Cutting Expenses In Your Freelance Business

Great article, i cant wait until my broadband contract runs out, im being charged to much for so little. 4Gb p/s aint to true i see about 200mb p/s. That is costing me £30 a month just over $60 USD.

Thanks for the fantastic advice, the phone bill and used equipment thing are certainly things I will look in to.

Regarding the phone bill, cut it and replace with SkyPE.
Try out the google Apps for your email hosting and Google Doc. It save you another few dollar a month.

Gee, why don’t we also not pay those nasty designers anything, and do all our marketing materials in MS Word, or Publisher! Those folks charge too much anyway…. (grin)

Sometimes one can be penny wise and pound foolish – free website hosting is a disaster waiting to happen. They have to make money somehow, usually ads or packing sites onto servers like cattle.

Shouldn’t your website be yours (no ads, no distractions) and have a good uptime and response time?

Just asking.

I agree one should review expenses, see where you can pare down, but some cuts can be too deep if not fully considered.

Robert,

Your article only looks at one part of the equation, which is cost. There’s two parts to every cost: the actual expense and how much money you make by spending that money. Don’t shortchange what you spend if spending more will also increase your return on investment.

For example: if you trade that $40/month internet connection for a $20/month internet connection, are you going to get the same up-time and reliability? If not, that costs you more money than the original $40/month was costing you, so the return on the $40/month is greater.

Yes, there are definitely places you can be frugal, but remember the flip side of that coin and invest to increase your business and improve your productivity.

Great ideas, Robert. You have come up with some substantial financial cutters. If all businesses would take this into consideration, they could profit much more. Most people in general think “the more I make, the more I can spend.” that is where most people and businesses go wrong. How are you supposed to make money and be profitable if you just keep spending on unnecessary objects and services. Open office is a great alternative to microsoft office. Rather than paying up to $300, you can use a free program. That is smart thinking. I am new to the internet marketing and internet business world. I was not sure where to start, until I stumbled upon James Brausch. I am currently enrolled in his internship where I am learning everything I need to know about starting my own internet business. I only have to commit to 3 hours per day, 5 days a week. That is convenient for me, since I am a student. You do not have to answer to anyone, you do the tasks he sends to you and you send them back. The amount of information you learn is vital to getting started on your own. His motto is Traffic + Copywriting+ Product= Successful Internet Business. He informs you the best ways to get all three factors into your equation. His website is http://www.jamesbrausch.com. Thanks to people like James and Robert and many others, you can learn so much about getting started.

For the hosting one, I doubt that free companies may guarantee 99% uptime like big guys in the field. And Gimp will never surpasses Photoshop (oh let’s hope that miracle actually exists).

But Open Office and Mozilla Thunderbird are great choices, apart from some conflicts between .doc and .odt if you considering a switch.

Nice articles though! (I’m checking your hosting freebies lol)

Another vote of no confidence on the free web hosting idea. There’s no need to pay through the nose if you’ve done your research, so you should be able to find a reasonable cost-effective solution that guarantees you the sort of stability and performance you need from something as critical as web/email hosting. Remember that if your host goes down, you can probably live with your website being out of action for a while, but not your email.

Agreed about the web hosting thing. $10/month is trivial for something that provides what’s probably the most visible public face of your business. Free web hosting services simply aren’t going to give you the reliability or features you need. If that $10 is breaking the bank, split the account with someone else or resell part of your plan — any decent web host will include multiple domains in even their lowest-end plans.

A cost-cutting measure not mentioned is dropping your landline phone service entirely.

I like SuperBytes.net for hosting. You can get a freaking VPS for $10 a month. It’s a great deal. Good support to.

Some of this advice is good, to a point. They are a lot of reasons for companies to spend more or should I say, invest in technology solutions during lean times. For example, with the rising gas prices it worth looking into online collaboration and communication solutions. I seriously doubt you will ever see a project like Gimp match what Adobe offers. Yes you might get some of the features. Gimp may work for some web projects etc. but where does one go for support? I’m not just talking about an Adobe Tech support line.

For a web presence their is more to the equation in hosting that space and bandwidth to consider like dedicated or virtual private servers, host e-mail filtering solutions and back end application support.

