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July 7, 2022

How to make your business more cost effective in 2022

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  1. Review your subscriptions
  2. Evaluate your phone and internet providers
  3. Don’t expense for the sake of it
  4. Think about where you’re working from
  5. Sell off excess equipment

The UK has been experiencing a cost of living crisis since the end of 2021, with high inflation outstripping wage and benefit increases on top of recent tax increases too. If you’re a freelancer you don’t need me to tell you this, as you’re probably already experiencing the effects of the crisis, with very few contractors offering to up their rates in light of the financial struggles many people are facing.

Inflation in the UK then reached a 40-year high in April 2022 and, as a freelancer, that essentially means that you’re earning less money for doing the same work, unless you’ve been able to increase your rates, which most people haven’t. 

The UK government has offered limited support for self-employed people by reducing national insurance for some lower-income self-employed people. But this only affects around 500,000 workers and, according to IPSE’s 2021 Self-Employed Landscape Report there are around 4.1  million people in the UK who work for themselves.

All of this comes after the Coronavirus pandemic, which hit freelancers particularly hard. A survey by the Centre for Economic Performance found that just under half (46%) of self-employed workers report having had trouble paying for basic expenses in January 2021.

Many freelancers are therefore looking for ways to cut back on their spends and especially on business expenses right now. But thankfully, there are plenty of ways to make your business more cost-effective, many of which won’t have too much of an effect on the way you work or change your day to day life.

We asked Alan Donegan – the co-founder of Rebel Finance School, which helps small business owners master their finances – to share five tips on how you can cut back on costs without making any huge sacrifices.

Review your subscriptions

Remember that 30 day free trial that you keep forgetting to cancel and have been paying for for three months? Now is a very good time to figure out what it is you need to do to cancel that. “As businesses we sign up to services like Canva, Spotify, web hosting, Adobe and more that charge us monthly,” says Donegan. “Sometimes those subscriptions run for years in the background without noticing.”

While you might think some of these subscriptions are absolutely essential to your business, there’s a good chance you’re not using them enough to get your money’s worth. Go through each of your subscriptions and think about how much you’ve used them in the last three months and if there’s any cheap or free alternative options. You could also consider sharing subscriptions with your friends, especially if you have friends within your industry, to help lower the costs.

Donegan recommends going onto the “regular payments” section of your banking app and figuring out which subscriptions you can afford to cancel, and try and end them there and then if you can rather than letting that task fall to the bottom of your to-do-list so you inevitably end up paying for another month.

Evaluate your phone and internet providers

“Now is the time to check the comparison sites and make sure you aren’t overpaying for your internet and mobile phone bills,” Donegan suggests. Sites like Uswitch and MoneySupermarket will let you compare deals and knocking money off monthly bills like these can make a big difference to your financial health, particularly for freelancers, as you probably need a phone contract with a decent amount of data and strong Wifi.

It’s a task no one really wants to do but you’ll feel so much better for taking a few hours out of your day and doing it.

Don’t expense for the sake of it

Freelancers often talk about items being “basically free” or significantly cheaper if they’re expensable, but this might have led you to build bad habits when it comes to regular or one-off purchases for your business. “Just because you can claim something as a taxable expense doesn’t mean you should spend it,” Donegan says.

Even if what you’re buying will be 20% cheaper after expensing it, it’s still 80% more than you were going to spend in the first place. “Instead of looking for what you can expense, look for what you can avoid spending altogether,” Donegan advises, adding that many people develop the mindset that it’s okay to pay for parking or buy coffees every day because they’re expensable, even when there are far cheaper options available.

Think about where you’re working from

A common misconception about freelancers is that they only work from home, but actually, more and more self-employed people are opting to spend their days in co-working spaces or coffee shops. Getting out of the house can be great for your mental health and your productivity so if that’s what works for you, don’t abandon it altogether. TBut think about if there’s more affordable ways you can switch up your working environment. Is there a cheaper co-working space you could move to, or one that doesn’t require you to use public transport to get there? Could you work from a friend’s house who also works from home and is looking for company one afternoon a week rather than going to a coffee shop?

Donegan suggests that you, “take advantage of some of the different offers out there.” He uses the example of Pret-a-Manger, who offer a £25 month membership (with the first month at half that price) that you can redeem on up to five drinks per day, meaning you can also use their cafe to work in. We know it’s not the most glamorous option, but there’s a Pret on every corner of London and they’re spread out right across the UK, so it means you’ll always have a place to work wherever you are.

Sell off excess equipment

If your job requires a lot of equipment – for example, if you’re a freelance photographer – spend a day figuring out if you have any old equipment you don’t need anymore. Even if you don’t think your job requires a lot of tech, you might have an old iPhone, laptop or monitor hanging around that you could sell on somewhere like Facebook Marketplace or GumTree. “You can always buy the equipment back from a similar site if you end up needing it at a later date,” Donegan advises.

Spending so much time thinking about money and finances might not be what you had in mind when you went freelance, especially if you work in a creative role. But the money saving skills you might have to learn during this period will be invaluable to your business in the long term and making them a habit could save you money and time in the future. After all, financial wellbeing and education, whether it’s personal or professional, isn’t something that happens overnight and it often takes difficult situations for us to effectively learn it.

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