Creative Commons License photo credit: Brainedge

We’ve all seen these offers: Free Cell phone! Free Credit Report! Low Monthly Payments!

They’re so friendly, like the fluffy sheep at the petting zoo (maybe a little smelly but in that good, earthy kind of way).

Their happy bleats are enticing: Only $10 a month to join the Business Hotline Reporting News, or just $20 to monitor who’s checking you out on the I-Quiz Social Network, or pennies a day for the Porridge-of-the-month club. You get all warm and fuzzy petting the little critters and decide to adopt them. It feels good to take them home and the monthly feedings seem easy enough to handle, so it’s not going to hurt anything.

They’re Not House Broken

When you first get them home, it goes well. They’re cute and fun to have around. Then, they get demanding: they’ve turned into Fixed Costs. I’ll save you the long winded numbers talk about fixed and variable costs but the gist of it is that they have to be fed no matter what. That’s right; you have to send the feed money even if you haven’t sold a single thing this month. Otherwise, they’ll poop in your house.

Then They Bite

Now, you have to work harder and sell more stuff each month just to make the money to pay off the sheep so they don’t ruin your carpet and bite the hand that feeds them.

The Hidden Wolf

The problem is that you don’t have control over the cost of feeding the menagerie because those are fixed. If you suffer a sales setback for any reason, you don’t have the flexibility to lower your costs in the short term. Then, you’ll be forced to dig ever deeper into your reserves to keep the wolf from snapping your hand off. When sales start declining or go up and down unpredictably, feeding that wolf sends your creative business into a death spiral and the wolf is never appeased.

Leave ‘em at the Farm

Be very wary of monthly wolves in freebie sheep’s clothing. They’ll eat your business.

Have you run across creatures like these? Tell your story in the comments or a note – we’d love to hear!