Opportunity Costs refer to the potential benefits that are forfeited when one option is chosen over another. In business, every decision carries an opportunity cost—the resources you allocate to one path are no longer available for other opportunities. This concept is essential to understand, especially when starting a business, because seemingly “free” things often carry hidden costs that undermine your long-term success.
In the early stages of a venture, offers of free equipment, services, or favors from well-meaning friends and family may appear to be a lifeline. However, it is precisely in these moments that the principle of opportunity costs should guide your decisions. What you don’t pay for in money, you will eventually pay for in time, energy, and lost opportunity.
“There's no such thing as a free lunch.” ~ Milton Friedman
Free Services: The Lowest Priority is Still a Priority
There is an inherent imbalance in accepting free services. Friends or family offering their help may have the best of intentions, but goodwill does not change the hierarchy of priorities. When your friends or colleagues offer free services, it’s important to realize that paying clients will always come first. Your website, marketing campaign, or operational support will be relegated to “when they have time.” As their paying work takes precedence, your business will be forced to wait.
Opportunity costs reveal themselves here. Time wasted waiting for someone to complete a task is time you could have spent growing your business, refining your product, or focusing on revenue-generating activities. By accepting these “free” services, you surrender your control over the timeline and, in turn, the momentum of your business.
Borrowed and Cheap Equipment: The Cost of Distraction
Free or discounted equipment is another alluring trap. The laptop handed down from a friend, the borrowed office equipment, or the free software you cobble together from various sources may work in the short term, but when they inevitably fail, the costs become clear.
The opportunity cost is not just the time spent troubleshooting or replacing broken equipment but the distraction it creates. Every moment spent solving problems caused by unreliable tools is a moment stolen from your core mission—growing your business. In the crucial early stages, distractions like this are luxuries you cannot afford.
"Price is what you pay. Value is what you get." ~ Warren Buffet
Favors Conceal True Costs
A business built on favors lacks clarity about its true operating costs. When you don’t pay for services or equipment, you can’t accurately calculate your Cost of Goods Sold (COGS). As a result, your pricing strategy becomes flawed. You may set prices too low, underestimating what it actually takes to produce and deliver your product or service at scale.
This undermines not only your financial stability but also your ability to compete in the market. A company that doesn’t know its true costs is vulnerable, operating on an illusion of sustainability that will eventually collapse when the favors stop or the business scales beyond what those favors can support.
The Pitfalls of Bartering: No Cash, No Clarity
Trading services with fellow entrepreneurs is another well-intentioned, but misguided, practice. Bartering bypasses cash flow, which means you're not generating revenue, and you’re also not gathering the essential market data you need to succeed. If your friend can't or won't pay for your product, they are not your target demographic. The same applies to you—if you’re unwilling to pay for their product, you’re not their true market either.
This leads to confusion about the value of what you’re offering and who will actually pay for it. By avoiding transactions in actual currency, you miss out on the critical insights that come from real customer interactions. Free and barter transactions are noise, obscuring the truth about whether or not your product has a viable place in the market.
"Neither a borrower nor a lender be; for loan oft loses both itself and friend..."
~ William Shakespeare
Stand on Your Own Two Feet
In business, every action has a cost—even when money doesn’t change hands. Recognize that the temptation of free help, equipment, and services is a short-term comfort that often leads to long-term consequences. Opportunity costs accumulate quietly, zapping your energy and delaying your progress.
To build a business that lasts, you must stand on your own two feet. Pay for the services you need, invest in reliable equipment, and resist the urge to barter or accept favors. By doing so, you maintain control over your business, avoid distractions, and gain a clear understanding of your costs and market value.
Free things may feel like a reprieve, but in truth, they bind you. The true price of free is the opportunities you miss and the clarity you lose. Be deliberate, be disciplined, and make decisions that set you and your business on the path to sustainable success.
-Jason
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