Self-employed during Depression 2.0: 6 ways to cut costs

We little guys struggle here amidst a tough economy just as much as the big guys. It’s time to look at our spending habits (if you haven’t already) and determine how we can cut costs and still get things done (whatever that means to your business).

1. Hardware – Save the earth and save some cash by purchasing second-hand computer bits. My favorite place to shop is Weird Stuff in Sunnyvale (they do ship some stuff). I’d be willing to bet there is a place like Weird Stuff in your area or in your nearest Metropolitan area. Especially now with so many companies going out of business there is a lot more selection and hardware that is only a generation or so behind. We’ve purchased at least a dozen servers at Weird Stuff and optimized them ourselves with bits we found at Weird Stuff and online. Solid machines at a budget price! Still going strong.

2. Office Space – If you need to work away from home due to the distractions of daily life then consider sharing an office with someone else. Office share can be beneficial in a few ways. Running our own business can be isolating and having someone to share ideas with or just split the cost on office sundries can help us feel a bit more connected to the outside world. Sharing an office also reduces overall cost. Look on craigslist.org or in local newspaper ads under real estate or rental. Have an office already and struggling to pay the monthly rent? Consider extending use of your office for a few hours a week to those who work-at-home so they can meet with clients in a professional setting.

3. Business Cards – one word – VistaPrint. I don’t hand out very many business cards these days because most of my dealings are via internet or smart phone. That said, it is essential for you, as a business owner, to carry some sort of contact information to hand to someone who may not be as tech-savvy. VistaPrint is inexpensive but I’ve found the quality is excellent. Don’t get fancy with your cards, save the money for online advertising.

4. Great customer service – Keeping clients happy is the most cost-effective way to promote your business. They say “word-of-mouth” is cheap but in all honesty you have to work hard to generate that buzz you need to elevate your business in the minds of your clients. A happy customer will tell one person and unhappy customer will tell ten people. Look at ways you can improve customer service (make an extra phone call, respond to email quickly or just make sure your customer knows that you care)

5. Start a cooperative – Do you know other business owners who are struggling? Can you get together and share costs and leads? Although cooperatives have been around for years there is a renewed interest in this business model. Depending on how the cooperative is setup they can share advertising costs, marketing costs and the cost of doing business on a daily basis. Not only does this reduce stress on the individual owners but it also encourages some really interesting collaboration.

6. Use Open Source – Do you really need that $2000.00 Adobe package? Shelling out another $300 to upgrade to the newest Windows OS? Try Open Source and you’ll see that you can still get the job done and save yourself $100’s a year in software costs. Don’t know of an Open Source alternative to your favorite program? Ask around, there are 1000’s of applications out there free to use that will meet your needs. Here is a great site to get started Open Source Alternatives. Take a look at distrowatch for the 100’s of linux distros currently available, find one that’ll meet your daily business needs. You can try them out using either VMWare or VirtualBox (I personally prefer VirtualBox). See my post about the Top five Open Source projects for daily use and the one I wrote about VirtualBox . Think outside the box and you can improve your small business chance at success.

Small business really took a hit when the economy tanked but that doesn’t mean it needs to stay down. Take a look at your current costs and you can find ways to weed out the deadwood and keep your business alive.

Please add your own suggestions for cost-cutting in your small business.