25 Cost-Cutting Strategies
Sometimes, the more you spend on your business, the less profit it earns. It’s not possible to run a business without any expenses, but you can find ways to lower costs. Here are 25 ways to cut down on expenses in your home business:
1. Eliminate your second phone line for business. While a second line is tax deductible, it is a significant expense. If you have an employee that uses the line, let them use their cell phone and then reimburse them.
2. Switch to using a smartphone. While data plans can get expensive, when you consider all the other things you can do on a smartphone versus a landline, the cost is worth it. Track your data usage so you don’t go over your allowance, but also, that you’re not paying for more data than you need.
3. Use VoIP. Voice over Internet Protocol, such as Skype, allows you to conduct phone and/or video conversations for free to other VoIP users. You can call from Skype to a landline for 2.3 cents a minute in the U.S.
4. Don’t fax. Faxing not only incurs phone line charges, but also costs paper and ink. Instead, scan and email documents. If possible, use digital signatures so you don’t have to print to sign documents.
5. Use recycled printer ink cartridges. Ink costs can add up if you print a lot. You can save by buying recycled ink cartridges. Unless a document needs to be a top quality, print at lower resolutions.
6. Reuse paper. Even in the digital world, home businesses can produce a great deal of paper. Some ways to avoid paper waste including printing on both sides, and reusing paper, for example, the backside for scratch paper.
7. Keep all your equipment clean and maintained. While it seems like computers and other electronic devices get outdated quickly, they can last a long time with proper maintenance. Use security systems to keep your computer virus-free and do regular file clean-ups and defragging. Don’t allow dust to accumulate and avoid eating near your electronic equipment.
8. Buy energy-efficient technology. If you do have to buy new equipment, invest in energy-efficient, green options which will save your energy costs in the long run. Plus, there can be tax perks to buying energy-efficient equipment.
9. Reduce travel costs. Only travel if necessary and choose the most cost effective options. For example, it might be cheaper to take the train or fly rather than drive, when you add the cost of gas, wear and tear on the car, and extra hotel costs for trips that are too far to drive in one day. Pack meals and snacks to avoid eating out for every meal.
10. Evaluate the cost difference between online payment processing services and a merchant account. While merchant accounts usually have a lower per-transaction fee, they have other costs that might make using an online service (i.e PayPal) a more cost-effective option.
11. Find affordable, yet reliable web-hosting. Your website is one item you don’t want to skimp on, especially if your marketing and business transactions are done mostly through your website. The trick is to find an affordable web host that has the highest uptime, great reviews for quality service, and 24/7 live technical support.
12. Use a content management platform (i.e. WordPress) for your website. While designing a website is a great way to set yourself apart from others, it can be an expense to create, and time-consuming to maintain. A content management platform offers versatility to customize your website, but the ease of maintenance and updating from anywhere you can get online.
13. Outsource time-consuming projects. Yes, hiring help costs money, but it can save you time and money in the long run, especially if you’re not knowledgeable or skilled in the project that needs to be done. If your time is worth $50 an hour, it’s more cost efficient to hire a virtual assistant or freelancer at $10 or $20 per hour to take care of routine or mundane tasks so you can focus on making money.
14. Buy cheap. This rule isn’t for everything. There are some cases in which you get what you pay for. But for items like office supplies, buy lower cost items and use reward programs or coupons.
15. Use free or low-cost marketing strategies. Today, the most effective marketing provides information to or engagement with your target market. That’s not to say advertising doesn’t work, but it’s often ignored. Video, articles, social media, and other free and low-cost marketing strategies are often more effective.
16. Shop for best insurance prices. Ask your insurance rep if your home business is covered in your regular homeowners or renter’s insurance (usually it’s not). Not only do you need to cover your home office, but depending on the type of business you run, you may need additional liability insurance. Research and find the best rates. Don’t forget that many professional and business associations offer insurance (and other) discounts.
17. Keep great records and take all the tax deductions you’re allowed. Home businesses have many legitimate deduction options. If you’re worried about it, use a tax software that can walk you through deductions. Or hire an accountant. Often a tax professional can save enough to cover the cost of his fee or more. Further, the cost of a tax preparer is tax deductable.
18. Shop around for best bank rates. Banks charge a variety of fees on business accounts. Shop around for a bank or credit union with low fees, but that still meets your business needs.
19. Pay your bills on time and avoid overdraft fees. You can fritter away money on penalty charges for late payment and on fees charged for being overdrawn. Overdraft protection can help, but remember, that’s a form of credit and is charged interest, so pay it all off as quickly as possible.
20. Use what you’ve got or buy used. This is especially true for office furniture. That fancy U-shaped desk in the office store might look cool, but it’s less expensive and just as functional to use a desk and table you already have, or visit your local thrift store for used desks.
21. Buy wholesale and ask for business discounts. For bulk items, this can save you in the long run.
22. Don’t pay sales tax on items you resell. Check with your state’s laws, but in many cases, you can avoid paying sales tax on materials you use to create your products or items you’re going to resell. Take advantage of this if you qualify. You’ll need to show your sales tax or reseller permit to the merchant you’re buying from to not be charged sales tax.
23. Pay bills online. Most banks allow you to pay bills online for free (if yours doesn’t, shop for one that does.) This saves you the time and money required to write a check, stuff an envelope, and use a stamp.
24. Negotiate everything. It never hurts to ask for a discount and it can save you lots of money. Many vendors are willing to cut their rates if you’ll be a regular customer.
25. Offer great products and services. The most effective and free way to generate more sales is by having your existing clients and customers tell others about how great you are. Keep your clients and customers happy by delivering on your promise and providing fast, effective customer service when needed. Many successful service-based business owners don’t do any marketing beyond social media because their existing clients refer all the business they need.