Every self-employed professional will eventually arrive at a fork in the road. It is at this point they must make a choice: go bigger, or stay the course.
Inconveniently, there’s no right or wrong answer on which choice to make. No contractor or freelancer ever navigates the same path, so the decision is different for every individual case.
Nonetheless, if you do decide to take the leap and branch out your business, you’ll need to look at maximising your profit margins. Here, Bright Ideas show you the best ways to do just that.
Bump up your prices
If business is booming but your Gross Profit Margin is a little on the low side, it could be time to start charging more for your services.
It’s normal to feel uneasy about raising prices across the board – but that doesn’t mean you shouldn’t do it. If you want to grow your business and rake in more money in the process, bumping up charges is obligatory. It’s just a case of timing it smartly and communicating it in a cautious way.
If your higher prices reflect your high quality, favoured long-term clients won’t dispute the increased costs (especially if you give them plenty of notice beforehand). Some of your less-acquainted contacts may fall by the wayside, but this will pave the way for more profitable partnerships. This is the next chapter of your career, and it’s time to think big.
See where you can claim back
Freelancers and contractors are eligible for all kinds of tax deductions that can give the bank balance a healthy boost. These include:
- Use of property costs (if you work from home), including rent, mortgage interest, electricity, internet and phone bills.
- Travel costs – to any locations/meetings directly related to work, as well as accommodation (hotels).
- Overheads for your business – office equipment, computer, postage, stationery.
- Office rent or payments made to use a shared a workspace.
- Networking group subscriptions related to growing your business.
- Client meeting expenses, including food, drink and travel costs.
Gaining a good understanding of what you might be owed as a contractor or freelancer is half the battle. Be sure to have a chat about expenses with your accountant to determine what you can claim back for.
Cut out the time-sapping stuff
If you’ve been freelancing/contracting for several months, you’ll already be well-aware that the self-employed lifestyle involves some truly time-sapping tasks. Between hunting down work, chasing payments and compiling invoices, you’ll also need to balance your books to send off a squeaky-clean Self Assessment to HMRC.
Whilst all of the above are equally important, there are things you can do to minimise the time spent on such duties. Automating software allows you to send out scheduled reminders to clients, whereas services like FreeAgent make financial management a breeze.
As for keeping your books neat and tidy, your best bet is using a specialist accountant like Bright Ideas. We are always here to lend a helping hand in any way we can, giving freelancers and contractors the support they need to run their businesses effectively. Get in touch today on 0161 951 5308 to find out how you could increase your GPM and grow your business.
