One of the major benefits of having a home based business is the low overhead, but that doesn't mean you don't need to be as cost-conscious as any other business owner. After all, money saved goes right to the bottom line in the form of increased profits. Here are 25 ways you can pinch pennies--and even dollars--in your home based business.
Buying and Spending Smart
1. Buy used furniture. Used office furniture can be purchased for a fraction of its cost new. Check newspaper ads, bankruptcy sales and even new furniture dealers who frequently have trade-ins or repossessions they're willing to sell at deep discounts. Another great place to shop for used furniture and equipment is the surplus office at a nearby college or university. If the school doesn't have a surplus office listed, call the main information number to find out which department handles disposing of used items.
2. Pool your purchasing power. Find other small-business owners--not necessarily home based--and team up to buy supplies in bulk. You'll save money on the cost of the materials, as well as the shipping. "I get together with an accountant friend and a computer specialist, and we order basic items like paper in large quantities, usually five or more cases at a time," says Lyn Richards, owner of Dog Logic , a resource center for large- and giant-breed dog owners and breeders in Manchester, New Hampshire. "We get a lower price per ream, and the shipping ends up being free because we buy so much."
Don't limit group-buying partners to noncompeting companies: "Coopetition" (cooperation among competitors) is one of the hot trends in business today. Consider group purchasing with businesses that offer the same or similar services as you but that perhaps target a slightly different market or geographic area. Be sure all agreements are clearly spelled out in writing. Clarify upfront who will actually make the purchase, how the goods will be delivered, when the others will reimburse the purchaser, and how any problems with quality or service are to be handled.
3. Save on shipping by taking it with you. If you're near your suppliers, pick up your order yourself--or perhaps have a friend or family member do it for you, suggests Sarah Williams Steinman, president of Casco Bay Herb Co., an herbal soap manufacturer in Cumberland, Maine. For example, Steinman's husband travels throughout the Northeast. "He keeps me updated as to when he might be near one of my suppliers," she says. "He often travels through the town where my olive oil supplier is, and he'll pick up a few hundred pounds of oil on his way home. That saves me about $75 in shipping."
Caution: Pick up supplies yourself only when it truly saves you money. If it's taking you away from a revenue-producing activity, you're not really saving.
4. Buy wholesale and ask for commercial discounts. Join warehouse buying clubs and never pay retail price to any supplier without first asking for the wholesale rate.
5. Negotiate discounts for long-term buying commitments. If you regularly use a particular item but can't buy in bulk because you lack storage space, ask your supplier for a bulk rate as long as you commit to purchasing a certain quantity over a specified period of time.
6. Buy at trade shows. Many exhibitors offer show discounts or will discount their booth samples to avoid having to ship them back to their warehouse. "Sometimes I can buy samples for a discount at a wholesale show and take them with me, which saves on both the product and the freight," Steinman says. Attend the shows in a vehicle large enough to transport whatever you might purchase.
7. Barter and trade. Find businesses that offer products and services you use and offer to trade. Be sure you're very specific on the details and agree on the respective value of what you're trading. The value of bartered goods and services may be taxable; check with your accountant. As an option, consider joining a barter exchange, which is an organization that facilitates bartering among its members. A list of exchanges can be found on the International Reciprocal Trade Association Web site .
8. Shop for insurance annually. Don't just automatically renew your business, health, automobile or other insurance. Ask your agent to review your coverage, do a risk assessment and make suggestions on how you might be able to save money. Insurance companies are always introducing new products, especially for the home based business market, and what was the best deal for you last year may be topped by something else this year.
9. Ask for a better price. When you're shopping for any type of goods or services, always ask for a better price. The worst that can happen is the supplier will say no--but they might say yes.
10. Don't pay bills until you have to. Protect your credit rating by paying on time, but never pay early (unless you're getting a discount for doing so). Let that money sit in your account earning interest as long as possible.
11. Pay bills online. At the very least, you'll save time and postage. In addition, many companies offer discounts to customers who pay online.
12. Ask your suppliers for cash and early-payment discounts. Make payment terms a part of your price negotiation; many suppliers routinely offer discounts for cash or fast payment.