By Carol Tice
When you’re trying to get a business off the ground from your kitchen table or back bedroom, money is usually at a premium.
Spend too much on your business, and you may find your budding business is a money-loser instead of the income generator you’d hoped. That could endanger your family’s financial health, not to mention mightily pissing off your spouse and/or your business partner.
I’ve spent the last two decades talking to business owners about how they save money in their business — and watching entrepreneurs who didn’t keep a sharp eye on costs go bust and close their doors.
How can you keep costs in line? Start with these five common areas for waste:
You do not need to spend hundreds or thousands on a website to launch an online business! Often, sites created by pricey designers don’t do as well at making sales as bare-bones ones you put up 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 to critique a site I know the freelancer spent big money and months of time to get created — and it needs to be completely redone, because it’s full of clutter or key elements are missing that would encourage more customers to call.
If you don’t have the skills to put up a website yourself, cheap help is readily available. Consider trading your services with a webmaster, getting web help through a barter or time-bank exchange, or recruiting an affordable student from your local community college. When I launched my freelance writing website in 2005, I got a teen from one of my sons’ high school digital design classes to create it at a very affordable price.
2. Recurring monthly services
When you’re busy running a home business, it’s easy to accept as inevitable your monthly charges for services such as Internet hosting, telecommunications, data storage and the like. But that’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 is a better offer out there. Better yet, consider whether you could find a free substitute for what you’re using. Many cloud-based software-services offer free trials too, so if you’re clever you could keep switching to different free trials for quite a while.
3. Hidden charges
Are you too busy to look at all the charges on your vendor bills? If you don’t scrutinize every line, you never know what extra costs you’re getting socked with.
For instance, recently we re-evaluated our business Internet service at my home office. We had it bundled with cable TV and digital phone. We discovered we were being charged for premium cable channels we had never watched in our lives — and to add insult, we were not being given the bundle discount we had been promised. Apparently, it had quietly expired at some point.
Make it part of your business routine to hunt for erroneous or excessive charges such as these and call companies to renegotiate or have your bill reduced if you find mistakes.
4. Late fees and debt costs
Many solopreneurs finance their business with credit cards, or buy from vendors on credit. Then, it’s easy to let the payment deadline slip. Next thing you know, your creditor is slapping a hefty late fee onto your bill. Late fees are the worst kind of business cost, because they do nothing to help you bring in more income. They’re an unnecessary cost that could have been avoided. And steep credit-card interest payments take a major bite out of your cash flow.
Create a payment calendar and make sure you don’t pay late. Check any new card offers you receive to see if they offer better rates — if so, then switch. If you have multiple cards or small loans, consolidate your debt. Fewer creditors means less opportunity to miss a payment and get hit with a fee. Also consider playing creditors off against each other to see if one might lower your interest rate to keep your business.
If you work with vendors, find out if you could get a discount for paying early — then, commit to paying promptly. Killing off late fees and getting a discount instead can really help you see more profit.
5. Going it alone
Having a home business can be lonely. It can also be costly, if you don’t connect with other small business owners in your town and figure out ways you could collaborate on marketing efforts. Get to know the other solopreneurs in your area with related offerings.
There are many ways to save on marketing once you start to collaborate and co-market. For instance, if you’re renting a trade show booth, you could team up with several other business owners with complementary products or services and pay a fraction of the cost to share the booth.
Or if you’re operating solely online, you could all advertise each others’ services on your websites for free. Another free marketing opportunity is to create a guest-post swap where you all guest on each others’ blogs to expose your products or services to new audiences.
Marketing aside, forming a mastermind group with other solopreneurs can save you a small fortune, as it gives you a chance to share ideas on how you’re operating lean. You can hire a pricey business coach, or just get tips straight from owners for free in a networking group.
Hopefully this list gets you started developing the habit of considering every business cost — and then, figuring out if you could reduce or eliminate it. Lower costs mean more profit, and a better chance your home business will be successful.
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 at her Make a Living Writing blog. Her new book is The Pocket Small Business Owner’s Guide to Starting Your Business on a Shoestring (Allworth Press).