When you’re running an art and design business, expenses can stack up quickly. And we know that paying yourself is the last item on the list.
So it is important for you to control your expense and understand where you have spent all your funds. This is particularly critical when you are a new start up, by going overboard on expenses, particularly before you’ve built up your income stream for your business, can put your business in a financially stressful position.
If you are an existing business controlling your expenses is even more critical.
To build a sustainable art and design business, every decision you make will change how you manage your business.
Below are ten ways you can apply to help you control and reduce expenses in your art and design practice:
- Bartering: Barter is the method of trading goods or services, for other goods or services. If your business offers a product or service that another business owner may need, offering a barter exchange is the way to go without hurting your wallet. Here is an example, if you are a graphic designer, you might barter with a web designer who can develop a website for you, and in exchange he might want you to design his business cards etc. Barters are typically considered to be taxable based on their value, so be sure to collect any necessary tax reports on any barter transactions for your tax returns. You should see your accountant for advice on this process.
- Contra: on the other hand is when you have a receivable account to offset a payable account with the same vendor. For instance if you are an interior designer and you have completed a design job for your accountant’s new office for $2000 and instead of getting paid for the job you can offset this bill with an outstanding bill that you have yet to pay your accountant. This contra would only work if both parties have a mutual agreement. The contra deal still needs to be carried out like a standard invoice.
- Review costing: Do a revision on your costings, and carefully research prices when you sign a contract with vendors. Make sure you are not over paying for a standard service. You can always do online searches and compare prices. Pay attention to contracts such as web hosting, merchant services, mobile phone contract contracts etc. Avoid any long term contracts. So shop around to get the best deal.
- Data storage: Thanks to modern technology, you no longer need to buy costly servers to store your business data. Have you heard of “Cloud”? You can now store your data online in a cloud based server. Instead of paying for the server, you only have to pay a low monthly fee, based on the amount of server space your business is using. For many creative businesses, using this approach could save hundreds of dollars each month. Would it be better for your business that you save money and you can also access your data anywhere.
- Save our planet by saving power: Review how you use energy in your business by having a commitment like turning off lights & devices before leaving your studio or office. Although this commitment may not make a big difference in savings on a day to day basis, however, in the long run it will save you hundreds of dollars.
- Equipment and furniture: When you are starting out, you don’t have to buy everything new, like purchasing equipment; desks, office chairs, and computers. It can be extremely costly and it could blow out your budget too. You can make a huge saving by purchasing second hand items or look for sales or specials. Look out for furniture liquidation sales or closing down sales that are selling their assets, and look for manufactures who sell direct to customers. If you are looking for used furniture you can search on Gum Tree or even E bay where you can make an offer to the dealer for the best offer.
- Use Virtual Support: Take advantage of this service. Instead of employing a full-time worker to handle office work, you may be able to save money by outsourcing office chores to a virtual assistant (VA). This type of service is mostly based overseas in countries with lower costs of living, so your expenses are likely to be much lower than hiring someone on a payroll.
- Review your stock inventory: Reduce your stock on hand, get rid of any slow sellers. If you run a wholesale, retail or online business keep your stock level to a minimum. By buying too much inventory at once can be costly, and you need to find space to store the stock which could add another cost to your business. To order the stock wisely you need to track your sales activities for a few months and work on the minimum & maximum on your inventory.
- Downsize your working space: The rental of your business space is the largest expense in any business. If you’re spending more than you can afford, consider moving to a smaller space or you could work from home or share your work space with another complimentary business owner. You could also encourage some of your team members to work from home so that you won’t require as much working space or equipment.
- Focus online marketing: Change the way you promote your business from the past such as flyers and catalogues to email, e-newsletters, blogs and take advantage of the social media networks. All these online marketing are low costs and some are even free. You will save lot of money from printing and shipping cost.
- Business Trips: Plan your business trip wisely by highlighting all that you must do on each trip. Can you stay with friends or family instead of staying in a hotel? Book online such as wotif.com and take advantage on airline specials. More importantly, take the time to weigh up whether a business trip is really necessary: Instead of travelling overseas to see suppliers perhaps you could do the business using video conference chat on Skype to your supplier.
So the next time you are setting or reviewing your expense budget, do consider the above tips as it could only help you save money and spend on what makes a big difference to your bottom line.