How I Plan to Cut My Business Expenses in Half This Year

How I Plan to Cut My Business Expenses in Half This Year

Since quitting my job in 2015, I’ve intentionally chosen not to write about my business too much. It’s not the topic I want to be known for, and there are bloggers who do a much better job of it already. However, my good friend Kara who runs bravely keeps reminding me that being transparent and sharing the details (including the numbers) has the power to help other women who want to start their own businesses. Being transparent is already part of my M.O., and my numbers have never been off limits. So, if there’s a chance that sharing this information could help even one person, I think I’ll publish my numbers once a year.

It probably makes the most sense to show you my overall numbers at the end of each year, so that will be the plan. However, since I’ve never published this before, I’ll start by sharing some of last year’s numbers so we have something to compare this year’s to. Last week, I mentioned that one of my two new financial goals is to cut back on my expenses and run a lean business this year; that goal only exists because I was not happy with how much I spent in 2016. You might thinking running an online business would be cheap, but somehow I managed to spend exactly $14,000 on mine. Here’s a quick breakdown of where that total came from:

  • Advertising (domains, email marketing, ads, etc.): $1,987
  • PO Box (required for email marketing): $164
  • Printing and Postage (for Mindful Budgeting 2017 Planners): $1,696
  • Equipment (new computer and external hard-drive): $1,857
  • Travel (flights, hotels, cabs, meals): $2,537
  • Education: $932
  • Contractors: $2,772
  • Accounting (FreshBooks and accountant): $777
  • Other Online Services (hosting, etc.): $1,278

Some of these numbers won’t change in 2017. I expect my advertising costs to remain the same. I need my PO Box. I would (figuratively) die without FreshBooks. And I love my hosting providers. In fact, if you’re curious which services I use to run my online business, here are the ones I pay for and would happily recommend to anyone:

While these costs won’t change, there are a handful of expenses I want to slash this year. In fact, I’ve drawn up a rough budget to spend only $7,000 on my business in 2017, which means I would have to cut my spending by 50%. Again, as I said last week, I’m not entirely sure this is doable, because I don’t know what the second half of the year is going to look like yet, but here is my plan…

Accounting Target for 2017: $320 (Save $457)

For the 2015 tax year, I hired an accountant to file my taxes for me. I had worked full-time for the first half of the year, then was self-employed for the second half, and I had an even longer list of expenses (and bigger box of receipts) to deal with. Hiring an accountant wasn’t an option – it was essential. I paid mine $475 and she was worth every penny. And I would have continued working with her, if she hadn’t changed the direction of her business and decided to stop filing taxes. Fortunately, I learned so much from her last year that I feel confident filing my own taxes this year (will cost $20). It helps that I kept meticulous records of my income and expenses in FreshBooks (I currently pay $215 USD/year).

Contractors Target for 2017: $1,200 (Save $1,572)

One of the things I do love about having my own business is being able to work with other like-minded business owners – and being able to support their work, by hiring them to help me with various projects. So far, I’ve worked with two amazing graphic designers, both of whom I will use again and again in the future. But last year, I hired them to do some work I wasn’t quite ready to share with the world. The work is done, I love it, and it will be shared in 2017! But I could have put those projects on hold until I was actually ready to release them (and saved me some money in the process). This year, I’m not going to start any design projects until I’m ready for them to go live.

Education Target for 2017: $0 (Save $932)

Last year, I spent $932 on a handful of courses to help me with my business, and I only completed one of them. Similar to how I used to buy too many books, I am now guilty of buying seats in too many courses. My education budget is on a shopping ban. It’s time to complete the ones I’ve already paid for.

Travel Target for 2017: $1,000 (Save $1,538)

This is one target that I’m not entirely sure I’ll be able to stick to, but here’s why I’ve set it to $1,000: I only plan on going to one conference this year (FinCon in Dallas). I could go to WDS, BinderCon, CPFC and more. Honestly, bloggers and writers could probably find at least one conference to go to every month of the year, and expense them all! However, I’ve decided to start looking at the return on investment (ROI) and know that FinCon is the best conference for me. I’ll likely be speaking this year (on behalf of Rockstar Finance) and doing all kinds of fun stuff with the team. So, that’s the one place you’ll be able to find me, friends! (And if you see me, please say hi!)

