If you're thinking about starting a home-based business, oralready run a business out of your home, you know that office expenses-- furniture, equipment and supplies -- can eat up a lot of cash. GaryForeman, founder, editor and publisher of The DollarStretcher, and Shel Horowitz,owner of and author of Grassroots Marketing: Getting Noticed in a NoisyWorld (Chelsea Green Publishing, 2000), offer tips on how to make themost of your budget.
"Cash flow kills more businesses than lack of profitability,"says Foreman. Saving money is as critical as your marketing plan andyour product pricing. It's an essential part of your business.
- Tip No. 1: Don't spend money onappearances. "If it's a home business, you're not likely to have peoplecome into your office," says Foreman. "But even if you have a smallbusiness with visitors, people will recognize that you're wise to notspend money foolishly."
- Tip No. 2: "New ventures ought not tospend lavishly on furniture," says Horowitz. "Get by with the barenecessities. You need a desk and a place to put your computer."
- Tip No. 3: That said, "Don't stint onthe chair," says Horowitz. "You'll spend more on a chiropractor thanyou would have on a decent chair." Moreover, you don't need to pay $500for a good chair. Good quality desk chairs can cost less than $100.
- Tip No. 4: Shop around. "Some businessowners make a checklist of the things they need, then go to the officesupply store and fill the order like it was a grocery list," saysForeman. That's not the best way to get the most for your money.
- Tip No. 5: Think about whether youneed to own the equipment. "Can you share or rent it when needed?"Horowitz says. He creates mini-co-ops with others, and the group sharesuse of the equipment.
- Tip No. 6: Be creative. "You can findresources without spending a lot of cash," says Foreman. Use itemsalready on hand to serve your needs. A coffee mug can double as pencilholder.
- Tip No. 7: Put the word out. "Someonemay be getting rid of a piece of equipment," says Foreman. If peopleknow what you're looking for, they can direct you to low-cost (evenfree) resources.
- Tip No. 8: Be patient. "You may notneed a fax machine right away," says Foreman. "You can wait until youfind one at the right price."
- Tip No. 9: Get value for your money.You can buy cheap file cabinets from a mass-market discounter, but theywon't last very long. "We bought a four-drawer file cabinet for about$200, 10 years ago, from Quill; a quality office discounter. It's innew condition," he says. "We bought a good quality lateral file at atag sale for $5 or $10. But the cheap plastic ones we have are wearingout and need to be replaced."
- Tip No. 10: Everything is subject tonegotiation. "I don't just ask for a lower price," says Horowitz. "Iask them what else they can do to sweeten the deal. They can addsomething that has high perceived value but doesn't cost them much. Forexample, when I bought a computer, they threw in the modem and printer.They could offer free delivery."
- Tip No. 11: You need to talk to a realperson to negotiate, says Horowitz. Ordering online doesn't allow youroom to negotiate.
- Tip No. 12: Bring someone else's priceto a retailer that you want to patronize. "Ask if they can offer youthe same deal," says Horowitz.
- Tip No. 13: Checkgoing-out-of-business sales. They'll often have equipmentand furniture that you can use in your home office. "When I was apurchasing manager, we once had 75 desks we were trying to get rid of.We sold them for a few dollars each," says Foreman.
Tip No. 14: Stock upat back-to-school time."You'll never find consumables cheaper," says Foreman.
TipNo. 15: "Don't think of it as buying stuff, but rather asaccomplishing a task," says Horowitz. For example, heneeded to connect two computers to the Internet. Instead of buying twoInternet connections, he purchased one Internet connection and used arouter to connect the two computers.Tip No. 16: Bundleservices and buy packages when you can. Horowitz has a $55monthly phone plan that allows unlimited outbound calling anywhere inthe United States or Canada, and includes voice mail and other perks.This is cheaper than even a low-cost long distance plan that requireshim to pay by the minute.Tip No. 17: Askyourself, "Would I spend this money on a personal item?"Foreman says, "Business money doesn't feel as real as personal money.You need to use the same set of standards when spending business moneyas you do when spending your personal money."Tip No. 18: Questionsto ask yourself before buying, according to Horowitz:Is this the best use of my money? How often am I going to use it? Is buying this the best way to meetmy needs? Are there other people I can sharethe purchase with? Does the product/brand have a goodreputation? Is it well-made?Tip No. 19: Whencomparing two sale items, look at the original list prices of yourchoices, says Horowitz. "If something was more expensiveoriginally and on clearance that would be a better deal than a lowerpriced product that was lower priced to begin with. The quality of theobject with the higher original list price will often be superior."Tip No. 20: Use yourhome phone instead of a business phone if you can, suggestsForeman. This is much less expensive than getting a business line. Tip No. 21: Knowwhen to buy a product vs. a service (i.e., an answeringmachine vs. voice-mail service.) The product may have a higher one-timecost but be less expensive in the long run. However, the service mayactually offer more value than the product. Horowitz suggests that whenit's something that will soon need to be upgraded or will becomeobsolete, it makes sense to pay for a service or to lease the item.When it is something relatively stable, it's usually wise to buy theone-time product. Tip No. 22: Don'tforget all the costs of owning when comparing prices. Amore expensive printer may use less expensive ink cartridges. Horowitzkept the costs in mind when he chose Internet fax service over a faxmachine. "I've never been sorry. There's no cost of purchase, noinconvenience of the machine, no junk faxes, no monthly phone-line fee."Tip No. 23: Don'toverestimate the difficulty of planning and budgeting for your homeoffice expenses. "You don't have to have an MBA tounderstand it," Foreman says. "We can all get this business concept."Tip No. 24: Makecompromises. Horowitz used to buy 100-percent recycledpaper but lost his supplier. Now the cheapest he can find costs $75 percarton, while nonrecycled paper can be found for $25. So he settled ona 30-percent recycled brand that is less expensive than the 100-percentrecycled but more expensive than nonrecycled. Tip No. 25:Sometimes paying more makes sense, says Horowitz. "I'venever been sorry I went from $20 a month for dial-up Internet serviceto $50 a month for broadband because it saves me 15 to 20 hours of timeeach month." But while he could save $30 a month on his phone bill byusing Voice Over Internet Protocol, or VOIP, he's not yet convinced thequality is good enough for his needs.Tip No. 26: Goonline. Craigslist.com, freecycle.org and other Web sitesallow local people to place free ads giving away things they no longerneed, says Foreman.Tip No. 27: Buy onlywhat is strictly necessary. "I got the desk I'm sittingat today free," says Foreman. "My wife worked for an accountingbusiness and they were going to throw it away. I'm still sitting at it10 years later. I could afford to replace it but don't need to."Tip No. 28: Purchaseequipment used. "You can buy a 1- to 3-year-old computerused. That should be as much computing power as most people need, andyou'll save a lot of money," says Horowitz. Tip No. 29: Orderwhat you need when you need it,recommends Horowitz. "Don't keep enormous amounts of inventory. Ittakes up space and becomes obsolete. You could use that space and moneyelsewhere." He tells the story of buying resume paper for the resumebusiness he used to have: "I stocked up because the style was beingdiscontinued. But then I stopped doing resumes for people. Now I have alifetime supply of the stuff."Bankrate.comis the Web's leading aggregator of information on financial productsincluding mortgages, credit cards, new and used automobile loans, moneymarket accounts, certificates of deposit, checking and ATM fees, homeequity loans and online banking fees. Visit Bankrate.comto get the tools and information that can help you make the bestfinancial decisions.
Source: Money & Work
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