For any business to be financially viable, it needs to be able to generate a profit. And it’s the same with freelancing. To make a profit and maintain a positive, healthy cash flow, you need more money coming in than going out. However, if you don’t keep a close eye on your outgoings and expenses, spiraling costs can quickly eat into that profit.
Here are some simple tips to help cut costs, maximize profits and run a lean and efficient business.
1. Review all your outgoings
A review of all your costs, both fixed and variable, can identify expenses that are either a) now superfluous to your business, i.e. a business subscription you no longer need, b) you could get a better deal elsewhere, or c) more favorable terms could be negotiated with vendors.
Regularly reviewing your expenses is sensible even when your business is doing well, because even if you only save a small amount, it will accumulate over time. The same goes for costs – they build up over time.
Furthermore, it’s sensible to plan ahead and know exactly what costs are due and when, and ensure you have a positive cash flow to cover them. You should also budget for contingencies, i.e. emergency or unexpected costs.
2. Use free or inexpensive online business tools
There are some great business tools available online to help you run your business. However, some tools are designed for larger organizations and therefore come with a bigger price tag that doesn’t take into account freelancer budgets (or their requirements). Nevertheless, there are plenty of free and freemium products available that you can take advantage of on the open market.
Take invoicing software, for example, why overpay just to get paid? Invoice Ninja is a leading free invoicing software designed specifically for small to medium-sized companies and freelancers.
We offer a range of payment gateways, allowing your clients to pay you with just one click, without leaving their client-side portal. You can choose from multiple currencies and languages for international clients, and transform quotes into invoices at the click of a button. You also get professionally designed invoice templates and a personalized dashboard, plus much more.
See all our features here and try Invoice Ninja for free here.
3. Review how and where you operate
If you need a lot of equipment or resources to perform your work, you might want to consider how you can use them or procure them more cost-efficiently.
For example, instead of purchasing a brand-new laptop or machinery, could you operate just as well with something refurbished or recycled and therefore less expensive? Likewise, if you need something that you cannot operate without, consider shared ownership with another small business or freelancer. It could be that you use equipment or tools that you can conveniently share with others.
Another overhead is working space. Instead of paying high rent for work premises, consider a coworking space or even a home office to reduce travel costs, if practical. Although working from home can reduce travel costs, you’ll also need to take into account the extra utility costs. Coworking spaces represent a middle ground and can also be good for networking with other freelancers.
4. Outsource time-consuming tasks
If an admin task is taking you a lot of time to perform, it’s costing you your time and, therefore, money.
Outsourcing time-consuming but necessary tasks could work out as the cheaper option. If you calculate the time spent and your hourly rate versus the cost of outsourcing, you might be pleasantly surprised.
Outsourcing can give you back your valuable time and therefore save you money.
Another advantage of outsourcing is that you can benefit from the expertise of others. For example, if you hire a professional accountant for your accounts and bookkeeping, they can actually save you money with their accounting knowledge and advice.
5. Make use of social media
Traditional marketing methods typically include print advertising (think newspapers and magazines), event marketing, and TV and radio commercials. These marketing methods, while effective, are not free and can use up a significant amount of your marketing budget. Even local leafleting has a cost.
Social media accounts, on the other hand, are free to set up, and even if you don’t use their paid ads to generate sales, social media marketing can still be a super effective way to market your business, remain top of mind, and generate leads. The only cost is your time. Again, this is something you can outsource.
Read more about how to market yourself on social media at our blog post here.
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Sticking to your budget, applying cost control and keeping an eye on the bottom line will help ensure your expenses don’t get out of control and help lay the foundations for your freelance business to thrive.
