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Summary:

If you spend, or plan to spend, substantial dollars on Web services or software support for your startup, you’ll want to read this post. I’m going to show you how, with my 8 Steps to Running Your Business Off Low-Cost Web-Apps, it is possible to run […]

If you spend, or plan to spend, substantial dollars on Web services or software support for your startup, you’ll want to read this post. I’m going to show you how, with my 8 Steps to Running Your Business Off Low-Cost Web-Apps, it is possible to run a substantial company on software services and infrastructure that are either entirely free, or available for a low monthly fee, on the Internet.

As an entrepreneur and bestselling author, I’ve lectured and written previously about how intense competition on the Web has lead to a proliferation of companies that offer mission-critical services for free or at very low-cost. I am not the only one who has recognized this phenomenon.

In late September, I took another step to try and amplify the benefits of this trend for entrepreneurs: I launched Search Free Apps , a search engine that includes over 700 hand-picked enterprise-quality applications that are free on the Web. This week I will also launch the Your Web Applications Audit by Search Free Apps, which you can use to save more money on the Web services you’re currently using, or to locate new services to support your startup’s low-cost expansion.

The benefits of this approach extend beyond lowering your operating costs. Avoiding a cost-prohibitive investment in custom technology will also afford your young company greater flexibility to adopt new, better Web technologies as superior technologies or services evolve. This will be even more important as your company grows. All of which adds-up to a more competitive firm.

At the end of this post, I share the list of free or low-cost apps that deliver mission critical infrastructure to my startup, Search Free Apps. I hope you try my service to find additional apps that suit your particular business. Even if you don’t, read my 8 Steps to Running Your Business Off Low-Cost Web-Apps, below. Follow them to gain even more value from my low-cost strategy.

1) Establish a bias towards software-as-a service.
Find free online applications (such as Weebly or ImageShack) that you rent on a monthly basis. Software should only be adopted in extreme situations. By adopting capabilities that reside on the Web, you eliminate the headaches associated with software maintenance. You also get the benefit of ongoing upgrades.

2) Identify the services you need; assume free or low-cost versions are available.
(See sample list below). Low-cost services should form the baseline for your ultimate choices. Then, any higher-cost service you identify needs to demonstrate the value of a premium price through some combination of factors including: better features, greater reliability, superior support, or greater ease of use. (In my experience, many premium-priced products do not).

3) Never commission custom software.
Custom code limits your flexibility by locking you into the offerings of a specific vendor for a lengthy period of time. You’ll pay for upgrades, and also lose the opportunity to try new low-cost Web services that come to market.

One way of thinking about this issue is to look at the costs of sophisticated services over time. It’s not an exaggeration to say that if a particular feature costs $50,000 to $250,000 today, a year from now it may well be available as a Web-based service that can be rented for less than $40 per month, and two years from now it may be one feature in a service package that rents for less than $25.00 per month.

4) Live by my 60% rule.
If a particular service meets 60% of your needs today it is what you should use. It’s good enough. As Web-based services are constantly enhancing their offerings, within a few months it will likely meet 80% of your needs, or even include valuable features that you had not imagined.

You must also accept that in a 60% world some potential customers will get away. But the appropriate question to ask is: How much revenue can I add to our business by filling in the gaps in a 60% solution? The answer is likely to be very small. Moreover, it’s my experience that businesses that invest in finding infrastructure services that are perfect, as opposed to good enough, rarely achieve profitability. They spend too much time looking for “perfect capabilities” outside their core offering, tend to over-spend on these capabilities, and thus, lack the flexibility of their competitors.

5) Focus on how a service works, not the brand-name provider who sells it.
In a large number of cases, sophisticated service platforms may be designed for one purpose, but can be implemented to provide a variety of purposes that are valuable to the needs of your enterprise. Think creatively about how a service may be extended and integrated into your infrastructure, and you will find many valuable uses for it.

6) Automate as much as possible.
There may be aspects of your business, particularly in your core offering, that require human intervention. However, you want to build a low-cost infrastructure that automates everything else. Once you need to put people power against any part of your infrastructure, you have lost the ability to easily scale the business.

7) Always have a backup ready.
The long-term reliability of any Web service should always be on your mind. I counsel companies to have a replacement for all services identified at the time they decide what services to use. Also include an estimate of the time it would take to replace a specific service, and an ongoing means of ensuring any valuable data or records accumulated by any of your services are transferred to you..

8) Learn html.
You or someone you trust must be educated in simple html. Sure, many Web businesses have in-house capabilities that eliminate this issue. However, I have seen too many start-ups founders from outside the Internet industry become totally at the mercy of outside vendors. For the lack of some easily obtained knowledge, they lose the ability to make the majority of the responsible judgments and tradeoffs advocated above.

The low-cost or free Web app can be a very powerful tool in the arsenal of any company. In today’s intensely competitive environment every startup founder should carefully investigate whether his or her company is fully integrating these cost-saving and flexibility-enhancing services.

