Last Updated on Apr 3, 2020 by James W
There are a lot of reasons that people will choose to start a home business. Their business might be based solely on the skills they provide, for instance. One of the main reasons that business is done from the office and not from home, however, is because it’s a lot cheaper. It’s the perfect place to start a lot of businesses that don’t require a huge amount of capital invested in them. But you can’t assume that your financial situation will always be perfect because you’re not paying rent. If you want the best for your business, you need to start getting smart with your money.
Protect those most valuable assets
You might not think you have any too much financial risk when you first start a home business. You’re likely to have home insurance, after all. But what about the equipment that is essential to doing your business? We’re talking about things like your office space and furniture, but the expensive tech like your computer and even your router. If you don’t have any kind of contents insurance covering your home, then you should definitely look into it once you start the business. Of course, you want to look into protecting the digital assets your business will rely on, too. If you’ve paid for a business plan, then you don’t want to risk losing that plan if your computer breaks down. Make sure you’re using both online and offline backup to protect your important documents and data.
Set up a separate entity
This isn’t a tip that absolutely everyone is going to need to follow. There are few different kinds of business structures for you to choose from, and they’re going to come with their own sets of restrictions and requirements. However, if you’re anticipating a need to invest in the business by buying equipment and the like, then you should definitely consider setting your business up as a different financial entity from you as a person. Not only will it split accounts, so you make sure you never mix business and personal money. It makes it a lot easier to account for which expenditures are truly business-related, saving you a lot of hassle when the tax season rears its ugly head.
Run your own admin supply
You’re going to have to get used to using a lot of administrative supply. Much of your finances will come down to using checks, for instance, while you’re also likely to have plenty of mail to send. Relying on post offices and banks to keep refilling on these supplies isn’t just more expensive in the long run. It’s going to require trip after trip that really eats into your productive time. So, instead, look into the places that can help you take full responsibility for these resources, yourself. Printed checks and printed postage stamps can be both cheaper and a lot more convenient for running a business.
Don’t lose track of your accounts
Of course, before we get a lot deeper into just how you can cut the expenditures of your business, we have to stress the absolute importance of actually knowing how your money is doing. It’s not enough to just check your bank and see how much it has changed. Even as a home business, you’re likely to have plenty of incoming and outgoing money. As well as cash trades, you’re going to have invoices to track. You’ll want to know how much money will be incoming even when you’re waiting on invoices to be paid yet. That’s why it’s a good idea to track them all with simple accounting software.
Go a different route with your marketing
There are no businesses that can reasonably expect to thrive or even survive without marketing. It’s very likely you’re going to need to spend some money on getting your business visible and branded. But that doesn’t mean you have to spend top dollar to get a top marketing campaign. There are a lot of great online methods that rely on technique a lot more than they do cost. For instance, email marketing has barely any investment of money involved. With an email software subscription, all you have to do is craft the right message, choose the right design, and send it off. Similarly, focusing on inbound marketing by learning search engine optimization techniques is going to cost a lot less than paying for full-blown outbound marketing campaigns.
Know how and when to hire
If your business becomes a bit of a hit, you’re going to find that you have both the need and ability to expand. With more customers and the potential for further growth, comes a bigger burden. You might very well need employees of your own. But that doesn’t mean you have to start paying for office space just yet. Why don’t you consider hiring remote workers, instead? As well as being less expensive for you and employees alike, it serves as the kind of perk that can make a job all the more attractive. You also might not need to hire someone altogether. If it’s a job you only need done temporarily, outsourcing could be much more cost effective.
Learn the art of negotiating
Your employees aren’t the only people costing you money, either. Your service providers, your suppliers, and your vendors are all going to be taking a cut of your hard-earned money. That’s a given, but it’s not a given that these payments have to eat up so much of your budget. If you believe that you have room to cut down on your suppliers’ fees, then consider getting into renegotiations with them. Business-to-business providers look for one thing above all else in their customers. They look for consistency and regularity. By proving that you’re in for the long haul, you might be able to convince them to give you a better deal for that long haul. There are plenty of negotiation tactics you could use like that.
Don’t overload on expensive software
The right software is going to help you in all kinds of ways. They might be essential for creating the documents your business needs to run. They might help you tackle your workload a lot quicker, making the business all the more efficient. But just because the software is essential, that doesn’t mean that you have to pay for it. Nowadays, there’s a growing library of free software for all kinds of tasks, from accounting to creating text documents. These free software packages might not have the support of paid alternatives, but they can be a good replacement for when you really need to cut down the amount the business is spending.
Spend time to build leads, not money
If you’re looking for clients, then building leads is an essential part of business. Paying for a referral system or straight up buying leads from providers can give you a boost. But you shouldn’t necessarily have to pay for them. Instead, get out there and find them yourself. We’re not just talking about researching and targeting potential clients directly. You should also be networking with other business owners. If their business has markets that overlap with yours, you could both be a very valuable friend to one another. Networking also improves things like marketing outreach and brand recognition with little increase in the amount of money you’re spending. You just need to decide whether you should spend the money or the time.
Above, we’ve shown that you should always question every aspect of your expenses. Never assume there’s not a more cost-effective way to do business.