I’m sure many of us conduct business online and tough economic times could actually be better for us. We have the opportunity to offer products and services that cut down on travel expenses for both the worker and shopper. For those seeking entertainment online rentals like Apple TV or Netflix could also prosper.

I think the mindset should not be one of penny pinching frugality but rather wise use of the tools available out there.

Some good points all around. In retrospect, I probably should have left free hosting out and focused on inexpensive (and I’m eating the dog food there, my site is currently being hosted on Nearlyfreespeech.net)

@Andy – This is why I advocate researching the smaller ISPs. Some cheaper ISPs can be terrible, but other are only inexpensive due to less advertising overhead.

@hieu – You’re probably right on Gimp, but one can dream, can’t they?

The NUMBER ONE place I encourage my small business clients to look to save costs is at their printer. With all the free inkjet printers available on the market today, everybody thinks that they are getting a great deal. But the average cost per print from these “freebies” is $1.50 per page… the ink is ridiculously expensive, it dries out if not in use, and it has a chip that says it’s empty when half full. You can easily wind up spending over $120 every two weeks on cartridges.

I suggest my clients get a “workhorse” laser printer, preferably 4 color, like a Dell 3110. The printer costs $450-500 but you get toner that should easily last you 4000 or more prints… at an average cost of about $0.09-$0.11 per page. Yes, you laid out money to begin with, but you get nice, professional looking prints at far less money than even going to Kinkos.

But do your homework… some of the laserjets are picking up on the inkjet trap… and selling for $150 or so for the printer, with toner replacements running $1000 for 4 colors after a few hundred prints.

You don’t need to be a high volume print user to realize substantial savings.

Great post, I just recently moved to a smaller city and found a local ISP and saved myself a bucket load… Proves that you should always shop around.

Oh, and one more item for turning expenses into cash… I run all my business expenses through a corporate card with a cashback system or good rewards points program. I typically pull $500-1000 back out of my corporate rewards program a year in gift cards, typically for things I’d normally use such as home improvement mega-warehouse gift cards or babies ‘R’ expensive gift cards. Light bulbs and diapers never fall out of fashion.

In the US, the IRS doesn’t chase down those rewards and gift cards, so you’ve effectively given yourself a small tax-free bonus in that manner.

Cutting costs is important, however, one should always remember that, for a freelancer, you have one resource which is the most valuable – your time. One should do the math of whether saving the buck is worth it.
Example – if you find yourself waiting for your computer to finish tasks, maybe the accumulated time is worth upgrading to a stronger machine. If you find yourself frustrated with OpenOffice, wasting minutes trying to do things that would take seconds in MS-Office, maybe it’s not worth the money you save.

I wrote a post about it: http://zvikico.typepad.com/problog/2007/07/when-saving-a-b.html

I’ve always been a believer of getting the tools you need to do the job and then make money with them. That means if I am more comfortable with Microsoft Word than whatever Google has then I buy the Word.

Now, obviously if there’s a replacement that I’m comfortable with I’ll take the cheaper alternative (such as Skype, which I use all the time)…but sometimes the frustration and hassle just isn’t worth it. I’d rather spend my time working than worrying about minor expenses.

But I do see your point – expenses do add up in the long run.

Well, I started sending e-mail rather than SMS and … 20$ saved.

IMHO is software the main problem, but fortunately exists many good freeware alternative (except Photoshop).

@Zviki – great comment regarding our time. I had to buy a new computer last year and my efficiency increased as I don’t fight with wireless connection and don’t wait for the computer to finish tasks. Every minute of our time is precious, as freelancers. If you earn $50/hours, find somebody to clean your house for $10/hour. Sometimes cutting cost to much or doing things ourselves work against us.

I have to agree with some of the members, if you are serious about building a business, free hosting may not be a good option, imagine if you are doing business real life, people will feel more comfortable if you are at least a properly setup instead of using someone else’s phone for your business communication, although web hosting is a recurring cost, it is not a huge overhead. After all, it does not seem worth loosing confidence to your clients to save yourself several dollars a month.

Interesting topic (and comments).

I was actually planning to write an article on trimming your comms costs in the next few days.

I have to agree with the others – free hosting often just isn’t flexible/scalable enough, and I’ll admit I’m a fan of my host’s Fantastico Deluxe tool. You can install project management, WordPress, Joomla, etc, etc in 2 minutes.

