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Marketing >> Financial Management >> Business cost savings secrets

Home-Based Business Cost-Saving Secrets

 

For home-based business owners, one of the key benefits to working out of your home is to reduce overhead.  Not only does this make a difference in your startup costs, but it lets you focus more on building your business instead of worrying every month from that point on about how to pay the bills.  

For the small business, the money you save on rent and utilities alone can easily add up to the cost of a new car every year.  Instead of paying it out in rent, it goes to fund your bottom line in increased profits.

Here are some additional small business ideas on how to save money in the startup and every month thereafter:

1) Avoid office supply stores when you can.  In many cases, the largest volume materials that you will need are available at discount warehouse locations like Costco, Sam’s and BJ’s.  

You will certainly have to buy more in bulk like a whole box of pens instead of one at a time or 3 printer cartridges instead of one, but it’s not cost prohibitive to do so and you can easily save 30%+ or more.  The side benefit is that it is not nearly as likely that you will run out of product when you are trying to finish up a print job at 11 PM.

2) Purchase product together with other business owners that you know.  A great example is to purchase multiple “software seats” or licenses at discount rates instead of everyone buying an individual license.  This is great for things like accounting software where you can get 5 seats for the cost of 3 individually purchased licenses. 

Just be sure that you have agreements about the software as to who holds the original copy and privileges.

3) A wonderful tip for business startups is to purchase used office furniture.  New office furniture loses about 25% of its value as soon as it leaves the showroom floor.  Shop auctions or business close-downs to find even better savings.  

When you see a going-out-of-business sign, stop in and see if the owners have any office furniture or equipment that they want to sell.  Be aware however, that when you purchase such things, you are buying it “as is”.  There are no warranties and if it stops working in a week, chances are you aren’t going to get a refund.

4) When you buy product, shop for local vendors that you can pick it up instead of having it shipped.  Shipping product can cost you a small fortune and then there’s the dilemma of having someone available to receive the shipment.  If you don’t have a pickup truck of your own, see who’s you can borrow and throw in $10 for gas. 

5) If you use a particular product but are limited in your purchasing or storage power, ask if you can get the bulk price if you commit to ordering a certain amount in a year.  If this agreement is not acceptable, consider asking if you can purchase the volume amount at the volume discount and simply have them store it for you so that you can pick it up piecemeal. 

6) Shop for your insurance every year.  If you automatically renew, you can sometimes get caught up in some very big price increases.  Some insurance companies offer low prices the first year as a bait and then raise the cost when the first year expires.  They know that most businesses will stay right where they are at for several years.  Changing insurance companies is a pain, but it’s one idea that can save you a ton of money.

7) Go to trade shows and buy there.  Both products and services companies will sometimes offer deep discounts to show attendees if they buy right there.  This can even happen with publishers where you may want to advertise.

8) Network with other small business owners for the purpose of bartering and trading products and services.  Bartering products and services keeps income off both sets of books and is legal in all 50 states to a certain point.  Home care companies can work this kind of an arrangement if they have a service that someone else needs.  

Be very sure that you have this agreement in writing and what the respective costs of products and services are valued at.  Hopefully it won’t become a legal issue.  But if it does, an agreement that spells out the value will be necessary in asserting your rights.

9) Always ask for a better price.  The worst you will hear is ‘NO’.  But you certainly won’t get it unless you ask.  You might be surprised who will give a better deal including places where everyone buys off-the-rack. 

10) Ask suppliers to discount invoices if you pay by check instead of credit card or if they can offer you an early payment discount.  Sometimes, suppliers are in a cash-crunch position and really want the money badly to cover their costs.  If so, they might be inspired to offer some deep discounts.

11) Employees need paychecks, but they also need perks and services such as life/health/disability insurance and they need to have a car.  When you pay for such services as a benefit, these are not generally not subject to employment taxes and you can walk with lower costs as a result.  

An employee who has a health insurance plan feels more comfortable in their job setting anyway.  If you put the same money into a health insurance plan that you would ordinarily pay them in gross wages, they end up with more benefit out it because it isn’t subject to taxes first.  Yet it doesn’t affect employers’ share of Social Security and unemployment tax or workman’s compensation rates.

12) Consider the new Health Care Savings plans as an alternate form of insurance.  If you and your employees are generally pretty healthy, this can be a great cost savings, they effectively OWN their health insurance at a lower cost to you, and they can take it with them when they go.  If you are not aware of Health Care Savings plans, you should be.

Marketing >> Financial Management >> Business cost savings secrets

 

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