Many small businesses face tough months ahead as huge increases in their energy bill add to the cost-of-living crisis afflicting their customers right after the pandemic.
Official CPI inflation is at 9 percent, according to the Office for National Statistics, and companies may find their costs rise faster depending on their line of business.
Producer price inflation figures show the annual cost of inputs rose 18.6 percent in April, while output, also known as factory gate inflation, was up 14 percent annually.
Besides these smaller businesses, they face pressure to pay higher wages, have seen transportation costs rise, have no protection against a rising energy bill, and may struggle to raise prices for their customers to reflect the extra costs.
This makes saving money wherever necessary. We look at some opportunities to do this below.
Work from home? Unlike small businesses, you can take advantage of an energy price cap
Commercial energy bills are rising
Recent research shows that SMEs saw their average gas bill increase by more than 250 percent in the first three months of this year, compared to the same quarter in 2021.
For some small and medium businesses, gas bills are up as much as 310 percent, according to a study by Cornwall Insight energy analysts.
Unlike domestic customers who can rely on an energy price cap, there is no limit to the price energy companies can charge companies per unit of energy.
This means that businesses that are not on fixed-rate tariffs are subject to huge hikes and that smaller businesses have yet to see any government support to help them manage the massive rise in energy bills.
Only traders working from home will still be able to take advantage of the energy price cap, which is £1,971 until the end of September, but could rise to nearly £3,000 in October.
How companies can save money on their energy bills
The Comparison Consulting Services and Business Advice website lists steps small businesses can take to lower their energy bills.
Chris Shaw of Utility Bidder said: “While there is no denying that the next few years will be economically challenging for SMEs, small steps can make a big difference when it comes to saving money on energy expenditures.
“Remember to contact your supplier to make sure you have all the basic information you need.”
According to analysts at Cornwall Insight.
However, he can still pay for the switch. This is Money and partner Bionic can help you compare the best deals using our free business energy comparison service.
For some small and medium businesses, gas bills are up as much as 310%, according to Cornwall Insight
Install smart light switches
Smart light switches include an occupancy sensor, which automatically turns the lights on and off. This can be useful for rooms such as conference rooms or meeting booths where the lights are left on often.
Avoid using air conditioning
British summers aren’t known to be particularly hot, so you may not need air conditioning during most summer days. You will need to turn on the heating in the winter – just be sure to carefully monitor the thermostat.
Turn off computers at night
Turning off a single screen when it’s not in use and on weekends can save your organization up to £35 a year on business electricity bills, according to Utility Bidder.
Make sure your technology is up to date
Older versions of appliances such as refrigerators, computers, and even kettles are much less efficient than modern versions. It is worth doing a hardware audit and looking at which devices can do the upgrade.
Install a smart meter
Consider installing a smart meter to monitor the amount of energy you use, and avoid any unnecessary costs.
You will need to talk to your power supplier about your eligibility. If you are renting your office, it is also helpful to ask the landlord if he plans to get an office for your building.
Remember that smart meter offers will vary between different suppliers, so you’ll need to contact them regarding terms and conditions – and always take into account the finer details.
The billing factor goes up in your business plan
As you implement business plans, it may be wise to include price increases in your plans for some time to come. This can prevent any nasty surprises in the future for your business.
Talk to your service provider if you are struggling to pay
Even if this is a small amount, you should inform your power supplier as there may be help they can provide.
Otherwise, how can small businesses cut their budgets?
In addition to cutting energy costs, there are plenty of other ways small businesses and individual merchants can cut their expenses.
This might include switching suppliers for phone and broadband, or swapping your checking account for a savings account to make the most of your hard-earned money.
Get the best bank account for your business
Having the best small business bank account is a way to increase your company’s money and make your life easier.
Changing a small business checking account may not be at the forefront of most owners’ minds.
But factoring in monthly fees, transaction costs, integrated accounting software, automated billing, and international fees, doing so can make a difference to your bottom line.
While limited company owners are required to have a trading account by law, sole traders can use their personal checking account for both commercial and non-commercial transactions.
The prospect of monthly fees and transaction costs may leave many lonely merchants wondering if it’s worth having a business checking account.
But even if you’re not legally required to have one, keeping your business separate can make it easier to manage cash flow and calculate tax liabilities at the end of each tax year.
Read our guide to the top business bank accounts, where we compare monthly fees, interest, overdrafts, and bonuses.
Investec recently increased the interest you pay on its trading savings account
Get a Savings Business Banking Deal
If you have extra cash that you don’t want to immediately reinvest in your business, it may be worth putting it into a savings account.
While no account will beat inflation, at 9 percent, it can gain at least something.
For example, Investec recently increased the interest you pay on its Business Savings Account, which features unlimited free withdrawals.
The bank increased the interest rate on Online Business Savings Account From 0.75 per cent to 0.95 per cent on balances between £40,000 and £800,000.
However, no interest is paid on deposits less than £40,000 or more than £800,000.
Customers can take advantage of unlimited free withdrawals, but they need to notify the bank 32 days in advance so that they do not incur any fees or penalties.
Shop for the cheapest broadband and phone deals
Most phone and internet service providers continue to raise prices, and many are well above inflation in the last round
But researching new deals for these can help you cut costs.
If you’re running a small business, perhaps from home, it’s easy to do with a comparison service, like This is Money’s broadband and phone comparison.
Other websites, such as Uswitch can help you figure out the best deal for your business.
Mobile phone costs can also easily add up which is worth checking out Best Mobile Deals – SIM-only tariffs for existing devices often save large sums.
Get the best deal on web hosting
Every small business needs a website, and it is important to find the right web hosting package for your needs.
When choosing, you should consider the number of email addresses and inbox storage included in the plan and the type of customer support the company offers, among other things.
You may also want to check if the SSL certificate, which enables encrypted communication, is included or if you have to pay for it separately.
Paying for a virtual private server (VPS) – a form of web hosting that means you don’t share the server with other users – will make your website more reliable.
Most providers offer different plans that cater to different needs, which you can then upgrade if your business grows.
GoDaddy website building and hosting service offers a special service Premium Support Package for WordPress Siteswhich could give you a good-value way to set up an existing site to scratch or fix issues, without having to hire a developer yourself.
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