Those of us who are self-employed, or who run small or home business, are not only managing our home finances, but are also looking after the finances of our company. As a result of this, a particular lesson is doubly-enforced: don’t spend more than you make. Some business models don’t scale well – if you are a traditional blacksmith, your business is limited to what you can produce. You may be able to expand your premises, buy more equipment and so on, but taking on an apprentice and training them up is a process which takes years. As a result of this, the market will dictate your maximum profitability at all times. In order to thrive financially, you need to look at other ways to reduce your costs and protect your profits.
There are many ways to go about this – you might look at complicated tax arrangements, transferring ownership of your business, registering as a charitable organization and so on. The simplest way, however, is often to reduce physical overheads.
The small businesses of today are different animals from those of a generation ago. The internet and remote working (and subcontracting) have created vast opportunities which previously never existed. While many small businesses retain offices, along with rental and utility payments and insurance, along with large advertising and marketing budgets – many, these days, do not.
The first thing to consider is running your business from home. You may still be eligible to claim breaks for expenses such as utilities used while you are working – eliminating rent from your overheads and reducing your household bills, too. Your employees, too, can work from home, eliminating the need for an office altogether, as you can now use relatively cheap online business management software to replace traditional office software. Some take it a step further – outsourcing their accounting and administrational work to a VA, or virtual assistant. For North American businesses, VAs in the Philippines are popular, thanks to their good command of English, the ease of communication, their high level of experience and competence, and of course, the fact that, not only are you not responsible for their insurance or pension contributions, or any liabilities, but they are usually much cheaper than employing a local.
If you really can’t eliminate the office from your expenses, then you can try to make running your office as cheap as possible. Firstly, make yourself and each employee responsible for keeping the office, kitchen and bathrooms clean. As the boss, you need to lead by example in this, for it to have any hope of success. Additionally, you could invest in a robotic vacuum cleaner which can be programmed to scoot around and clear up when everyone has left the office. All it takes is the initial investment – it’s not that complicated. That way you don’t leak money paying cleaning agencies.
Try to go digital in everything you do. It is probably impossible to eliminate all paper, but anything more than a few binders is far too much for a small business. Even if you need to buy tablets for your employees to update files, check records and so on, in the long run you will still save money by not having to buy reams of paper, ink cartridge, toner and technicians to fix your printers and photocopiers. Sell off the printing and copying equipment you no longer need and leave them to history.
If your office is in a prime location, perhaps it’s close to the train station or airport, for ease of meeting clients, or perhaps you wanted a prestigious address, now is the time to clear out and move to a warehouse in some forgotten, and much cheaper part of town. You can still keep a prestigious mailing address and hire out swanky conference and meeting rooms, decked out with your corporate logos to impress clients – simply do this through agents which lease such spaces and maintain mail boxes and switchboards for modest fees. Even if your actual offices are located in Eureka, Nevada (which markets itself as having ‘The Loneliest Road in America’), you can still have a mailing address in Midtown Manhattan and a 212 number.