As someone who is self employed, your income can be more unpredictable than if you were employed. And when it comes to managing money amidst soaring cost of living, there are a couple of things you can do. First, you can try to ensure your income is rising in line with cost of living. But if that’s not possible, then perhaps looking at cost cutting and therefore improving profitability, is another way.
By implementing smart strategies and making conscious decisions, self-employed individuals can effectively cut expenses and increase their bottom line. In this article, we will explore several practical ways to reduce costs when you are self-employed.
Think About Travel Costs
Travelling a lot for work?
Considering fuel cards if you’re driving to meetings or to work events could be away to cut your petrol costs. Considering electric vehicles (which are tax friendly too) could be another option.
Looking into railcards and which you might be eligible for if you’re travelling by train is a smart move. And trying to plan your travel as far in advance as possible is essential to getting the best price on train travel.
Streamline Your Workspace
Creating an efficient and organised workspace is essential for reducing costs. Start by decluttering your office or workspace and removing any unnecessary items that contribute to a chaotic environment. Consider implementing digital solutions to reduce paper usage and storage costs. Reduce your energy consumption by using energy-efficient equipment and turning off electronics when not in use. And finally, if you have a rented office, why not consider coworking space or working from an allocated space at home if that’s feasible for you.
Minimise Overheads
Self-employed people often face high overheads that can mount up without you even realising it.
To reduce these costs, explore cost effective alternatives. For example, instead of leasing or purchasing expensive software, consider open-source or cloud-based solutions that offer similar functionality.
Take advantage of virtual tools for communication and collaboration, such as video conferencing and project management platforms, which eliminate the need for physical meetings and excessive travel expenses. Outsourcing certain tasks, such as bookkeeping or marketing, can be a cost-effective option compared to hiring full-time employees.
Optimise Your Tax Strategy
Proper tax planning is crucial for those of us who are self employed. We can’t advise you directly here, but what we would say is that a specialist consultant in this space will be able to help you to make savvy decisions to cut your tax bill, which will ultimately mean more money in the bank for you.
One thing it’s vital to do is to keep comprehensive records of all your business related expenses, such as office supplies, travel costs, and professional development as all of these will be tax deductible at the end of the financial year.
By optimising your tax strategy, you can significantly reduce your tax bills and free up more funds for you!
Negotiate Better Deals
Can you get better deals on the things you’re already paying for?
As consumers, many of us know that a simple call to a supplier to tell them we’re leaving will often result in a counter offer. The same can be true of B2B too.
Negotiate with suppliers and vendors to simply see if you can get a better deal than what you’re on now. Explore bulk purchasing options or buy-on-subscription to secure savings on things you buy a lot of (like office consumables, for example).
Consider joining professional associations or networking groups that offer member discounts on various products and services. By actively seeking out opportunities for negotiation and cost savings, you can effectively lower your expenses and improve your profitability.
Embrace Digital Marketing
Traditional marketing methods and paid online advertising can, frankly, be pricey.
The cost of acquiring new business can be one of the most expensive elements of running a company of any size (whether a company or 1 or 1000).
Getting savvy with your marketing and focussing your efforts into the channels that deliver the lowest cost per lead is a way to cut costs. Audit your ad spend and marketing activity and cut anything that’s under delivering.
The channels that work will be different for every business. But generally, for many self employed people, the use of social media platforms to promote your services or products, engage with your target audience, and build brand awareness can be cost effective.
Create a professional website or blog to establish an online presence and showcase your expertise if you haven’t already.
Invest in SEO techniques to improve your website’s visibility and attract organic traffic, which is typically much more cost effective once established than paid advertising traffic.
In Summary
When thinking about self employment, managing costs is crucial for long term profitability and ultimately your own personal bank balance.
In a cost of living crisis, earning more is always helpful. But let’s not neglect the cost cutting side of things too. Once you start digging into the ways to save you might be surprised by just how much cost cutting you can achieve.
