Small business & Freelancing: you can still run a business with minimal costs

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Whether you’re a web designer, like me, a math tutor or a virtual assistant, running a home based business should not cost you an arm and a leg.

Sure, some might make snide comments about you working from your kitchen table and not from a fancy office, but at the end of the day, what you provide your client is the most important thing: do you offer them a good service at a decent price?

Then it’s really irrelevant to them if you’re working from a big office or your basement.

A little trip down memory lane …

It was 2002. I was a radio DJ at a local station, the pay was OK, but I still couldn’t afford a computer at home, not to mention having internet access was a dream (not that it wasn’t available, but it would cost quite a lot). The radio station, as you can imagine, had them both, so, after my show was over, I’d stay for 3-4 more hours to read about how to run websites, how to do HTML etc.work-from-home-1

After almost an year since being a webmaster (I had a site online), my boyfriend then (husband now) decided to make an upgrade for his home computer, so he gave me the old one. It was clearly outdated compared to what was on the market, but for the first time in my ‘career’, I’d be able to work/learn from home and not have to stay more at the station. Was also able to secure a cheap dial-up internet access and I had to go online for few minutes, download the pages/articles to study and then get back offline, so that I don’t have to sell my left kidney to pay the bills.

It might seem ludicrous for someone who’s starting in 2013, with all the gadgets and perks, but even such a humble beginnings didn’t steer me away from my passion. I’d spend many hours/day (not to mention entire weekends and holidays) tweaking my sites (had 3 in 2004), creating designs, even taking on my first clients.

The computer was clearly not doing a great job (let’s remember my husband changed it for a better one), but it was still enough for what I needed to do: learn, work and test my skills. In 2006 I decided to get into debt over a new laptop (was already living half a week at BF’s, half a week at home and didn’t want to stop my work/learning, not to mention I’m not the one to share a computer, as much as he was willing to let me work on his), which allowed me to work on more complex tasks and didn’t freeze if I’d open 2 browser pages.

Over the years, especially while traveling, I have worked on a kitchen table, on a sofa, at my desk at home, on an improvised desk etc. I never cared that I don’t have a ‘real’ setting in most of the cases, I never cared about the fact there are ‘cooler’ web designers who own agencies in the city or at least an office, I never cared if they’d make fun of me for being too poor to afford an office.

An office doesn’t make a business successful

We have some family friends who run a similar business as I do. They’re not into web design, but graphic design, which theoretically doesn’t need such huge investments either. I mean their work is basically done on a computer, just as in my case, then they have to go to a local printing shop for their clients advertising materials. Just as in my case, they can meet said clients at a coffee shop or at the clients’ office (many of my clients love the idea of me coming to them, since it allows them to lose as little time as possible).

Yet, from the moment they started out, working from home was below their standards, so they rented a small basement office. They couldn’t afford anything bigger or more ‘luxurious’, but even the rent for this was quite big for their regular earnings. Once you have an office, you also need a secretary at least, so they had to pay someone to work on this position. Over the years they had 2 other setbacks: a flood and having their 2 computers stolen from there.

Even if they had some good months (although business for local designers is not going that well these years), having to pay rent/utilities (for the space), plus a salary, plus replacing the computers and recovering from the flood, all put a huge strain on their not so great income. Last time we talked, they were seriously behind with their company taxes, were in debt and relying way too much on their mother’s pension.

At the same time, working from home meant ZERO office expenses for me. I eat at home, don’t need to dress ‘fancy’ and don’t have any transportation costs (it’s clearly free to go from our bedroom to the ‘office’). I don’t have anyone hired, I’m the secretary, the maid and the CEO. Another reason for both me and husband to not consider an office (even if we could easily afford the costs) is that we don’t want to be ‘tied’ to it. We like to travel and, if we want to leave the country for 2 or 6 months (which we already did and not only once), we don’t want any stress regarding employees or the space we rent.

As you can guess, I received enough ‘abuse’ for this setting, for not being a ‘real business’, but at the end of the day, what matters to me and my clients is the service I provide. My small overhead allows me to earn a decent living, my clients don’t have to pay more just so that I feel like a ‘real’ businesswoman, we’re ‘nimble and quick’ when it comes to traveling or working from the other side of the world. All I need to take with me is the laptop and my brain (which is fortunately attached to my body, so I can’t leave it at home, no matter how forgetful I tend to be). Getting internet access now is really not a problem.

Decide what’s important FOR YOU, not what others think is cool

When starting working from home, you’ll probably receive a lot of comments. You’ll be mocked at for not having ‘a real job’, you’ll be mocked for ‘working in your pajamas’ (who’s working in their pajamas anyway?), for not having an office etc. If you are pleased with the setting and your services don’t suffer from it, just mind your own business. One of the greatest things you can do for your business, is to keep costs down and you’re clearly doing so. Everything that’s left after the taxes and your very small expenses is ‘your’ money, which can be saved or invested. Your call.