Sites where I get free or low-cost services for Search Free Apps:

  1. Mozy: continuous online backup of PC’s. It’s free for the first 2 Gb.
  2. Weebly: free site hosting and easy Web site creation service.
  3. Wufoo: sophisticated forms; free for the first three forms.
  4. Weber: auto-response service, with unlimited follow-ups and mailings for $19.95/month.
  5. Feedburner: free RSS management.
  6. Typepad Pro: unlimited blogs for 14.95/month. (Other are free, like WordPress.org.)
  7. Web-Stat: Web tracking free, or $5.00/month.
  8. Image Shack: free web-based management of images.

Bruce Judson is a Senior Faculty Fellow at the Yale School of Management, the author of Go It Alone!: The Secret to Building a Successful Business on Your Own (one of the first books to be published on the Web, Bruce’s book is yet another free resource for you to tap!), and the founder of Search Free Apps.
Copyright 2007 Bruce Judson. All rights reserved.

  1. I have found these sites to be amazingly helpful in building my startup:

    CRM: Salesforce.com (cost is about $60 per month per user, but absolutely the best CRM tool I have ever used)

    CRM: Zoho.com CRM (free and almost as good as Salesforce.com)

    Small Group Tools: 37signals.com and Zoho.com. Both are absolutely stellar companies with top notch developers. Most if not all apps are free.

    Accounting: MS Accounting from Microsoft. This is a download, but is free and so easy to use.

    Email Marketing: ConstantContact.com They give you 60 days free and then it is about $20/mo.

    File Conversion: Zamzar.com. Free and completely simple. Take a Word doc and turn it into a PDF.

    Online Presentations with side by side video: Zentation.com. So cool – upload your powerpoint and a video that goes with the powerpoint. Free.

    Just my thoughts on programs that work for me as I build my third startup. Good luck!

    Nathan

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  2. [...] Read the rest of this entry on Found|Read… [...]

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  3. Google Analytics is a very good Web Analytics pacakge and is free

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  4. For Designers or those working with images:

    Heavy weight image manipulation: The GIMP. http://www.gimp.org or http://www.gimpshop.com/ for those used to photoshop.

    Vector graphics: http://www.inkscape.org

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  5. SugarCRM offers an open-source version of its CRM package. It’s not quite as slick or easy to customize as SalesForce, but if it meets your needs, you can spend the $60 / user / month on something else, right?

    I’d also echo the “learn HTML” sentiment. These days, you can get away without knowing how to do sophisticated page layout, but it’s invaluable to know how to bold a phrase in the middle of some text. Armed with a little bit of HTML, a Content Management System like Drupal can let you customize your web presence without turning into a full-fledged web developer.

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  6. [...] all this entire post was spawned off a great article which you can read here. Bruce does a great job of breaking it down, and trust me, it works. So far, building Datecraft.com [...]

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  7. I’ve been running on open-source software for awhile now. However, I switched from the Gimp to Photoshop, even though the price tag is heavy. It’s much more productive.

    For office however, I use Open-Office. It’s not as efficient as MS Office, but it follows the 60% rule you mention. My work doesn’t require me to use office applications heavily. Google Docs is good for storage/collaboration as well, although it has a long ways to go.

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  8. I am surprised that some essential web based applications are not mentioned. Also I wonder why Typepad Pro is recommended (who needs unlimited blogs?), when you can have WordPress for free which can be even (mis)used as a simple CMS (content management system). With WordPress MU you can have multiple accounts and everything is free (and it WP is top notch).

    – Google Apps (Gmail, Google Calendar, e.g., accounts that use your own custom domain). It runs abolutely smooth and has one of the best Spam filters. We use the free version and never looked back (ca. just one Spam mail per day and ca. one ‘false positive’ every 1-2 weeks)
    .
    – Plaxo.com. After trying several PC based programs to sync our Outlook contacts and calendars between three PC’s I just switched to Plaxo. It runs absolutely perfect and does not slow down Outlook at all. For 1000+ contacts a premium account is needed (which also does regular back ups of the contacts). Plaxo works on any platform and with mobile phones as well, which means it will support our upcoming switch from Windows PC’s to MAC PC’s.

    – Concerning Mozy: we have Mozypro account and the application already saved my life, better said an essential database, but if you run it on several PC’s and if you need some GB’s of storage it is not that cheap anymore.

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  9. It doesn’t look like Mozy is free, sadly. :( $4.95 a month. There are plenty of other online storage solutions, though I have yet to find one that does auto-back-ups. Wuala seems pretty close though. Haven’t fully tested it yet. It only holds a gig. Box.net is a good service I use from time-to-time, but again, there is no auto-back-up feature and it also holds a gig. You might also check out StartForce.com for web-based desktop computing. It comes with a gig of online storage as well–seems 1GB is the magic number. Wixi, beats it and although it is tailored for media storage, it can store a LOT of media–I have over 7 gigs of video uploaded in my account and it’s free and I can share the videos with anyone I want. But back up is sooo very important. Thanks for this very useful post! I hope my suggestions help, too. ^_^

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  10. [...] 8 Steps to running your business on (mostly) free apps – FoundRead [...]

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