Running a Business, Not a Charity

Worth reposting...

I am running a Business, Not a Charity

It is a common saying but some people do not seem to understand it. If you are running a business, you should not be giving your time and resources away for free. This is why barter is so often not a solid business model because many people don't actually

How about the following sayings?

"A real business should have a realistic business model."

A business should not be built with the idea of making everything free and their long term goal is to "get bought by a giant tech company for lots of money." That might have worked for YouTube getting bought by Google, but do you honestly think your business model compares with YouTube?

If your business model doesn't have a solid revenue stream that turns a profit, it is not a business that you are running.

For example if your plan is to invent a perpetual motion machine that creates energy for free and your plan is to give your designs away for free, that is not a business model. Anyone smart enough to invent such a machine should guard that secret.

If your plan is to open a new bank, accept people who want to store their money or valuables with you, offer loans and mortgages where you turn a profit off interest and fees, and lets say to make your bank unique that it also accepts gold, bitcoin and Canadian Tire money - that is a business model. The Gold and Bitcoin Bank. It could happen.

"Have a well defined revenue plan."

You are selling a service or a product, or both. You can have discounts, coupons, Canadian Tire money (which is basically a reward coupon), whatever so long as what you are doing turns a profit and causes revenue. If your plan is to give away free things to people who are not customers - that is a great way to feed the homeless, but does nothing for your revenue.

"Get paid upfront."

A smart person gets paid upfront, preferably in cash.

Beccles26 on childmindinghelp.co.uk says:

I am so so mad, I am a new child minder so haven't got full numbers, in fact only 2 children for 10 hrs a week, I did have a school drop off and pick up but I think mum thinks I am running a charity and not a business with over heads and bills to pay, she hasn't paid me and owes me nearly 4 weeks fees!!!!!! Each time I have asked for payment its a different excuse after excuse!!!! I cancelled her contract and have passed it on to the NCMA legal team!!!! So back to just the 2 children, and with xmas coming up its not going to pay the bills! xx
Rant over, feel better now! 

So clearly Beccles26 forgot the whole get paid upfront concept.

She accepted what was essentially a babysitting gig and didn't figure out when and how she was getting paid on time.

She even used the words "running a charity and not a business" which goes back to my point at the top.

Think of callgirls (or whatever the male equivalent is) for a second. They always get paid upfront. Because otherwise they might not get paid at all. And it probably didn't take them that long to realize they need to enforce that rule.

Some businesses it makes more sense to require a deposit.

Like a 30% or 50% deposit. In which case the deposit is there to make sure that the person doing the work gets paid something, even if it is only a smaller amount in case the deal goes south. Basically the deposit is usually a requirement if the contractor is doing some work and wants to make sure they get paid, or if they are supposed to meet someone somewhere and they want to make sure the person shows up.

Think of a wedding photographer. They get booked for a date and show up. But if the wedding is cancelled last minute, they get paid nothing. So a 30% deposit or prepayment makes sense.

Think of dentists. If you make an appointment and don't show up, they charge you for it anyway. There is no deposit in that situation, but maybe there should be. And if you refuse to pay the fees for not showing up? Probably not a good idea to annoy your dentist.

"Time is Money."

Really money should be measured in how much time and effort people used to make it. If you work 2 hours and make $30, then you just spent 2 hours of your life making that money.

And when you consider if you live to be 75 years old and work full time (40 hours per week) from the age of 25 to the age of 55...

40 hours x 52 weeks x 30 years = 62,400 work hours in your life.

If you work 62,400 hours your whole life and only get paid $15 per hour... that is a measly $936,000.

So no million dollar home for you. You could work over time and still never afford that home, because you have other costs to worry about.

The cost of renting before you eventually buy a home, university tuition, clothes, food, bills, transportation, gasoline... lets face it, $15 per hour is barely a living wage.

So now imagine someone asking you to work for free - for their financial benefit. I am not talking about a charity. Some loser who doesn't know you and is asking for freebies is not a charity. They are just a cheapskate who doesn't want to pay for your time.

The proper answer to such a request is to explain you charge a fee for that service. Because time is money, you get paid upfront, and you are running a business - not a charity.