Running a business always has some costs. Many are unavoidable, but some can be reduced. And less money going out of your business means more profit left over for you. So here are some ways to help with saving money on business costs.
Always remember to keep the invoices and receipts for all purchases made for your business. These are the expenses that you can use can claim against your tax. You will need the paperwork in case you are ever audited for your tax returns. Don’t forget to include materials, tools and other supplies, postage and packaging costs, listing fees, stall fees and similar costs, Paypal and other processing fees, and ‘office supplies’ such as storage, stationery and paper. Check online to see just what you can and can’t consider tax deductible (it varies depending on your country or state). See my article Ten Tips For Tax Time for more ideas.
Here are some common business expenses and ways you can save money on them:
Usually these are fixed by the selling venue you use (eBay, Etsy, local shows etc) Keep an eye out for special offers for free listing days. Sometimes larger volume sellers can get reduced rates, so this may be something worth checking out.
Remember that internet selling sites usually charge a final sale fee based on the actual item price, and not on the postal charges. So adding the shipping fee to this price so as to offer “free shipping” may attract more customers, but may also put your fees up a little.
Postage and Packaging
Once your shop is getting regular sales you can really save costs by buying your postage supplies in bulk. Shop around for good prices for envelopes, wrapping paper, bubble wrap or peanuts. Don’t forget that the little things like sticky tape and labels also add up, so again buying in bulk can save the pennies. Some sellers team up with a crafty friend to buy in bulk and split the supplies between them. This is a great idea if you want the bulky saving, but don’t have the need or room for quite such large quantities.
Are you spending lots of time (and petrol) on trips to the post office? Check online to see if your post office has a pick-up service for parcels. There are many private companies who also offer competitive parcel delivery service. There are also online services to let you print pre-paid stamps and delivery labels. As well as sometimes offering cheaper postal rates, this can again save you valuable time – time which you can then use to make new things!
For more info on ways to save on your packaging costs, check out episode 22 of the Craft Seller Success Podcast, Packaging Your Craft Products. You can listen to the podcast or read the full transcript, here on the Tin Teddy Blog.
Again the biggest savings are to be made by buying in bulk, ideally from the product’s original manufacturer or a wholesale source. When your craft business is very small then it is convenient to buy your supplies in your local hobby shop. But once you start to grow you can save a lot of money by searching out better deals. As a registered business you may qualify for wholesale or “warehouse” prices from big companies. Being a good repeat customer can also earn you a better deal with many smaller companies too. Don’t be afraid to politely ask your favorite suppliers if they offer any such discounts or incentives.
Never forget the importance of quality in your supplies though. If you find a much cheaper version of something you use, make sure it is or a comparable quality too. Loyal customers who love to buy your silver plated necklaces may well complain if they start getting items that turn green, fall apart or look skanky. Quality of materials is an important selling point for your product so something you must always take into consideration when saving money on business costs.
Promotion and Advertizing
Nowadays there are many free and low costs ways to promote your business, both online and off. However many forms of paid advertizing are still used and can be very profitable for your business. Try to target your advertizing as closely as possible to your target market. Facebook adverts, for example, allow you to tightly define who will see your advert. If you are considering a magazine advert make sure it is a magazine that really is likely to have potential customers in the readership.
Do search the forums first before using the paid adverts on Etsy. These ads can be profitable, but you need to use them the right way – and most people don’t. There is a reason that experienced sellers refer to them as ‘newbie tax’.
Keep notes of when and where you try different advertizing campaigns so you can better see which ones actually work for you. If you don’t do this then you could be paying out for advertizing that is not bringing in any extra sales. Check out the analytics or stats available for the marketing campaign you are using. For example, MailChimp have detailed stats to let you monitor the success of email marketing campaigns, or Google Analytics allows you to see how social media campaigns are panning out.
Usually when you want something done there are two choices. Either do it yourself or pay someone else to do it. Are you paying for any tasks that you could learn to do yourself? Some examples could be website development/maintenance, marketing and research.
Although it is a very good idea to get professional help the first time you need to do tax returns, very small businesses can often do this themselves once they have been through the process once or twice. There is lots of online help, as well as many good books. Even if you can only do part of it yourself this could save you a lot in accountant’s fees. Keep all your receipts and use a website such as the great free WaveAccounting.com or a software package such as Sage or Quickbooks to records your business finances. If you keep the records carefully and diligently then you will have a lot less work to do when it comes to tax time.
Sometimes paying someone else actually can save you money in the long time. You can use the time you save for something more profitable, such as making more prodcuts. Would it save you money and time to pay someone to do routine tasks for you such as a simple part of your creation process (cutting things out?), packaging items up or taking them to the post office?
Other Ideas for Saving Money on Business Costs
Here are few other little ideas for saving on your business expenses.
Although it is great to always post customer’s purchases out as soon as possible, if you sell a lot then you may be able to save on petrol for the post office run by posting every other day instead of daily.
Don’t be shy about talking about your business to family and friends. Word of mouth is still one of the best ways to advertize, and you never know who your friends might mention your shop to. Ask them for ideas and feedback to get them involved. A good strong family/friend support network can be one of the most precious commodities your business can have.
Shop around for products like web server space, domain names and software requirements. Right now it is very much a buyer’s market. Will your web host offer you a discount if you buy multiple products from them? Look out for extras that can save you money. For example, many web hosts offer a free domain name or cloud storage as part of the deal.
Store your finished products and materials carefully. Damaged items are money down the drain. Make sure they are safe and you will be easily able to find them when you need them. Invest in boxes, bags or whatever storage system you require.
Be wary of spending large sums of money on things like trade shows unless you are confident you can gain a suitable amount of benefit from doing them. Many new businesses get caught up in these things and end up spending vast amounts on them, with little or no return for their investment.
I have written an article on Ten Tips for Tax Time which may help you save a bit.
If you are finding it hard to set prices for your craft products, check out my article Craft Prices – Setting a Product Price for Craft Sellers. You can read the article or listen to the audio version if you prefer.
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I would love to hear your hints and tips for saving money on small business costs.