The only reason I could see this budget changing would be if/when I can convince a small group of writers in the money/minimalism space to go on a retreat. I’m thinking: 8-12 women come to BC, we rent a big house and talk shop for a few days. Interested? Email me and let’s talk (seriously).

Printing + Postage Target for 2017: $1,200 (Save $496)

Finally, last year I spent $1,696 printing planners and shipping them to people at no cost. Some went to family and friends, some went to bloggers, and I always keep some on-hand for special cases. I will never stop doing this, because it’s an easy way for me to give back to the people who support me, but I do want to try to lower my costs a bit this year. Again, I’m not entirely sure this will be doable, especially because I’m looking at some different printing options for the 2018 version of the planner. But this is my initial target, based on the facts I have today.

Altogether, I’m targeting to shave $4,995 off of last year’s spending + I spent close to $2,000 on equipment last year, which I won’t need to repeat this year. If I meet all of my targets, I would only spend around $7,000 on my business in 2017. Again, I can’t promise it’s doable, but it feels good to have some goals to work towards! And if you go back and look at the chart in my last post, you’ll see how quickly business expenses can eat into your income when you’re self-employed. This year, I’d like to keep a little more of my money in my pocket (and invest it in my future).

Before 2015, I didn’t know how much I was spending on my business. Thanks to tracking my expenses for the past two years, I am now acutely aware of how much everything costs, which has helped me answer the question of whether or not I’m happy with where my money has been going. If the answer is yes, I can carry on. But if it’s no, I can set new targets and try to work towards them. This exercise is no different from what any of us should be doing with our personal finances – business owners or not.

Are there any specific numbers you want to change/work towards this year?

  • Not exactly budget related, but more so a comment on your planner. I enjoy your planner but have a request for next year– could you add either a ribbon sewn in the top or an elastic band attached to back cover? It would be nice to have an attached bookmark. Otherwise I love the planner!

  • Thanks for being transparent about your expenses! I tend to be very frugal with my business, but I know it’s about time to start investing more into it and myself. It is hard to find that line of what is a true return on investment, so your comments are insightful!

    • I’m glad it was insightful, Rachel! If you feel it’s time, I’d suggest starting with the 1-2 things you think would help you the most. Some of the best investments I’ve made have been relatively inexpensive but have paid dividends of their own. :)

  • Have you considered making your planner into an app? I bought the first one but I stopped using it because I could never remember to take it with me (that’s not a slight on you or the planner that’s ALL on me!). I take my phone everywhere and I’m more likely to input into that. I just haven’t found another money app that does what your planner does.

    I get that if you did turn it into an app it would cost $$$ to do so. Seeing as you’re trying to cut your business expenses I totally understand if you didn’t.

    • I actually have thought about it, and have a friend who could help make the idea come to life! My concern is that it would become something I would continually need to pay to update, make changes to, etc. – and that’s not something I’m sure I can handle/afford. We’re going to discuss it this year, though!

  • This is a great goal. I think way too many people get caught up in the mindset that spending more on your business will automatically equate to more revenue. It’s not necessarily true and there is no press like free press! I am hoping to make my first trip to FinCon this year. This will likely be my biggest business expense of the year. If I see you, I’ll definitely say hello! And thanks for publishing the numbers. It helps people gauge their own expenses and progress.

    • Well, the truth is that some spending does lead to more revenue! But it’s also really easy to waste money on stuff you’ll never get a return on. I just want to make sure I question my business spending decisions before making them. And if you have any questions about FinCon, I’ve been 5 times and would be happy to answer them! :)

  • My goal for the year is to break even. I had a little pile of money set aside when I started to help cover the initial costs, but now all new expenses need to come out of income. I think it’s easy (especially when you don’t need a lot of income) to let work become an expensive hobby. =)

  • I appreciate you being so open with your business numbers. A lot of people, including myself, really value your opinion on business and money related matters. It’s good to know we don’t have to purchase every business related “thing” out there to be able to run your business. I’m still walking that blog/photography hobby-wanting to actually start a business line. I have been forcing myself not to buy any new photography equipment unless it’s something I truly need and will use on a regular basis. I’m also cutting back on CreativeLive courses because I have…three I haven’t finished going through yet. I can’t wait to hear about those “projects” you have coming out this year! :) I would love to come to BC for a retreat. Can I just hang out and take pictures? If only I wasn’t so far away!! LOL

  • Thank you so much for sharing, Cait! This is really helpful to those of us just starting out. It’s can be difficult to decide where to spend to receive the most value.

