By Carol Tice
When you’re trying to run a business from your kitchen table or back bedroom, money is usually at a premium.
Spend too much on your business, and you can expect your budding business to be a money-sucker rather than an income generator. This can endanger your family’s financial health, not to mention pissing off your spouse and/or your business partner.
I’ve spent the past two decades talking to business owners about how they save money in their businesses — and I’ve seen entrepreneurs who didn’t keep a sharp eye on costs close their doors.
How can you keep costs in line? Start with these five common areas for waste:
You don’t have to spend hundreds or thousands on a website to launch an online business! Often times, sites created by expensive designers may not sell as well as the bare bones you create yourself. It’s perfectly fine to start with a basic site and improve it as you go along.
I review freelance websites in my mentoring business, and nothing makes me sadder than criticizing a site that I know freelancers spent a lot of money and months building — and it needs to be completely redone, because it’s messy or original. Full of ingredients. Missing which will encourage more customers to call
If you don’t have the skills to set up a website yourself, inexpensive help is readily available. Consider trading your services with a webmaster, get web help through a barter or time-bank exchange, or hire an affordable student from your local community college. When I launched my freelance writing website in 2005, I got a teenager from my son’s high school digital design class to build it for a very affordable price.
2. Recurring monthly service
When you’re busy running a home business, it’s easy to accept your monthly charges for services like Internet hosting, telecommunications, data storage, and the like as inevitable. But it’s an invitation to end up spending too much.
Be sure to re-evaluate these services at least every six months to a year. New offers and new providers pop up all the time, so find out if there are better offers out there. Better yet, consider whether you can find a free alternative to what you’re using. Many cloud-based software-services also offer free trials, so if you’re smart, you can switch to different free trials over a period of time.
3. Hidden charges
Are you busy looking at all the charges on your vendor bill? If you don’t scrutinize every line, you never know what extra costs you might have.
For example, we recently re-evaluated our business internet service at my home office. We bundled it with cable TV and digital phones. We discovered we were being charged for premium cable channels we’d never seen in our lives — and to add insult to injury, we weren’t being offered the bundle discounts we were promised. Apparently, it ended quietly at some point.
Make it part of your business routine to hunt for mistakes or overcharges, and call companies to renegotiate or reduce your bill if you find mistakes.
4. Late fees and loan costs
Many solopreneurs finance their business with credit cards or purchase from vendors on credit. Then, it’s easy to slip payment deadlines. Next thing you know, your creditor is slapping a hefty late fee on your bill. Late fees are the worst kind of business expense, because they do nothing to help you bring in more revenue. They are an unnecessary expense that could have been avoided. And steep credit-card interest payments take a big bite out of your cash flow.
Create a payment calendar and make sure you’re not late. Check the new card offers you get to see if they offer better rates – if so, switch. If you have multiple cards or smaller debts, consolidate your debts. Fewer creditors means less chance of missing payments and getting hit with fees. Also consider playing creditors against each other to see if someone can lower your interest rate to keep your business.
If you’re working with vendors, find out if you can get a discount for paying in advance — then, commit to paying promptly. Waiver of late fees and getting a discount instead can really help you see more profit.
5. Going Alone
A home business can be lonely. It can also be expensive, unless you connect with other small business owners in your city and figure out ways to collaborate on marketing efforts. Meet other singles in your area with related offers.
There are many ways to save on marketing once you start collaborating and co-marketing. For example, if you rent a trade show booth, you can team up with other business owners with complementary products or services and pay a fraction of the cost to share the booth.
Or if you only work online, you can all advertise each other’s services on your website for free. Another free marketing opportunity is to create a guest-post swap where you all guest post on each other’s blogs to showcase your products or services to a new audience.
Marketing aside, forming a mastermind group with other solo professionals can save you a small fortune, as it gives you a chance to share ideas on how things are working consistently. You can hire an expensive business coach, or get direct tips from the owners for free in a networking group.
Hopefully this list will get you started in the habit of considering each business expense — and then, figuring out if you can reduce or eliminate it. Lower costs mean more profits, and your home business has a better chance of success.
How do you save money in your home business? Leave a comment and share your tip.
Carol Tice is a work-at-home mom who teaches freelance writers how to earn more from her Create a living text The blog is his new book Pocket Small Business Owner’s Guide to Starting Your Business on Shoes (Allworth Press).