Monday, February 20, 2006

The Zero Overhead Model

The following is an exerpt from one of my original posts to Self-Employment for Bohemians. I have edited it and reposted this piece, as it truly gets at the heart of the matter of successful Self Employment.

I want to tell you about my foolproof concept for starting your own business—it’s called the Zero Overhead Model. The idea is that your clients are going to finance your business for you! I use my own business model here for a couple of darn good reasons. First, it’s a business I know well. I’m qualified to hold forth on the business of wholesale custom screen-printing. Second, my business is built around both a service (custom screen-printing) and a commodity (t-shirts/apparel). I believe that the Zero Overhead Model can work for both a service based or a commodity based business.

Here’s how it works in a nutshell. Your potential client comes in to order 100 t-shirts imprinted with their logo. I quote a price on the job and they agree to it. I write up the order, detailing the particulars. The client signs the order form, acknowledging their agreement to the deal. Let’s say that the total on the job is $700.00. I tell the client that I require a 50% down payment to produce the job, with the balance due upon delivery. With costs of about $250.00 total to produce the job, not only have I enlisted my client to finance production of the job, but I’ve gotten a little pocket money up front in the deal.

When I started producing custom screen printing jobs as an undergraduate, it didn’t take me long to figure out that my customers were also going to be my financiers. Necessity is indeed the mother of invention.

This little schema does bring up some obvious questions. For example, why the heck is any potential client going to trust you with the aforementioned $350.00 downpayment? Based on what do they trust you? Okay, I admit it’s a con game! A confidence game, that is to say. When you meet a prospective client, you are projecting confidence in your ability to deliver the goods. Your appearance and demeanor project professionalism. If you are indeed in the t-shirt game, you show them samples. They are welcome to walk if they see red warning flags in the course of your meeting. I’m a proponent of the soft sell; as such, I am very comfortable with a perspective client who decides not to place an order at any particular meeting. My attitude is, I’m not so much gunning to close a sale no matter what, rather I’m helping the client fulfill there need for some quantity of screen printed t-shirts. If the price is too dear for them, or if we aren’t a good fit to do business, I’m quite happy with that.

Another question: What about production equipment? What about samples? What about office or production space? Phones? Computers? Etc.? Well, when you are starting out, you just need to improvise. You (hopefully) have a roof over your head, whether it’s your place, your parents house, a sublet garage (ideal!), a dorm room, or even if you are couch surfing.

Work with what you have and build from there. If you can borrow a friend or family member’s phone and/or computer for even an hour a day, that may be enough to contact initial clients and produce that first job. I’ll dust off an anecdote as an example. I began freelancing t-shirt and illustration jobs while still an undergraduate at Umass, printing jobs in my dorm lounge. I took off for the west coast half a year after taking my degree. After several months of traveling, I found myself in Eugene, Oregon. I spent the little money I had securing an apartment. I placed some ads in the local university newspaper advertising my screen-printing services, then I copied up a couple hundred flyers and papered the phone poles in the college neighborhood with them. I was down to about eight bucks when the first job came in (phew!).

It was a small job, which would take only about $30 bucks in supplies to produce… yet somehow I had neglected to hit up the client for a down payment. Oops! I needed a can of ink, four blank t-shirts, a squeegee, a yard of synthetic silk and a wooden frame. What to do… I borrowed the money from my girlfriend! From there I sold more jobs, just scraping by, until a bounty of dorm, frat and music festival gigs rained down on me in the Oregon spring.

You do not want to always ask friends or family to bail you out. And if you do borrow money from them, be sure to make it your first priority to pay them back. But you will rely on your network of friends, family and colleagues again and again. Community is a very good thing! When someone comes to you for help, gladly give it to them. (Unless they are a serial leech, in which case giving them a kick in the ass is the best favor you can do them… ).

The Zero Overhead Model may be the only way to fly for BoHo entrepreneurs, but believe me they aren’t the only ones. Look at a guy like George W. Bush. Is that guy a self-made business man? Hell no! Everything that guy ever owned was procured with sweetheart loans from his daddy’s fat-cat friends and stuff like that. Do you think the super rich ever buy anything with their own money? NO! They get it with O.P.M. (other people’s money). OKAY! That’s it for the Zero Overhead thing for now. I’m getting off track talking about these darn oligarchs and plutocrats.

2 comments:

FreeThinker said...

Right on! Community is cool; independence is cool too.

Anonymous said...

Great concept. But don't forget that lefties depend on Other People's Money too.