Have you ever joined a gym, go 5 times and never show up again?
The kicker is you probably signed a year-long contract which means you paid a lot of money for nothing.
I’ve done this more than once.
Many people fall into the trap.
If it weren’t for this, gyms wouldn’t make money (I jest, but no doubt it helps their bottom line).
If you’ve done this, you probably don’t like to think about it. It’s not fun facing such waste… plus the fact we totally failed on good intentions to improve our health.
As an aside, I’m not suggesting gym memberships are bad. They’re a good deal if you use them. I go regularly these days and am happy to pay. In the past, there have been chunks of time I paid for memberships I never used.
Wasted gym memberships aren’t my only past financial follies.
I’ve squandered thousands of dollars in my business.
I’m talking about paying month after month for software and services that I don’t use or don’t use as much as I should. I kept paying because I told myself I’d get around to using it, but I never did.
I’m also talking about growing staff to unnecessary levels. This is a result of kneejerk reactions to crazy project ideas.
Here’s how hiring too many people happens:
I read about some tactic or strategy. Or maybe I dream one up. Instead of thinking it through, I slam a napkin plan together and before I know it I’ve hired one or two people to do it.
While some kneejerk napkin plan ideas have been a success, in many cases it just cost me money and time. At this stage, I need to focus on what’s working in a streamlined manner which does not require all that much paid help.
How I Slashed My Expenses
I’ve known for some time that I needed to review every single business expense. However, I detest going through expenses and pretty much everything accounting-related. I should say, used to detest.
Once I got started early last week, it didn’t take long to get excited. I quickly realized that every $100 per month saved was $1,200 per year earned. That’s pretty exciting.
This is what I did:
I reviewed Amex and Paypal statements for the last 3 months. I put each expense in a spreadsheet with the associated cost. One by one I either canceled, kept as-is or reduced.
Don’t forget to check your recurring subscriptions in Paypal. There may be a few to delete there too.
I didn’t ditch every expense. That’s impossible. However, I did look at decreasing costs for necessary expenses such as hosting and email marketing software (AWeber).
I forced myself to ask: can I still grow/run my business without such and such expense? For many expenses, the answer was yes. While some software made my life a bit easier, in many cases, the convenience wasn’t worth cost, especially since I didn’t use much of it as frequently as I should.
By the time the smoke cleared (this morning), I had reduced my expenses significantly including hosting costs, content costs, domain renewals, VA costs and definitely software costs.
Here’s a laundry list of expenses to review
If you’ve been blogging for any amount of time, you probably have a few domains you registered and renew every year that doesn’t make any money. You’re saving them for a rainy day.
While sometimes it’s worth keeping domains for a rainy day, ask yourself if you really need the domain. If you have 50 extra domains kicking around, that’s approximately $1,000 per year in renewal costs.
Recurring software (monthly AND annual recurring software):
Do you really need that social media posting software? I’m not saying you don’t but look into it. Consider:
- How often do you post to social media? Would manually posting be just as effective (it really doesn’t take long)?
- How much traffic and money do you generate from posting to social media? If you’re generating $3,000 per month from social media, investing in $50/month software is probably worth it. If you’re barely making $20 per month from social media, it seems to me paying for software is a waste of money.
Other subscription software to assess includes:
- WP theme memberships,
- plugin subscriptions,
- keyword research subscriptions,
- productivity subscriptions
… the list goes on and on. Pull out your Paypal statements and/or credit card statements for a few months to see what you’re paying for. You might be surprised. I was.
Please note – I’m not suggesting you hurt your business by eliminating necessary expenses. The key here is to simply get rid of waste that may have piled up over the months or years.
Get the right hosting plan
I’m going to save big now because I had too small of a plan which resulted in paying for monthly overages. Overages add up in cost very quickly. I bumped my plan up and should be good now.
Lower cost provider?
Could you use a cheaper hosting company that will work for you. Or perhaps a cheaper plan?
While you don’t want to compromise performance, take a look at your hosting needs and what you’re paying for. You may be able to save some money.
Unused hosting plans
During this one week expense audit, I discovered that I was actually paying for a couple of small shared hosting plans that I wasn’t using at all. Somewhere along the way I had moved away from the small shared plans into larger plans but forgot to dump the older plans. These alone were costing about $140 per year. Talk about a total waste.
While it was a huge hassle locating all my domain accounts and various hosting accounts, at the end of the day, the cost savings will be huge. I turned off auto-renewal on a handful of domains and canceled a few small unused hosting plans.
