Controlling costs is critical to all small businesses, including home-based businesses and it’s even more critical in this current economic climate.
For many home-based business owners, this becomes even trickier. Since they already own many of the things they’ll need for business (such as a PC, printer, etc.), many home-based business owners get lulled into false security. It’s almost as though they feel their overhead is “too low,” and get the powerful urge to spend money on upgrades and equipment they really don’t need. Do you resemble that remark? I know I do…sometimes.
Thanks to this wonderful modern age of technology, it’s easy to get tempted into started a home-based business. After all, we already have a computer, Internet connection, phone line, and the like. The Internet, in many ways, has really leveled the playing field to allow home-based entrepreneurs to compete with the “big dogs” on even footing. The problem comes in when we start to feel like we need to compete with the big boys in other areas, like high-tech phone systems and the latest gadgets and gizmos. That’s where the ol’ bottom line can take a hit in a hurry.
In this article, I would like to share a few tips to help you avoid unnecessary business expenses and to cut the necessary ones down. After all, in business, it’s not how much money you earn, it how much you keep that counts. Right?
Computer Upgrades – This is one that is near and dear to my heart because I am a total computer geek. I like new PC equipment and it’s easy to justify buying a new one by saying, “Hey, I’m in business now.” Sure, that old, reliable PC was good enough to send e-mails on and surf the web, but we’re in business now, so we need to upgrade to the best, right? Well, not necessarily. If your present computer works well, runs a current operating system, anti-virus program and all the software you need for your business, it may be wiser to keep it. Of course, if your system is more than five years old and hiccups when you load Facebook, it may be time for an upgrade. In that case, you may want to shop around and look for the best deals. I have an article on this coming up in the near future.
Computer Software – This sort of goes hand-in-hand with the previous point. A lot of the time, we think we need to buy the best software because we’re in business now. Too often, we equate “best” with “most expensive” and that’s not always accurate. Let’s take graphics editing for example. The temptation is there to spend several hundred dollars on the latest version of Photoshop. Unless your business is graphic design, that may not be the way to go. There are other programs, such as Paint Shop Pro, which is available at a fraction of the cost and there are even some top-quality free ones such as Gimp. Of course, this applies to most software categories. It pays to buy what you need and never pay more just for the flashy brand name. After all, who are you trying to impress? Your clients will be more impressed by the work you produce for the most reasonable cost and your accountant will be impressed by a strong, health bottom line.
Latest Gadgets (IPads, Tablets, etc.) – Everywhere you look, you’ll see people with the new tablet devices such that Apple IPad or Motorola Xoom. Sure, they’re convenient for taking notes and checking the web while you’re on the go, but are they critical to your business? Only you can answer that. If your business is such that the increase in productivity will positively enhance your bottom line by more than the cost of the device, it may be a good deal. On the other hand, if you are thinking of buying it because it’s shiny and new and because you want to “keep up with the Joneses,” that probably isn’t the best reason to part with the money. I know some folks who have a desktop PC in their office, a laptop for when they’re on the road, a smart phone that does everything except make coffee and a tablet too. At what point to enough technology roll over into the too much category.
Cell Phone – Do you remember when cellular phones were only used to make phone calls? I sure do. My first cell phone was the size of a brick and all it did was make phone calls. Now, we have smart phones that can surf the web, do your baking, edit your website and much more. Of course, these added features come with added costs. I suggest you check your cell phone bill thoroughly and ask you cell phone providers for any plan enhancements (such as unlimited talk or data) that can lower your bill. These deals are not always obvious so it pays to ask. Also, I strongly recommend only upgrading your phone when you renew your agreement. That way, you get a new phone at a greatly reduced price.
Office Phone – Often, when we starts a business, we call the local phone company and order a business phone line. Most of the time, that’s a wrong thing to do. Unless your business is planning to attract foot traffic into your home, you probably won’t need a directory ad and I really don’t recommend getting a business line installed by the phone company. First off, they are likely to charge you a premium for the monthly service – just for the dial tone. Business lines are usually more expensive than residential lines. Having said that, you probably think I’m going to recommend that you to get a residential line, but you’d be wrong. Residential lines don’t usually give you the option to attach a toll-free number to it which is something you may want to do once your business starts to grow. Also, a residential line may not allow you to port your number should you ever change service providers. It would be awful to lose your phone number after you’ve spent a lot of time promoting it. Personally, I believe most home-based businesses would benefit much more from using VOIP. This allows you to use your existing high-speed Internet connection for your business phone line. Plus, with some providers you can set up multiple extensions and even have toll-free numbers all without the hassle of having added wiring installed in your home.
Merchant Account – When you’re in business, people expect you to accept credit cards. That’s just the way it is. Unfortunately, most traditional merchant accounts contain a lot of fees that can really put a dent in your pocket. That’s why you want to shop around for the best deals and make sure you are dealing with a bank which is “home-based business friendly.” Not all are. In fact, most banks actually charge higher fees to home-based businesses, especially those who conduct business online or through the mail. If you process a low volume of transactions every month, I suggest you look into Square for your credit card processing. Sure, their per transaction discount amount (fee) is higher than many merchant accounts, but it is more than offset by their lack of an application fee, monthly fee, invoice fee and all the other fees that can “nickel and dime” you to death.
This list is just the tip of the iceberg. There are so many areas, where a home-based business owner could reap savings, that this article could have continued on for thousands of words more, but that would be a bit much I think. Besides, the six things I’ve listed here are some of the areas where you should be able to enjoy significant cost savings almost immediately.
Photo Credit: Pixomar / FreeDigitalPhotos.net
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