It doesn’t matter whether your home-based business is flourishing or just getting by, you have to be concerned with everyday operating expenses. Keeping them in check is imperative. It’s doubly important because your home is also your office. There are ways to cut costs; all it takes is the willingness to make a few sacrifices and the ingenuity to find the right way to do it. Following are a few money-saving tips for home businesses.
Distinguish Between What Is Necessary and What Isn’t
In order to make a business succeed, you must make a profit. It’s as simple as that. No one can stay in business for long unless they do. To make that happen you need to either increase the inflow of money, or reduce the outflow. The perfect combination would be to do both, but it’s a lot easier to cut costs than to bring in more money. You should concentrate your efforts on saving money by reducing your expenditures. The best way to do that is to cut out unnecessary expenses. Take stock of your business. Make a list of all your bills. Go through them one by one and determine which expenses are necessary to the operation of the business.
An example of an unnecessary expense would be overstocking. Every business that produces a product must keep a certain amount of inventory on hand. If you have too much of a particular type of material in stock, it is tying up money that could be used for other purposes. On the other hand, if you purchased that material at a world-beating price then being overstocked wouldn’t be as much of a burden. Buying stock for a business is a judgment call. It is subjective. Buying in quantity is a proven method of saving money, but only if you can get it at a really good price. Otherwise you’re tying up money unnecessarily.
Keep a Lid on Spending
Another facet of unnecessary spending is to make sure you buy something only when you really need it. While it’s a sound business practice to have enough stock on hand to ensure your business runs smoothly, it can be a waste of money to store things that aren’t used often enough to warrant their purchase. If your normal shipments go in 4″ x 5″ containers it doesn’t make sense to keep a couple thousand 20″ x 30″ boxes in stock. Although it’s nice to have the necessary material on hand to meet than once in a lifetime sale, it would make more sense to pay a bill with that money. If the only people that use your home office are you and your spouse, you don’t need eight office chairs. You don’t need a state-of-the-art photo printer if all your paper communications are printed in black and white. The idea is that you keep a lid on spending by purchasing only what you actually need.
Find the Best Deals
When it’s time to replenish your stock, look around for the best deal you can get. Negotiate with your suppliers. If you purchase your supplies from the same source over and over again they may be willing to give you a discount because of your repeat business. Shop around for places that sell your material in bulk. Purchasing supplies in quantity is a proven method of saving money, because the price per unit generally comes down as the amount of your order increases. Be careful not to order too much a certain material that isn’t used often, or the savings may be only illusionary.
Save Where You Can
Even a small reduction in cost can save money, especially if you can find a lot of ways of doing so. Use energy efficient lighting in your home office. Pay your bills online whenever possible and save the cost of stamps. Bundle your Internet, landline and cell phone bills. Advertise on neighborhood bulletin boards and print your own business cards, instead of buying newspaper ads. Create a website and advertise online using social media. Do as much of the physical work yourself as you are able to. Paying someone else to do what you could and should do yourself is a waste of money. Cut insurance costs by bundling your insurance policies and by raising your deductibles. If you take the time to think about it, there are probably a hundred other ways to save a few cents here and there. By themselves, each of these suggestions will save only a small amount, but taken together they can add up to substantial savings.
Guest post from Bailey Harris. Bailey writes for www.businessinsurance.org.