There is never a bad time to check your spending and reassess your expenses as an independent contractor. Any business budget can benefit from a little belt-tightening, but solopreneurs deal with smaller profit margins than larger companies, so the need to keep expenses to a minimum is much more pressing.
We’ve assembled a list of seven ways for independent contractors to easily and painlessly cut expenses, and free up those funds for other, more important uses.
It’s a common practice for suppliers to offer discounts for paying invoices as soon as you receive them. Not only will paying early save you money right away, but it also cements a strong relationship between you and your suppliers, which can lead to more room for negotiating lower prices in the future, as well.
Buying in bulk may reduce the price of each item, but a large order still costs significantly more than a smaller one. Consider whether you really need to tie up that much of your working capital -- for example, do you really need a year's worth of paper at one time?
Opportunity cost is just as much of a factor in saving money as cutting actual expenses is. If you are using your valuable time to perform menial tasks, instead of revenue-producing activities, you are losing money. Hiring an intern or an assistant (virtual or real-life) allows you to delegate the less specialized tasks and focus on bringing in more income. MBO Partners' own Business Managers and other back office services are also time and money-saving benefits, allowing you to avoid tedious work around invoicing, contract negotiation, quarterly tax filings and more.
Rather than spending money on necessary products and services, negotiate a deal with other business owners in which you provide them with an equivalent amount of goods or services from your own independent contractor business. Just be sure to set out the terms of the deal in a contract, to make it a legal transaction.
The high cost of software can put a serious dent in a small business’s budget, especially if several different specialized programs are necessary. Open source software provides free alternatives to many popular programs, from Word to Photoshop, and files can usually be converted easily into formats compatible with clients’ needs.
Some of these are inescapable, such as utility payments. But whenever it’s possible to buy equipment outright rather than lease it, do so. Purchasing used equipment can result in even greater savings. Not only will you have one less payment to worry about each month, but you’ll be able to take advantage of the tax benefits that depreciation brings, as well. If you must make an ongoing payment, use an automated or online bill paying tool, often avaialble through your bank, to save the hassle and cost of mailing bills in via the postal service.
Many solopreneurs use credit cards to pay for business expenses. What is the annual percentage rate on yours? Often, credit card companies are willing to work with cardholders to lower rates, which can save your business a great deal of money, both in the short and long-term.
By exploring these seven means of cutting expenses, you stand to save your independent contractor business a significant amount of money.
Insurance for home-based businesses can help provide essential liability, equipment, and legal protection that is not included in standard homeowners or renters policies.
News and notes for independent contractors around the web. This is the February 29, 2016 edition.