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Beyond the balance sheet

How free is freeconomics for your tech start-up?

Chris Thompson 10/9/2015 7 minute read

Chris Thompson explains how free content in the form of freeconomics can never replace the value of a professional advisor to your tech start-up.

Look around the digital world. There are so many websites offering vast amounts of content for free. Never has it ever been so easy to unearth apparent business intelligence on any given topic simply at the click of a button.

In the past people had to use libraries and academic institutions for these purposes. This came at a price and so had a store of value attached to it. No more, the digital age appears to have turned that all upside down. Now we seem more empowered than ever with apparent access to the entire bank of human knowledge, for free!

If you’re the owner of an early stage business or a tech start-up entrepreneur then you’ll likely be on a budget and managing expenditure carefully. Accessing free business content on the web may seem like all your Christmas’s come early. No need for professional advisors and their fees, right? Don’t be fooled! Freeconomics for you as the end user is akin to a desert mirage. When consumed in the wrong manner it could prove deadly to your business. Should you run an organisation and base decisions, even in part, on the free content you consume then you need to read on.

The evolution of free

Discounting and free offers are nothing new. They existed long before the days of the internet. Whether you’re in a retail park or watching tv, you’re bound to still be bombarded with adverts that tempt you with new deals such as “buy 3 for the price of 2” or heavy discounts on loss leading products that drive you into their stores to generate brand awareness.

 

However, it seems as if the internet has taken this to a whole new level with free content practically taking over. Today’s web is absolutely crammed full of the following tools for you to use:

  • Free websites
  • Free search

  • Free news
  • Free blogs
  • Free videos
  • Free essays
  • Free thought leadership
  • Free ebooks
  • Free guides
  • Free webinars
  • Free courses
  • Free software
  • Free podcasts
  • Free audio
  • Free slide shows

When you consider this infographic of what happens online in just 60 seconds by the Centre for Learning and Teaching, that’s an enormous amount of content being created and distributed for free. The implications of freeconomics therefore appear somewhat severe for those in the intellectual property industries.

Web content in 60 seconds

How freeconomics can be bad for you as the end user

The problem with all this is two fold. If you’re in business and sharing so much information for free, then what does the end user really appreciate? They could forget what your real product or service is. Worse still they might not associate any value to it. More on how to use free content later in this post.

Interestingly, freeconomics led Nancy Fox in an article on LinkedIn, why I’m Not Giving It Away For FREE (And You Shouldn’t Either), to ask a significant question, “who’s buying anything with any real money?” Herein lies the second issue and fundamental flaw with collaboration and free web content - perhaps we have got too used to accessing information as and when we want it, at no cost.

We appear to have not considered the potential full implications of absorbing this information and implementing the advice it imparts. This is particularly the case when it’s specific to business matters and professional advice. It means those who adhere to this free content-helps-all ideology, could now end up losing out (heavily).

How much do you really investigate the authenticity or validity of the information you find on Wikipedia and the like? Furthermore, do you really check to understand the accuracy and application of this material to your personal circumstances? Ask yourself, are you questioning this online information enough, are you researching the opinions, advice and data sufficiently?

As Fox points out, Chris Andersons’s book, FREE: The Future of A Radical Price (Hyperion 2009) makes a key observation about our psyche and attitude to the consumption of complimentary content:

“Most transactions have an upside and a downside, but when something is FREE! we forget the downside. FREE! gives us such an emotional charge that we perceive what is being offered as immensely more valuable than it is.”

She then expands on this:

“FREE becomes an unhealthy drug, because we don’t have to take any risks. And as humans, we are afraid of loss much more than we are drawn to gain.”

That means freeconomics spells real risk for today’s entrepreneurs when it’s not consumed in the right manner. Don’t get me wrong, there’s plenty of useful, informative and helpful content out there. If you’re asking the right questions then that’ll lead you to the natural conclusion, which we cover at the end of this post.  

The dangers of getting it wrong doing it yourself

Rather than seek professional help for vitally important matters such as leases, the tax treatment of transactions or employment law to name a few, today’s tech entrepreneurs are inclined to use the internet and count on other start-up owners for advice. In the case of the latter, these people may have some limited experience of the service in question as a client but that doesn’t mean they’re remotely qualified, or well informed, in these areas.

The end result could be you receive one or a combination of the following:

  • Completely the wrong advice
  • Factually correct advice but not specific to your needs
  • The right advice at completely the wrong time

Worse still, as a consumer of this information, you wouldn’t know things were going wrong until it was far too late. That’s a real problem if you’re a business owner. You may source information from the web to avoid using what you perceived as expensive advice, but this will actually end up having quite the opposite result. It will cost you a lot more time and money than if you had approached a professional in the first place. 

Why? As an example, you may download a template employment contract from the web and then later find yourself paying 6 months gardening leave to an employee because the terms of employment failed to detail specific circumstances.  What's more expensive!?

When doing it yourself, the likelihood is you will end up appealing to an accountant, financial advisor or lawyer for help, when you’re in something of a disaster scenario and under a high level of stress. They will then have to spend more time and therefore your money, untangling your mess and righting the wrongs than if you had approached them in the first place. That's then a big case of whoops!

Why you need a professional advisor

Face it, professionals exist for a very good reason. Freeconomics can’t and won’t replace them! From business law, to accounting, tax and financial products, these are often very complex and highly regulated areas. Legislation in these fields is in-depth and can be completely unfathomable to the untrained eye.

Professionals act to keep you compliant with all the laws and rules while helping you navigate the regulatory minefield. That means they take the hassle of these time consuming tasks off your hands so that you can focus on the areas of the business that best suit your skillset.

These professionals spend several years training and taking exams to develop their high level knowledge. The result of this is a qualification that proves their intellectual specialism in specific fields.

Usually the path to, and post, qualification will include on the job training combined with continuous professional development. Consequently knowledge, concepts, methods of work and intellect developed over many years is passed down from more experienced, senior personnel to the upcoming generation of talent.

The best advisors then apply their firm’s experience of acting for other clients historically to help you implement various authentic, strategic initiatives to grow your business. The really good ones deliver insight and tailored advice to help you make more informed business investment decisions. It's a form of guidance, counselling, mentoring and instruction specific to your requirements that you just can't find in the world of free content on the web!

 

The strategy behind free content

The need for advisors in specific fields you don't have experience or knowledge in is therefore clear. Then consider this, most free web content is marketing designed to make you engage with a brand. The idea being, as you consume more of this information (such as blog posts), so you become more immersed in the values/reputation of that company. How they identify your pain points, what they do to address your needs.

You may for example subscribe to receive email updates of their latest content as part of this process and download several of their eBooks. In time your continuous engagement is likely to lead to a purchase decision. It’s a slowly but surely approach and very similar to the earlier example we mentioned. Retailers use heavy discounts on loss leading products and in eCommerce that very brand awareness is via the organisation’s website.

For that reason, consuming content online for business purposes is certainly enlightening, but you need to remember that it’s unlikely to provide you with the solution you require in its entirety. To obtain that you will probably have to buy at some stage.

In conclusion, consume free content with a cautious, inquisitive mind and view freeconomics as a clever marketing strategy you can implement to help grow your start-up business. If you need professional advice then seek exactly that - a professional.  It will save you a lot of money, time and hassle.

Accounting systems for scale ups

The content of this post is up to date and relevant as at 10/09/2015.

Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.

 

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