In 2015 I invested a lot of time and money into growing this blog, and my skills as a freelancer. I purchased a lot of courses and paid a crazy amount out to freelance contractors (this was for help with social media marketing, graphic design and launching a membership site).
I was determined to make my #blogtobiz plan a success. Because of this, I spent money that I thought was necessary to growing my business. When 2016 rolled around, however, I took a hard look at how much I was spending on my business and decided it was time to cut back. I was on the fast track to spending much more than I could rightfully implement all in the namesake of it being “a business investment”.
Just because you can spend money on upgrading your business doesn’t mean you always should. This is a trap that many freelance business owners fall into, and I was no different.
Here’s my process for cutting my business expenses by nearly half from 2015 to 2016.
2015 vs 2016 business expenses
Before diving into the exact things I did to cut business costs by nearly half, here’s a quick snapshot comparison of what the numbers looked like for the past two years.
2015 business expenses minus taxes = $19,972
2016 business expenses minus taxes = $10,589
As you can see, I was able to cut my business expense by nearly half in just one year (and brought in a good bit more income)!
Please note; this post does not take into account state and federal income taxes for each year because that’s not an expense I can control (grrrr). The IRS and state both dictate how much I must pay every quarter, and (like it or not) that’s what I have to shell out.
All of the numbers you see here, and mentioned below, were easy verify simply by looking at in my FreshBooks expense dashboard. This is another reason to use a good bookkeeping software as a freelancer — it’s easy to track your progress and make adjustments over time.
1. Create a process instead of hiring people
The first thing I did was to perform an annual review of every business expense category, starting with the the highest one. In this case it was Contract Labor — also known as contractors and freelancers that I paid to help me with certain projects.
As hinted, in 2015 I paid over $9,800 to freelancers and experts to help me with various projects. I also had several members on my team to help run this blog and my private Facebook group.
I knew I couldn’t rightfully pay out something close to $10,000 a year if I wanted to run a lean business. That may not be a lot of money for some biz owners but it’s still a lot to me. So I began looking for ways to create a system to complete a job instead of hiring a person to do the work.
Here’s what I mean; I work with Glori Surban who is an awesome VA and presentation designer. She put together a new presentation for many months in 2015 and I was able to produce some amazing courses and workshops for my community.
This recurring monthly expense was one that I couldn’t afford anymore, so one way I was able to reduce this cost was to request that Glori create several templates of presentation slide decks for me to choose from, then I could input the workshop information as needed.
A one-time cost is often more effective than paying for a recurring subscription or monthly retainer. I also did this with other areas of my blogging business, such as:
- Social media scheduling, where I started using scheduling tools like Buffer and Tailwind instead of hiring a social media VA to do everything manually.
- Editing blog posts and freelance client projects with Grammarly instead of keeping an assistant editor on staff.
- Facebook group monitoring, where I began monitoring the group myself versus paying for a community coordinator.
- Preparing my taxes instead of pushing everything off to my CPA (since I have a background as a tax professional I know how to do everything myself, I just wasn’t taking the time to do so).
These are just a few of the actions I took to create a process for a particular task instead of paying a person to do it. This sort of systems audit is something I find really fun and fascinating — give it try and you’ll see what I mean!
With so many apps and online resources available there’s bound to be a product that delivers the work you need done so you don’t have to employ a person to do it.
2. Apply course knowledge instead of buying more
This is a common trap that I feel a lot of budding freelancers and business owners fall into: we purchase courses and classes as a way of expanding our knowledge as beginners. But then we continue buying without actually putting the knowledge we’ve gained into action.
Our investment becomes a liability because we don’t actually implement everything we’ve learned and then we feel guilty for wasting our money. It’s a vicious cycle!
This realization caused me to take account of all the courses I purchased versus the time I’d taken to implement them. In 2015 alone I spent $929 on courses and products to help improve how I did webinars, negotiate better rates with clients and up my Pinterest game.
But how many of those did I actually apply my time and effort to? I started all of them but never fully implemented each lesson or completed each action item.
So in 2016, I vowed to go back and apply the knowledge I gained by finishing the courses I already purchased. Then, and only then, could I purchase future courses — but I must also fully apply these lessons to my business. Because of this strategy, I only spent $541 on courses for that entire year.
One of the best investments I made was to purchase an Asana for Bloggers course from my friend Matt G. (who literally lives up the street from me) for only $25. Using his advice I was able to create an editorial calendar for my blog, and stick to it, for the entire year.
Another amazing course investment was the Making Sense of Affiliate Marketing course from my blogging friend, Michelle. Because of the actionable tips she shares I was able to triple my affiliate income from January to December and now earn an average of $1,000+ per month from this one stream of income.
I have gone through all of the lessons of these courses and in the last 3-6 months of 2016 was able to implement all of the action items. This lead to seeing massive results (see the above paragraph) — all for nearly half of the cost of what I spent the previous year.
3. Evolve my money and budget
Finally, the biggest change that helped cut my business expenses by nearly half was evolving the way I budget and manage my money. I’ve been in the money world for years, ever since I was 18 years old. I’ve heard the same tried-and-true ideas for years, and experimented with just as many.
This has led to getting into a bit of a rut with my budget and it was time for a much-needed fresh take. In the past I used two different money management programs — one for my personal transactions and a separate one for business ones.
But in 2016 I started documenting all of my spending by hand, using my business partner Cait’s, Mindful Budgeting Planner. I also switched over to using credit for nearly everything and then paying the balance off at the end of each week. I now have a credit card for personal costs and a different credit card for business expenses.
This really helped streamline everything while still giving me a regular overview of my finances each week. If you’ve been a Careful Cents reader over the years you probably already know my (previous) stance about using credit cards, so obviously I was skeptical about this new budgeting tactic.
Much to my surprise, though, it’s one of the easiest and best strategies for managing inconsistent income I’ve ever tried. And trust me, I’ve tried a TON of them.
Regularly review your business expenses
While there were plenty of other smaller things I did to cut my business expenses by nearly half, these were the three that made the biggest impact. If your goal for the New Year is to cut costs and spend less in your business in order to have a higher profit margin, then I suggest starting with your highest expenses categories.
What can you do to streamline your business systems? Are there certain tools, apps or products you can purchase instead of paying a person to do the job? Is your current money management working? Maybe it’s time to do a spending audit of your own business and see what improvements can be made.
What’s one thing you’ve done to cut back on business expenses?