In her book, Bold as Brass, Hilary Devey talks about just how ‘tight’ she became in her first years in business. She paid herself just enough to cover food and rent and every single cost was driven down. Hilary did the cleaning herself, shared the chemical loo with truckers and injected ink cartridges with a syringe.
You’ll find similar stories from most people who’ve succeeded in businesses. Whether you want to build a steady freelance income or become a multi-millionaire like Hilary, getting into frugal habits pays off in the long run. I think of every saving as an investment in my future freedom.
Here are our top ten tips to help you cut those costs:
1. Audit your household expenses
Like Hilary, it helps to reduce what you pay yourself to a minimum in the early days, so start with a unflinching review of your household spending. I did this when I started my business in 2012 and managed to easily save an astonishing £6,000 a year. I’m not sure whether to be proud or ashamed, but there it is.
2. Use online comparison sites
I saved over £1k a year on household and car insurances alone. Another cost of ‘demanding’ jobs is that we can feel we don’t have enough time to review bills, so keep them rolling over on direct debits. Never again. Comparison sites saved a heap and I use them every year now to get the very best deal.
3. Power and broadband costs
Power and broadband were the other big wins. It doesn’t take long to shop around and the savings can be considerable. I saved around £650 for each of those cost centres.
4. Vehicle costs
When you are looking to change vehicles, getting a cleaner, more environmentally friendly model is now a no brainer. The environmental benefits are obvious. It has contemporary brand value (not too many people are impressed by flashy gas guzzlers these days). And the cost savings are significant. You can likely half your fuel costs and get a significant discount on vehicle tax. If you have a new driver using your car, you can also save significantly lower your insurance costs by getting a black box fitted to your vehicle.
5. Printer ink
If you use an inkjet printer you can pay more for printer ink than you would for the very best champagne by volume. Look at injecting like Hilary did, or using an ink recycle shop. While inkjet printers are cheap as chips, they make their money with the ink. In fact it may not take too long to pay off the upfront cost on a cheap laser printer, with the massive savings in ink cartridges.
6. Get the coach
Rail travel just keeps getting more expensive. I resent paying peak time travel rates and as I can generally set my own work times, I don’t need to! When I have to travel to London for meetings I either try to set them in the afternoon or if an early start is unavoidable, I get the coach. It takes a little longer, but it always gets me off to a great start; unlike the train, it is quiet, the lights are dimmed and the seats comfortable. And the price: £9 compared to £74 by train. What’s not to like?
In the early days of starting a new business a fixed phone line is not only quite a big expense, but it can also be quite inflexible if you need to move premises as you settle down. If you are a freelancer or your business requires you to move around a lot, then just using a mobile number for business makes sense and it shows that you are out there, on the job. VOIP-based services are another option. They provide very low cost or free internet based calls.
8. Currency exchange
If you have clients overseas you can lose a huge amount in currency exchange fees. Banks charge a multitude of fees which the World Bank estimates add up to 12% on the average small exchange. Money transfer agents like Western Union average 9%. We use CurrencyFair, a peer to peer service which charges 0.15% commission and a 3 Euro transfer fee. As you are directly exchanging with peers CurrencyFair usually beats the bank exchange rate by around 3% too.
If you are drowning in work but not quite at a stage where your business is stable enough to take on employees, then you may want to think about outsourcing discrete activities. This could cut the cost to your time of doing things that take you away from customers. Word of mouth recommendations are a good place to start. And for discrete pieces of work, outsourcing platforms like Peopleperhour can be useful. Those platforms enable you to post jobs and get proposals from lots of freelancers very quickly. They also integrate good work flow and payment systems.
10. Use free website tools
You don’t need to spend a fortune to establish an impressive web presence. WordPress and Wix offer free websites and templates which can look very professional. They are both relatively easy to learn. With free and professional templates and plugins you can adapt the platform to complement the nature of your business.
So there you have it. There can’t be many new businesses that wouldn’t be able to make some savings from this list! And if you have any that aren’t on the list, please add them in the comments section below.