My first cost-cutting measure is a big one, because I’m looking to free up a significant amount of cash in one fell swoop, and the timing is convenient. My lease is up in a few short weeks, and so I’m already on the lookout for cheaper accommodation. I live in downtown Toronto, and my place is bigger than one person needs because I wanted to have enough space for a home office. My rent is accordingly quite expensive.

Luckily, working from home doesn’t necessarily mean working from home all of the time, so this time around I’m willing to make concessions regarding space (and location) in the interest of saving significantly in terms of my monthly rent. Instead of a one-bedroom-plus-den, which I have now, I’ll be looking for a one-bedroom place, which in this market might amount to as much as $700 in savings, depending on where I end up relocating.

To make up for the lost space, I plan on spending much more time working away from home. I have a three-part approach to accomplishing this, which should ensure that my routine stays varied enough to remain interesting, and has some built-in redundancy to ensure I always have somewhere to go to work that isn’t my own apartment.

Coworking/External Office Space

The first and primary part of my plan is to use a largish portion of the money I save in rent to pay for a membership at a newly opened coworking venture here in the city. It’s called Camaraderie, and it’s conveniently located relatively close to the area I’m looking to move to. Membership fees are $300 per month, which guarantees you a spot during working hours, including free Wi-Fi and hot beverages.

It’s a deal that can’t be matched by renting office space alone in the downtown area, but if you live somewhere that isn’t a major metropolitan area and that doesn’t have a local coworking space, try looking around for office space rentals, and see if they might not be cheaper than maintaining the larger place you’re using now as your living/work space. You might be surprised at how much money you can save this way. Even the savings represented by being able to choose a lower-cost Internet plan for home and savings on tea and coffee spend are significant.

Museum/Gallery/Library Memberships

The second part of my office/house separation plan involves simply maintaining the library, museum and other public space memberships I already have. Library cards are free in most cases (or at least they are here in Canada) as long as you can prove residence, and museum and gallery annual memberships generally aren’t that expensive.

It’s like having coworking space, except you’ll often be the only one working and it’s an interesting environment. There might not be coffee immediately available, though, which is why step three is a great old stand-by.

Starbucks/Coffee Shop

Never underestimate this old time-tested web working buddy. The coffee shop will save your sanity time and time again. If you’re in a dense urban area or have access to a car, this one should be the easiest of the three steps to get a handle on. My advice is to find an independent place with low turnover, because you’ll get the familiarity benefits of an office setting without all the downside of an actual office.

All told, it looks like I might be able to shave between $300 and $400 a month off of my budget, all by accepting a move to a slightly smaller space and adding some coworking to my routine, something I’ve been hoping to do more of anyway; not a bad cost-cutting measure by any means.

Have to tried downsizing your home office to cut costs? How did it work out?

It’s important to be methodical in order to cut costs effectively. Here are six strategies we can learn from companies that are tightening their belts:

Look at the facts and numbers when faced with a decision. It’s easy to jump to conclusions and make emotional decisions when you think your business is in danger. Most people seem to have an instinctive drive to be ruthless with their cost-cutting. In the corporate world, the basic knee-jerk reaction seems to be laying off employees. Whatever your instincts tell you, this is hardly the time for an uneducated approach.

Review your financial and sales records. If you have your own blog or web site, study its site stats. Check out the other metrics you have. If you’re not measuring anything in your business, now is as good time to start: you need these figures to base your decisions on.

Make your schedule as effective as possible. Companies that are hesitant to do layoffs are reducing employee work hours or providing alternative schedules such as a four-day work week. In some ways, this approach might be useful for online workers who have control of their schedule. Audit your work hours and see if there’s a way for you to spend less time on non-billable tasks. Find your peak working hours and use them as the center of your scheduling decisions so that you can maximize your productivity. Beware of getting caught up in internet time sinks as well.

Also, to increase profit, check if you have more time to work on other paying projects.

Limit business travel. With telepresence technology constantly improving, it rarely makes sense to travel for business. There might still be exceptions, such as networking events that are essential to your career. Many companies are making business travel less glamorous and more practical, which is a move which makes sense for freelancers as well. Stay with friends and family if you need to go out of town, or share accommodation with other web workers who will be attending the same events.

Go the extra mile for current clients. Why is this a cost-cutting measure? Generally, it’s much cheaper for you to keep current clients happy rather than acquiring new ones. Provide them with the best quality of work and customer support so that they won’t even think of taking their business elsewhere, even if your competitors might lower their prices. Give them a feeling of security knowing that it would be too big of a risk for them to let you go. By keeping them happy, you’re likely to get referred to their friends – a no-cost method of marketing that provides higher conversion rates.

Drop weak or unprofitable ventures and focus on the most profitable ones. If some of your products or services aren’t selling, even if you’ve made several attempts to improve them, then it only makes sense to drop them, at least temporarily. Now is not the time to devote your energy to unprofitable ventures that will only drain your time and energy as you try to look for creative ways to make them sell.

Don’t cut expenses that are crucial to your growth. While you’re busy working on your cost-cutting plan,  remember that you’re not just supposed to think about how many dollars you’re going to save. There is something that deserves higher priority: the growth of your business or practice.

Remember that cost-cutting isn’t just about lowering your expenses. You should channel your costs in such a way that you’ll get the highest return on investment (ROI). If you use this thrifty mindset in a way that is complementary to your growth, you might find yourself thriving rather than just surviving in tough times.

Are you using any cost-cutting methods? Share your strategies in the comments.

Image by linusb4 from sxc.hu

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