and they only want this much information for free. How bad could it be? It's not that much and it comes so easy to fact, you had already given it away before you even thought about it. Let me give you an example:

A prospect with a new business idea comes into my office. They tell me what they want to do, and after maybe a half hour of discussion, they say something as innocuous as this: "What type of entity should I set up? LLC, S-Corp, C-Corp...what do you think is best?" And before I know it, I've rattled off a 60-second answer that sets up their tax status for the life of their entity, potentially saving them thousands and thousands of dollars in taxes. What did they pay me for that advice?

$0. You want to know how I know that? I know that because I don't ever "bill" someone for work after I've done it. I always price work beforehand so they know their investment in the process. With a slip of my solutions-seeking tongue, I gave away part of the farm for nothing. You've done this if you own a business. Don't lie to me. I know you have.

The "friends and family" discount is my favorite. Start-Up School clients have asked me repeatedly "So, how do I deal with friends and family asking me to do work for free?" My reply is as follows: "If they don't mind giving you a place to stay when your business can't produce revenue and you lose your home, tell them OK. If that won't work, tell them to get out their checkbook." I'm deadly serious here. But it's more than the money.

Free work is worth what you pay for it. You will NEVER pay as close attention to work that you won't be compensated for. You know why? Because that work on the corner of your desk that is awaiting completion so you can send out the invoice which allows you to pay your landlord and your vendors gets precedence. Every time. I have disappointed more friends and family with the turnaround time of work than any paying client. For that reason, I do one free tax return every year...for my sister. Even my nephew pays me for his tax return (it may be in bourbon, but that's another story).

In all seriousness, you have to be careful here. The anger that accompanies knowing you won't be paid for something is worse than not receiving a check; the guilt that accompanies a late completion date for your best friend's website design is worse than not getting paid for it; and the late-night emails from your brother because you didn't deliver his contract review on time, with his closing scheduled for tomorrow, are worse than not being adequately compensated. It's the baggage. That crap plays havoc with your mind, and it pulls you away from doing profitable work for paying clients and experiencing the euphoria of creating something that you're proud of.

So, how will you answer next time when someone asks you to do something for free? I'd say something like this: "I do my best work for clients that pay me, and I don't want to give you something that I can't be proud of."

Try that one out, and see what happens. Let me know because I would love to hear the story!

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