The Myth of 'No-Cost' Startups & The Truth of Equivalent Exchange

TL;DR: Forget the fantasy of effortless, high-profit passive income from "no-cost" ("無本") startups. As the principle of "Equivalent Exchange" from Fullmetal Alchemist teaches, gaining anything requires sacrificing something of equal value – time, reputation, opportunity cost, if not direct capital. Before pursuing any business idea, rigorously assess its viability with a detailed 36-month pro forma Income Statement (Revenue, COGS, OpEx), scrutinizing all assumptions. While forecasts are always imperfect, this planning process is crucial for understanding potential outcomes, managing cash flow, and making informed decisions in the face of uncertainty.

Let's talk about a common entrepreneurial fantasy. About three years ago, a young, charismatic KOL – let's call him Mr. U – came to me asking for business advice. "Is there anything," he asked, "that requires no effort but generates HK$500,000 in pure profit every month?"

I had to chuckle. I offered him three "solutions":

1. "Sure, even HK$50 million a month is possible – I can burn joss paper offerings for you monthly."
2. "If you have HK$200 million in cash, put it in a fixed deposit. HK$500k a month in interest is definitely achievable."
3. "Or... you could build a proper business with a sustainable income stream."

He was looking for a shortcut, a way to get something for nothing. That reminded me of a core principle from a story many might know...

Equivalent Exchange: The First Law of Alchemy and Business

"Humankind cannot gain anything without first giving something in return. To obtain, something of equal value must be lost. That is Alchemy's First Law of Equivalent Exc 1 hange."  

Fans of the manga Fullmetal Alchemist will recognize this central theme. The entire story revolves around this principle and the consequences of trying to defy it. And frankly, it applies just as much to the world of business as it does to alchemy.

Debunking "No-Cost" (無本) Entrepreneurship

You see countless articles online promoting "no-cost" ("無本") startup ideas. But if you look closely, "no-cost" almost always just means no upfront capital investment. It conveniently ignores the other essential inputs and sacrifices required:

• Technology: Do you have the necessary tools or platforms?
• Talent: Do you possess the required skills, or can you attract people who do?
• Operational Capability: Can you actually deliver the product or service consistently?
• Office/Equipment: Even virtual businesses need infrastructure.
• Reputation/Network: Are you leveraging existing credibility or connections?
• Time & Opportunity Cost: This is the big one. If you start a blog or YouTube channel, your "cost" is, at minimum, the salary you could be earning elsewhere. If you engage in MLM-style ventures, the "cost" is often your personal reputation and relationships.

There is no free lunch. Equivalent Exchange always applies.

Planning for Reality: The Pro Forma Income Statement

Mr. U pressed on. "Okay, be serious. I have a 1 million budget. What can I do?"

My response: "Alright, let's map it out. Let's build a Pro Forma Financial Statement, specifically a projected Income Statement, to see if this idea is actually viable. Is it worth potentially dedicating my life to?"

Whenever I evaluate a new venture, a Joint Venture (JV), or a potential Merger & Acquisition (M&A), I always create a detailed 36-month projected Income Statement. It forces realistic thinking. Here’s the breakdown:

1. Revenue: This isn't guesswork. Revenue = Price x Quantity. You need to define:
   • Your pricing model and actual price points.
   • Projected number of customers over time.
   • Expected customer retention rates.
   • Realistic monthly growth rates for each factor.
   • Crucially: Don't rely on vague intuition like, "I estimate 5 million this year, growing 50%, so 7.5 million next year." Build it from the ground up based on justifiable assumptions.
2. Cost of Goods Sold (COGS): These are the direct costs incurred to produce or deliver your product/service. Subtracting COGS from Revenue gives your Gross Profit / Gross Margin.
   • For a trading business, it's primarily the purchase cost of goods.
   • For my software business, COGS is minimal – mostly just server costs like Google Cloud fees. This is why software often boasts high gross margins (95%+).
3. Operating Costs (OpEx): These are the ongoing expenses required to run the business. For Mercury, this includes rent, utilities, internet, salaries (including potentially your own!), accounting/legal fees, marketing, office supplies, etc.

Net Cash Flow = Monthly (Revenue - COGS - OpEx)

This resulting cash flow is the real lifeblood and "capital" ("本") of your business. When you factor in all costs, including a reasonable salary for yourself, you quickly realize how critical generating sufficient revenue truly is.

The Necessity (and Fallibility) of Forecasts

When creating these projections:

• Detail Every Assumption: Don't just show a table of numbers. List every assumption (growth rates, pricing, hiring timelines, cost estimates) and the formulas used.
• Enable Sensitivity Analysis: Build your model so you can easily tweak variables. What happens if customer acquisition is slower? What if you need to hire sooner? What if costs increase? This helps you understand the potential range of outcomes (best case, expected, worst case) and prepare contingencies.