More accurate word counts
I’ve also come up with a plan to dramatically save on content costs. To date, when I place content orders, I set out word counts for each article. The problem is I really don’t know how many words the topics need. In fact, I budgeted for high word counts for each article just to be safe.
I’m changing this process. Fortunately, my main content provider is good with my new approach.
What I’m now doing is having my main content service to only write enough that thoroughly covers the topics. I pay for a set number of words up front and when the budget is used up, I simply pay up again to keep the content flowing.
While there may be instances that an article may require more words than I typically paid for, I’m very certain most articles will require about one-half of what I’ve been paying for.
Order less, update more
Another way to save on content is to slow down on new orders and put more time into updating existing content. I’m doing this as well. It’s a proven strategy that may be a much better use of your time and resources.
Focus on content that has the best chance of earning a good return
This was not a problem for me because I’ve honed my keyword research process to the point that I have a pretty good idea what works and what doesn’t.
However, maybe you order some content that never does well. If so, you might want to reassess the topics you cover and focus on ordering content that performs well.
It doesn’t take long to have a big staff. I carefully looked at the workflow and determined I did not need as many VAs as I had on board. While my output may decrease a little, the savings will be significant. I had too many people on board and while they were good at their jobs, I sometimes found I was coming up with make-work projects to keep them on board… which is a sign of massive waste.
In fact, I had one person employed to manage everyone else. With reduced staff, I no longer need to pay anyone to manage.
The main reason I ended up overstaffed was a result of some big projects I undertook over the last 1.5 years. Those projects are done and so I don’t need as many people on board any longer.
Email marketing software
I had AWeber delete tens of thousands of email subscribers who had not opened an email in 6 months. I also deleted a few thousand subscribers in dead lists that I don’t use.
This alone will save me hundreds of dollars per month.
If you pay for email marketing software, you could save a lot of money by deleting subscribers who haven’t open an email for 6 months. You also can save money by routinely deleting unsubscribes. Yes, in AWeber, you pay for people who have unsubscribed. You need to delete them in order to remove that cost.
While it’s nice to say you have 55,000 subscribers, if a huge chunk of them never open an email, why pay for them? I’d rather save $250 per month with a 30,000 subscriber list.
Bookkeeping costs and software
I’ve squandered way too much money on accounting costs over the years. I’m a train wreck in this department. I do very little bookkeeping throughout the year. When tax time comes, I email my accountant multiple spreadsheets with thousands of entries. I pay their bookkeepers something like $89 per hour to organize it all for the tax filing preparation.
This year I got Quickbooks and am setting it up so that bookkeeping is done regularly which will save a few thousand dollars on accounting fees each year. Yes, I see the irony in subscribing to Quickbooks to save money, but I’m pretty sure as long as I use it, I’ll save.
As an aside, with far fewer monthly expenses hitting the books, there will be far fewer monthly accounting entries which will save time and money as well.
Fortunately, my legal fees never got out of control. I pay a lawyer $350 each year to file the few forms necessary for my company. I could prepare the forms and file them myself, and I used to do so, except I’m not very good with remembering annual dates. Even with a calendar, my problem is the reminder comes up, I push it aside for later and never end up doing it.
A practicing lawyer is set up to take care of all this properly. Losing a registered company is akin to selling it which could have catastrophic tax consequences. Therefore, the risk is way too high for me to be responsible for this stuff.
$350 per year in legal fees is well worth it.
Unlike me, perhaps your legal costs have ballooned out of control. This can easily happen. If so, it’s worth reviewing all the legal work you’re having done or how much your lawyer charges.
My most profitable week ever
I’ve been neck deep in cutting costs for one full week. I’m pretty much done so it’s back to business as usual.
It took longer than I expected, but it involved some big decisions as well as a lot of phone calls, locating accounts and live chats. I also set out multiple budget scenarios to help decide what I should keep and what I should get rid of.
The end result is I’ve dramatically cut my annual expenses in 1 week. In fact, it will prove to have been the most profitable week of my life when the annual savings are tallied up.
For far too long I’ve been cavalier about expenses, but now I see that every dollar saved is a dollar earned. Of course, I knew that before, but I never really took the time to appreciate it. I was so focused on growth.
If you suspect you’re spending money unnecessarily, take a day or a few days to see what expenses you can cut. Once you start, if you find waste, you’ll really appreciate the resulting high profits with not a whole lot of work.