Amen to Open Office (I only save OO docs in M$ formats for “compatibility ) and the Mozilla suite (though personally I prefer the Firefox based Flock, to Firefox itself). As for GIMP – you’ve just got to commit to learning how to do all the Photoshop things in it, rather than giving up at it’s clunky interface. Though I’ve not tried it myself, I’ve heard that GimpShop is a good step in improving their interface (read “making it more like Photoshop”)

I’ll second the use of Skype. I use Skype Pro, and have so far saved about $70AUD/month in call costs.

In terms of picking up second hand equipment, another option might be leasing it. I lease my business laptop, as in my experience laptops really begin to run into repair costs (cracks, keyboards,screens) when they run out of warranty – why not let that be someone else’s problem. It’s worth considering leasing any business equipment which degrades fast and/or costs a whole lot get buy up front (in my case, my Iveco Daily work van).

Worried about losing all your installed apps? Use free open source apps which you can pick up and install free again on the next computer. For things like the Mozilla suite, get the portable versions and keep them on a memory stick (and on another one as backup).

Finally, I wouldn’t suggest moving all your work docos, etc onto Google – been there, done that, reverted. I just can’t rely enough on always having appropriate inet available.

I get all of my Techie Gear used. I find deals on Craigslist all the time for used Mac’s, iPods, PDA’s, etc. Most of the time, they are last year’s model but work great for the office environment I am in.

And it is totally true that shaving 50 or so bucks a month doesn’t sound like a whole lot, but it can add up when clients aren’t coming in as fast as you would like.

BTW – Lulu shipped my copy of the book yesterday, looking forward to it!

Couldn’t agree more about the free software. There are so many great free and open source apps now, many are even better than the commerical equivalents. Check out http://www.freeapps.co.uk for loads of them!

On Hosting: I use a $10/month Hostgator account. I use 10 of my allotted 50GB to share files between friends and family via FTP, and host not only my company website there, but also about six client websites (charging a monthly hosting rate of $8 for each site) and a few of my own hobby sites. I’ve thought about switching from time to time, but the lesson is to use a webhost with cheap data and bandwidth that more importantly allows for unlimited domain names.

It’s funny… when it comes to tax time my accountant is usually screaming at me to find deductible expenses. I don’t have many to begin with!

I think frugality in general will work to save you much more money than business-specific frugality. Of course, I don’t NEED MS Word for what I do so I use OO. A writer doesn’t NEED Photoshop for what they do so Gimp or similar works well for them.

If things are so seriously tight that you’re looking to cut your web hosting from $200/yr for a quality service or your internet connection from $40/mo for a high-speed connection you may be better served by cutting those daily Starbucks visits or other luxuries. Sell some clutter, old business assets, work on deductions, but don’t shortchange your business just to save a few dollars.

I think I remember reading the Yaro Starak saves money for his business by outsourcing! Can you imagine! Yaro came to the conclusion that he would actually have time to make more money if had an assistant and developer handle his more menial tasks, thus increasing his profit margins and more than offsetting the expense of hiring a helper.

I agree with most of the other commenters– web hosting is an area business owners should not try to cut too many corners…

Try some Brasso on your scratched screen. A little bit of elbow grease will help minimize it or even remove it completely. You may want to tape over the keys first to prevent the compound from getting in.

This also works on older iPods, like the iPod Photo and earlier.

Excellent post! I like these tips and want to add one of my own. Mike sort of hinted at it above, but I wanted to hit it straight on.

Taxes. One of the biggest expenses of the year, depending on your income of course.

I wrote about it in another post, but to sum up, everything you purchase over the year technically reduces your income. That’s provided, of course, that you’re in a legitimate business. You can write off much of your expenses. And if you’re just plain stuck with a hefty phone plan, just deduct it at tax time and you’re golden.

Also should mention that if you’re going to give away old equipment/software in favor of upgrades, don’t just toss them out. Donate them instead and get a receipt for their value. Now you’ve got charity deductions as well.

I strongly disagree with going cheap on web hosting if you have any sort of online presence. Really good hosting can be had for under $30 a month but how much would it cost you if you lost a client because of a bounced email, an offline website, or any other downtime?

As the saying goes “Penny wise and pound foolish”.