Does it seem like everyone these days has a home-based business? You’re half right. About 50% of businesses are run from the founder’s primary residence. If you’re one of those intrepid entrepreneurs, congratulations. You’re already saving money by not paying rent for an office space or a daily commute. However, you can’t afford to leave other dollars on the table. That’s why you need to focus on frugality.
Being careful about where you spend your finances can pay off handsomely in terms of your net revenue. Even if you can just hold onto 5% more per year, you’ll be ahead of where you were. Fortunately, it doesn’t take a lot of work or sacrifice to trim some pennies here and there. By making just a few adjustments, you could see a sizable payback.
1. Keep all your business receipts.
Let’s start by talking about “tax time”. It’s not as dreaded as you might think, especially if you run your company from home. The federal government allows you to take a home office tax deduction as long as you meet all its specific requirements. This saves you money right off the bat and gets you on the right track.
Be sure to stay on that track by keeping copies of all your business receipts. Whether they’re in paper or digital form, you’ll be glad you stashed them away. In fact, they’ll give you two very important advantages. First of all, they’ll ensure you don’t miss any deductions. It’s easy to forget that you spent $5 on a new pack of highlighters 10 months before. Having a receipt jogs your memory. Secondly, you’ll need to offer up those receipts if you’re ever asked to present proof of the expenses you’re deducting.
2. Cut down on your energy costs.
Depending upon your home office setup, you may be able to deduct a portion of your utilities on your taxes. Or, if your home office is an actual separate building, such as a former carriage house in your side yard, you can deduct all those utility costs. Even so, you don’t want to shower your utility providers with money every month.
A good way to pull back on your utility costs without incurring any discomfort is to look for alternative energy sources. For instance, you may want to invest in solar panels which will eventually pay for themselves. What if you don’t have cash on hand to front the money for an installation? PosiGen, an emerging leader in the solar panel installment industry, offers a unique leasing arrangement whereby you can get panels — and savings — immediately with little down. Another quick way to cut back on the need for something like air conditioning is to keep your windows open on temperate nights. You’ll spend less time running your HVAC equipment.
3. Buy all your supplies in bulk.
Maybe you only need one ream of paper right now. But what about in the future? Would it benefit you to buy a case of 10 reams to get the discount? If you use paper and haven’t moved to a paperless office setting, your answer will probably be “yes”. After all, going for bulk supplies can significantly lower your per-item price tag.
You may want to join a membership-only warehouse like Sam’s Club or Costco to get deep savings. Amazon Prime can sometimes be valuable, too, depending on what your regular office needs are. Do a little “number crunching” to see how you can whittle down the amount you pay for any type of supplies you use.
4. Treat yourself to pre-owned furniture.
Many companies aren’t going out of business but are selling off their office furnishings. Why? They’re making the move to become remote-only or hybrid businesses. Around 25% of companies are thought to offer their employees some type of flexible scheduling. As a result, they just don’t need all the desks, chairs, and filing cabinets they once did.
This is where you can swoop in and get yourself terrific bargains. Try snooping around on Facebook Marketplace or eBay. Or, try going “old school” and poke around your local or nearby Craigslist. Etsy can sometimes hold some upcycled finds as well. If you hear of a business in your hometown that’s shuttering, stop by or give a call. The owners may want to unload some of their furniture. You’ll get a refreshed home office workspace, they’ll get money, and your bottom line won’t suffer for the style upgrade.
5. Keep yourself on a schedule.
Is time really money? Absolutely, especially when you’re in business for yourself. The more efficient you can be with your time management, the easier it will be to handle all your responsibilities. That’s why it’s so critical for you to keep yourself on track with a digital or physical planner. Having a calendar keeps you focused on what you need to do and lowers your likelihood of frittering away your working hours.
You don’t have to feel bad if you struggle with time management. Even great entrepreneurs have their shortcomings. A good way to start getting on a schedule is to put all your to-do items into a daily list. Mark them by priority and schedule them throughout your day. At night, create a new list and schedule for the next day. Eventually, this process will become routine. When it does, you’ll be running your professional and personal life more smoothly.
6. Invest in AI-based software.
Another way to give yourself more time is to invest in software to take care of some of your manual tasks. Many home-based business owners assume that they can’t afford AI-based systems. Not true. Some programs are free or low-cost to use and they can be hugely beneficial.
Perhaps the most emerging of all these tools is ChatGPT. Though there’s been a lot of debate about ChatGPT’s promises versus its problems, it’s clearly worth tinkering with. One safer way to lean into AI is by finding out which of your current tools is or plans to integrate AI into its system. MarketMuse, a content planning and optimization tool, has recently launched a version with ChatGPT integration. The update allows users to create outlines and optimize content without investing more hours, making it a great option to save time for business owners.
7. Weigh different payment options.
How you get paid can either save or cost you money. Now is a good time to conduct a deep dive into how you receive payments from clients or customers. Do they send you checks? Do you accept money through a service platform like PayPal? Are you set up to use credit cards for a fee? There are plenty of ways to get the cash you’re owed. However, not all the ways may be putting dollars back in your pocket as quickly as they could.
For instance, if you receive checks in the mail, you have to wait for them to come. Then, you have to wait again for them to be processed. This could mean an extra few days between when you deposit your money and when you can actually use it. Who wants to risk a cash flow gap, particularly if you’re a small business owner with bills to pay? Even if you have to pay a fee for a faster payment service, you may find that it’s worth it in the long run.
8. Spend time on organic content marketing.
You’ll definitely need to pay for some of your online marketing. For example, it’s fairly uncommon these days for businesses not to have a website. Although you can certainly create and manage your own site, you’ll still need to pay something to keep it live. Nevertheless, there are innovative ways for you to get some free advertising. One of them is through SEO measures like blogging and posting on social media.
Organic, non-paid content marketing can help spread word about your brand and its abilities. While you may not be able to completely cut yourself from paid advertising, you shouldn’t discount the power and value of organic SEO. The better your SEO, the better your visibility will be online. Again, SEO won’t put you in front of people the way paid Google or Facebook ads will. Still, it can be a good way to temper those other expenses and still be seen.
9. Examine your expenses every quarter.
Three months can fly by when you’re growing a home business. Just don’t let each quarter slip away without undergoing a quick evaluation. Pull out your expenses and study them carefully. What were your top five expenses for the past quarter? How many were one-time expenses, such as the purchase of a laptop? How many were ongoing costs? The ongoing costs are the ones you need to think about for the next three months.
Explore ways to make your top ongoing costs smaller, if possible. You may be able to negotiate with a vendor, for example, or switch to a different, lower-priced product. Get imaginative. Just remember that you shouldn’t make cuts that will put your effectiveness, product or service quality, or optimization at risk. But some cuts may be reasonable to implement, at least for the following quarter.
Spending wisely always makes sense when you’re in charge of a home business with limited resources. All you have to do is take a few extra steps and you could wind up saving a bundle.