How to Cut Down Your Business Expenses When Income Is Tight
If your client work has dried up over the last few weeks, you might be worrying how you'll pay for your upcoming business expenses.
You're not alone.
In this post, I'm breaking down how to work out where you can save some money in your business.
Step 1
Start by going through your bank statements, Excel spreadsheets, or accounting software (whatever you use to manage your business finances) for the last 12 months.
Note down all the expenses you come across.
Step 2
Cross out any:
payments to colleagues for subcontracted work
subscriptions you've since cancelled
expenses that were passed onto your clients
Step 3
Classify all remaining expenses as:
unnecessary and didn't provide value
unnecessary but nice to have
necessary but there might be cheaper options
absolutely essential to your business
Leave the expenses in the 'absolutely essential' category on the list and ignore them for now.
Step 4
Unnecessary and didn’t provide value
If they were one-time transactions, cross them off the list.
If they’re subscriptions or direct debits, cancel them straightaway, then cross them off the list.
Step 5
Unnecessary but nice to have
Decide whether you can afford to keep paying for these, and cancel (cross out) any that you're willing to do without.
Keep a list of these somewhere, so you can consider signing up again once things get back to normal.
Step 6
Necessary but there might be cheaper options
Do some research into other options. Could you find a cheaper competitor offering a similar service or product?
Think about what you're getting for the extra money. Is it worth it to you?
Step 7
Once you've narrowed down your list to just those expenses you really need or find valuable, look at the total amount they came to. Divide that figure by 12 to give you an average monthly figure.
Can you afford to keep paying for these if things continue as they currently are? If not, repeat Steps 4-6 and cut some more expenses from the list.
If you’d like some support to carry out these steps, I’m offering free access to my Business Budgeting Spreadsheet which helps you classify your expenses into the above categories.
You’ll get written and video instructions to guide you through the process, and you’ll even be able to stay on top of your expenses by tracking them from month to month. All you have to do is click on the button below!
Hi, I’m Susie
I mentor freelancers on pricing so you can earn a decent living doing what you love.
I’m a translator, editor, chocoholic, crochet addict, animal lover, and budding gardener (get it?) who loves empowering others to achieve their goals.