Now, the hard truth: Unless you possess god-like foresight, your forecast will be 100% wrong. Financial projections, like business plans, are guesses about an inherently unpredictable future. That's the nature of entrepreneurship. There are no perfect answers. You have to embrace uncertainty ("把不確定性當饅頭來吃，當枕頭來睡" - eat uncertainty like bread, sleep on it like a pillow) and, critically, compare your actual results to your forecast every month, then adjust your strategy accordingly.

Based on this, my own operating principles tend to be:

1. Avoid borrowing money if possible.
2. Keep operating costs ruthlessly low (requires strong self-discipline, as mentioned back in Part 3).
3. Be prepared to adjust revenue strategies (e.g., change pricing, target different segments).
4. Constantly seek to optimize COGS (e.g., negotiate better rates with suppliers like Google).

So, what happened with Mr. U's passive income dream? When we built the Income Statement, even the most optimistic scenario showed monthly revenue falling far short of the HK$500k target. The numbers didn't support the ambition, so the idea was sensibly dropped ("不了了之喇").

無本創業？由鋼之鍊金術師眼光去看生意

話說三年前有一位又瘦又靚仔嘅KOL - U先生同我吹生意經。「有冇嘢可以每個月唔使做但係有500,000純利？」U先生問我。我笑住俾咗3個方案： 「1. 每個月5,000萬都得，我每個月準時燒俾你。」 「2. 你有2億Cash，做定期，一個月50萬利息一定有。」 「3. 正正經經做一啲有sustainable income 嘅生意。」

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「人不付出犧牲，就無法得到任何回報。想要得到什麼，就必須付出同等的代價。那就是鍊金術中所說的，等價交換的原則。」 等價交換，這是漫畫鋼之鍊金術師中貫徹始終的原則；正確一點來說，整個故事的進程，就是等價交換的原則和其挑戰者的角力。

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其之四「無本」 創業需要甚麼？

• 資金
• 技術
• 人才
• 營運能力
• 辨工室/ 設備
• 名氣

網上有很多文章提出了不少「無本」創業的方案；如果細心看哪些文章，他們指的「本」只是指資金。如果計上機會成本，去做Blogger/ Youtuber 就最少要把自己的薪水賺回來。如果是做傳銷式的創業，你要付出的就是自己的名氣。

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「正經啲，我得1M budget；有咩可以做？」U先生再問多次。 「咁我哋不如做一個Pro Forma Financial Statement 去計生意到底能不能做？值不值得花我一世去做？」

每一次創業，JV/ M&A，我都會做一個36個月的Income Statement。 Income Statement分三部份

• 營收（revenue）：revenue 就是Price x Quantity：收費方式、價格、幾個客戶、留存率多少、⋯⋯等，然後仔細想一下每個月時各個成長率會是多少，用這些來產生營收預期數字，不要用直覺去做「我預估今年五百萬，用 50% 成長，所以明年七百五十萬。」
• 銷貨成本（COGS（cost of good sold）：COGS 基本上就是為了推出這產品/ 服務的直接成本，好用來算出你的 gross margin（毛利）會是多少。如果以做貿易/ 賣貨；就是入貨價。如果以我做軟件為例： 其實沒有太多 COGS, 大部分都只有 Google Cloud的費用，因此常常可以 gross margin 有 95% 以上。
• 營運成本 （operating cost）： 就是要經營公司下去所需要產生的費用。對於我來說，基本上就是租辦公室的費用、水電，網路、人工、會計師或律師的費用、Marketing、辦公室雜項支出⋯⋯等。

簡單來說：純現金流 = 每月（營收 - 銷貨成本 - 營運成本） 現金流就是你的「本」；如果你把自己的人工也算進去，你會發現revenue 是非常重要。

製作這份報表時, 每個 assumption 都列得清清楚楚的，並且把公式都列好，不要只給一個表格和數字。因為你會想要去自己調整看看，比如把你的客戶數調降一點、人工調整一下… 等，好讓自己心裡有個底知道即使不如預期營收發展，大概公司的狀況會是怎樣。甚至你也可以自己做一點 sensitivity analysis，列出發展很好、發展如預期、發展不佳時的各種狀況。越清楚越詳細，對自己也越好。

另外除非你有天才般的預知力、預估的意思就是，它 100% 是錯的。財務預估很重要，但就像Business Plan一樣，但和任何針對未來預估的本質就是，它一定是錯的。也像所有跟創業有關的東西一樣，沒有正確答案給你去尋找，創業家必須把不確定性當饅頭來吃，當枕頭來睡。然後每個月把Actual 去比較，再造調整。我自己的營運方針是：

1. 不借錢
2. 把營運成本壓至最低 （所以其之三的自我約束力是必須的)
3. 調整Revenue 的策略（例如價格上漲）
4. 每月改善COGS (例如和Google 講價）

最後：U先生的生意呢？做Income Statement 時，在最理想情況之下；每月Revenue 都不夠500K, 所以就不了了之喇。

There are no shortcuts to sustainable success. Embrace the principle of Equivalent Exchange: be prepared to invest significantly – whether it's capital, time, effort, or reputation – and plan rigorously using tools like financial forecasting. That's how you move from dreaming to building. Plan realistically.