Evaluating solutions for a small "budget conscious" company in a Microsoft market

I'm the only IT person in my company, and therefore I'm the de facto CTO in regards to recommending technology initiatives. The company is extremely small and has only 6 employees counting me, two of which are the husband/wife owners (and the husband focuses most of his time on several other business ventures, including two non-profits). The company has been extremely unprofitable for the past several years (I have this on good authority from the owners) and they are extremely "conservative" when it comes to spending money (i.e. they're cheap and don't want to pay for anything, but I guess that makes sense when your business loses $100,000 a year and only stays afloat because your husband dumps $100K into the company account to break even).

That said, we need a pretty robust infrastructure to continue to do business, as our current infrastructure is pretty much garbage (just a bunch of bad code and no business practices) and doesn't work right or works half right sometimes, and from my research is the #1 cause of the company not being profitable. As what amounts to the CTO, it's my goal to improve this and turn us into a profitable business; I think half the problem is that this company has never had a person in my position who really wanted to turn things around and get things moving to start being profitable.

The biggest problem is that I have $0 in budget to do anything - I might be able to negotiate a few hundred dollars (but it's doubtful), but largely I have no money in my IT budget for anything. Our computers aren't up to date, our software is at least 5 years old if not more (still running Office 2000) and I'm fairly certain they are unlicensed copies since I can't find any documentation. Also, we need some heavy computing power at times but don't have the money for additional licenses, for example SQL Server.

In a situation like this, what would be my best approach? I am highly considering looking at moving our infrastructure to open source technologies since the majority of solutions are free. It would enable me to improve things without getting my requests shot down because it costs $200 for Software X, or because I remind senior management that we need a $1,000 license to legitimately run that software. Now, I'm not talking about things as radical as moving everyone off Windows XP to Linux boxes, but simple things like using Linux for our web/application/database/file servers, using open source databases instead of spending vast amounts of money on SQL Server licensing, and upgrading everyone to OpenOffice or IBM Lotus Symphony as our office suite to replace Office 2000, with Mozilla Thunderbird replacing Outlook as our email client. I'm also looking at making use of cloud-based services like Google Apps to provide our email storage and rudimentary file sharing (although most of the spreadsheets we use are very large) in place of the dirt cheap and inefficient POP3 service we use today.

The problem in the back of my mind, however, is twofold: First, I'm a beginner at best with using Linux and open source; I know enough to get around by I'm not an expert with it, so I would have to basically learn a whole new plethora of tools and software (that's not necessarily a bad thing, though). Second, and more important, is the fact that my local metro area is entirely Microsoft-based, and career wise I'm afraid if I switch to open source to help out this particular company, I will end up knowing a technology stack that, while a good thing to know, has no other companies in the area using. I have a pipe dream of sorts to educate small businesses of the cost benefits of using open source in place of costly proprietary software, but again the market doesn't seem to care. In fact, the main reason I've become interested in open source as of late is due to my current job's environment and the lack of funds to do anything, despite there being a ton of things that need to be fixed.

I personally think that open source solutions would be a great boon to most businesses, especially the smaller ones; doubly so in times like these with the economic downturn. Since if I'm not mistaken most of this forum are small business owners, wouldn't you agree that it would be a great benefit to your company if you could have high-quality, robust software and IT solutions without having to spend thousands of dollars for the "right" to use it? Or am I approaching things from completely the wrong direction, and going this route would be cutting off my nose to spite my face?

Any and all advice or suggestions would be appreciated.

Open source could work well, but you need to spend much time and efforts to get familiar with the internal things quite deeply while cannot await and (free) assistance (except discussion boards - but there you get five different answers from four different people to one question).

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The biggest problem is that I have $0 in budget to do anything - I might be able to negotiate a few hundred dollars (but it's doubtful), but largely I have no money in my IT budget for anything.

May I say that your company doesn't have an IT related problem, you face a financial problem. But this is not your job, it's the owner's "right" to work on this.

Let's face - without any money, your company will be dead sooner or later. Open source software can be much - but it cannot be a life preserver for an unprofitable company.

I agree with Marc. The focus needs to be on fixing the business model. With that being said, open source technology could be a viable solution. Being that its a 6 man operation you can definitely pull it off. However, the cost isn't necessarily 'free'. For one thing, you need to figure out the costs of migration. How dependent is the company on its current IT infrastructure? Would there be a significant downtime and subsequent loss of revenue?

It seems like the only choice you have is to either stick with what you have or go open source. You need to determine whether the company can absorb the losses incurred while making the switch.