Even if you do decide to take on a space, don’t go for something fancy. Sure, we’d all love to have some huge offices, like we see in the movies, but is it really worth it? If you can do a great job from a small basement office or a rented space that costs very little, just focus on your goal: making more money with little expenses.

Don’t ever go overboard with spending

One of the things I clearly did wrong, after setting myself as a local LLC, was to go and buy myself a fancy printer (scanner / phone / fax / printer – all in one). It cost A LOT compared to my salary and the earnings my business was bringing in. Was it worth the price? No. I didn’t have to send faxes (my communication is mainly by email / phone / skype), I don’t think I used the scan feature, just printed few pages, which I could have easily done at the radio station or a local printing shop.

I was clearly overspending, lulled by the ‘coolness’ of being registered as a ‘business’. The printer collected dust for 5 years on my desk and is only now being used by me and husband. And I would have probably thrown it away, if I didn’t remember the steep price, so I wanted to have it work at least now, so that my money wasn’t in vain. If I was smarter, I’d have not purchased it back then (it was useless), but get a similar one now, when the prices are way lower for these options and my income is clearly superior to what I used to make in 2007.

So, just because you feel like a businessman, don’t start overspending. Buy only what you need, when you need it. Remember: keep the costs down.

How will your clients feel about it?

This is one of the reasons some designers start spending money on fancy offices, they fear the clients won’t be impressed with their work, unless they see how wonderful ‘settings’ the designers have. I have worked with hundreds of clients over all these years and NO ONE cared about my office. What they want to see is my portfolio, my credentials (if we were working on freelancing sites), testimonials etc. We’d discuss about what I can do for their business, what services I can provide, my rates. None asked me to show them pics of my office or even bothered ask me if I’m working from home, from abroad or anything.

When it comes to local clients, we always met at a coffee shop or their office. Both solutions worked nicely for them and none had an issue with us not meeting at my office. Meeting me at their own workplace helped clients feel more secure and ‘at home’, while meeting at the coffee shop allowed them to relax a little and enjoy the setting, while also discussing a good deal.

I don’t skimp on quality, I’m always keeping up with the trends, I do have a very good laptop and invest constantly in my education, so I do provide the kind of service I’d like to get if I was in my clients’ shoes. Keeping my costs down allowed me to play the ‘price game’, when times were rough, being able to still secure some income. What I haven’t spent on keeping up appearances, I was able to reinvest in my business, save and support our family.

Sure, there’s the occasional ‘funny’ man who’ll consider I’m not really working, if I’m doing it from my home based office, but I never really bothered with what others think. My main focus is to keep my clients pleased, costs down and build some financial stability for our young family. All the rest is just chit-chat.

14 COMMENTS

  1. As a freelancer, I ghost write every now and then. I am confident that yes, I do provide good service. Decent price? I feel that I am underpricing but I don’t know how to find out what is the appropriate rate, especially coming from where I am. 🙁

    • Well, I think most of us have this problem. I’d say slowly increase rates and see how it works. It’s normal to keep on increasing them, as your experience/portfolio grow.

  2. I think the main idea when opening up a business of your own is to earn as much as possible, and that means keeping the costs down. I still remember how my dad transformed our apartment’s hallway into a showroom, where clients came and admired the wood flooring samples he was selling at the time. He only decided to rent a small space when the business started to grow and there was not enough space to bring in and show clients samples of.. doors!
    I don’t think anyone complained my dad brought them into an apartment and not into a fancy office.

    • He did a great thing by keeping his costs down until the business needed more space. I’m sure the customers cared more about the merchandise than his apartment 😀

  3. LOVE this, Dojo! We too, have a very modest and “archaic” home office. But service is what’s most important to me, and if I can provide great service to my clients, who cares and who will know? You’re totally on the right track here, my friend.

  4. You stated what I was thinking while reading your article, “what matters to me and my clients is the service I provide.” It’s even better for you that your overhead is low. You can charge less than people who have to pay office rent every month.

    • You bet. Not paying thousands each month to have employees, rent and all the jazz allows me to keep my work to a more ‘bearable’ stage (I don’t really work 12 hours/day anyway) and it pays enough for our family. My dream is not to have a huge business, my dream is to be able to take care of my kid and still be able to put some bread on the table

  5. I have never seen a business with the same low start up costs as starting an online business. You really don’t even need a computer, just a local library card and enough money to cover your hosting costs.

    I know I’m going to regret this since I’m probably jinxing myself… but I’ve been using the same laptop since 2008 and it’s still chugging along! I’ve been tempted a few times to upgrade but when I think about it I really don’t need a new one!

    Great post.

  6. In my case, as a blogger, there is even less need for an office as there is rarely a need for direct contact with customers. I also thought about renting a place (just to separate the office from the house and hopefully minimize work hours) but it doesn’t really make sense to spend money on that right now. Plus, I’m closer to family.

    I have also purchased a cool printer soon after starting my business, being 100% sure that I was going to use it and now it lies in a corner of my room using valuable space. Glad I stopped there though 🙂

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