    Like you, I spent more than I planned on courses/education last year – and I haven’t completed one of the courses yet. It’s on queue – just slow. I’m not planning to buy any new courses in 2017 either (not that I don’t want to !).

    FinCon will likely be my biggest expense for the year. Hope to get the opportunity to see you there! :)

    • Let’s please make sure we meet at FinCon, Amanda! I don’t usually go to many sessions, just hang in the halls, etc. :)

  • I appreciate the share. I’m still operating on a shoe string but considering investing a pittance this year once hosting is covered. Any recommendation on the best investment if you had to choose one? I’m thinking the po box for an email list so far.

    • I wouldn’t say it’s been the “best” investment, but it’s definitely an essential one, haha. And it pays (get it? dad joke…) to have your privacy. I think FreshBooks has been the best investment for my finances, and paying designers to help with projects has been the best for my business/products.

    • Sweet! Yea, there are lots of cloud accounting options out there, but I’m a big fan of FB. I send invoices from it, track expenses, etc. and love all the different reports it gives you. Documenting everything once/month made entering the numbers at tax time super simple!

  • Im gonna try and make some inroads into out debit. We are a one wage family and really struggle to make ends meet. However we are both quite crafty and hope to be able to sell some of our work this year and ( hopefully) this can go towards paying down the credit cards. This will also help our monthly budget as they payments will go down. We want to sell the house and move to New Zealand in the next few years ( thats where Im originally from), but have lots of work to do on the house to make it saleable. Husband can do the work, but we just need to finance it, not easy on one, quite low wage. Lots of goal and ambition, just need to finance them. However, Im determined we are going to make some headway this year.

    • It sounds like you know exactly what you want, which is the best place to start – even if your income is low. Without goals, we don’t have anything to work towards. I wish you luck this year!

  • I have a huge list of dream software that I wish I could justify paying for! The biggest shock for me has been the cost of postage for my side business. That can really cut into your profits, especially if you’re shipping internationally.

  • I just emailed you about the retreat, it sounds like an amazing idea. I know you don’t talk too much about your business but I’m looking forward to see how you manage to reach your business budget goals.

    I’ve been lucky to work for a company that lets me ship things at a discount thanks to our deals with Canada Post, I’ll be going from shipping things for $8 to $20, not excited about that haha.

  • Wow, cutting the expenses in half is really something to look for. I know how tough can be to grow an online business, but so rewarding! Even if sometimes it means to invest more than you initially planned.
    I like your Shopping Ban idea, by the way. Even if it’s a bit draconian. :-)

  • Hi Cait — thanks so much for sharing these numbers from your business so transparently. I’m totally on board with you that cutting business expenses is one of the easiest ways to increase profitability! (I wrote for YNAB about how that really helped me my first year in business My online coaching business has similar number so it was great to be able to compare with you. Last year I cut my education budget for similar reasons that you cited for the year to come — being enthusiastic about courses but then needing to finish them! Growing my skills and expertise is really important to me, but there are so many other ways to learn on a budget, starting with library audiobooks and podcasts. Thanks for the inspiration to take another look at my own 2016 expenses and create a goal for 2017.

  • I think in this blogging industry, people love transparency. It gives them something to relate to and they realize that you’re a real person behind the blog. The retreat is SUCH a great idea! For us Aussies, I’ve heard of a few groups of women who go to Bali on retreat and really empower each other and talk business. It’s definitely on my bucket list to go to one of those, and Fincon!

  • I have heard so many great things about FinCon. I am curious to check it out in 2018. I hope I learn a lot. Thanks for sharing your links for web hosting. They were helpful

  • I’m also guilty of being a course junkie and think I should also go on a shopping ban. I’ve spent more money on courses than I care to admit to and have yet to complete most of them. I am going to trim my expenses this year, but I think I may increase my advertising dollars. Thanks for the post!

  • I am in Real Estate and as such need to know my numbers, have a business plan and a goal of 30% profit. That said I am only now learning to hold my money accountable. I appreciate your transparency here. I had my head in the sand for years over my biz expenses and no longer can afford to live like that. SO…with the help of my accountant I am implementing budget allocations for each expense (some are Cost of Sales and they are variable) to make sure I am seeing an ROI (return on expense). I slashed non-producers or non-essentials 4th qtr 2016 and am already reaping the rewards.
    Keep on sharing!

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