Many small businesses face difficult months ahead as huge energy bill increases add to a cost of living crisis hitting their customers just after the pandemic.
Official consumer prices index inflation is running at 9 per cent, according to the ONS, and firms may find that their costs are going up even faster depending on their line of business.
Producer price inflation figures show the rise in the annual cost of inputs at 18.6 per cent in April, while outputs, aka factory gate inflation were rising at 14 per cent annually.
Coupled with this small businesses are facing pressure to pay higher wages, have seen transport costs jump, have no protection on energy bill rises and may struggle to hike prices for their customers to reflect extra costs.
That makes saving money where you can essential.We look at some opportunities to do so below.
Working from home?Unlike small businesses, you can benefit from the energy price cap
Business energy bills are soaring
Recent research has shown that small and medium-sized businesses saw an average gas bill increase of more than 250 per cent in first the three months of this year, compared to the same quarter in 2021.
For some SMEs, gas bills have risen by as much as 310 per cent, according to a study by energy analysts Cornwall Insight.
Unlike domestic customers who is hosting any website can rely on the energy price cap, there is no limit on the price that energy firms can charge businesses per unit of power.
This means that firms who are not on a fixed-price tarriff are subject to large rises and small businesses have yet to see any Government support to help them manage the massive rise in energy bills.
Sole traders working from home will still be able to benefit from the energy price cap, which is £1,971 until the end of September but could rise to almost £3,000 in October.
How businesses can save money on their energy bills
Business advice and comparison website Utility Bidder has put together a list of steps that small businesses can take to cut their energy bills.
Chris Shaw of Utility Bidder said: ‘Although it is undeniable that the next few years will be economically challenging for SMEs, small steps can really make the biggest difference when it comes to saving money on energy expenses.
‘Remember to contact your supplier to make sure you have all of the essential information you need.’
With suppliers withdrawing tariffs at short notice due to an unstable energy market, it has become more difficult for small businesses to secure new fixed contracts and they risk paying more, according to analysts at Cornwall Insight.
However, it can still pay to switch.This is Money and partner Bionic can help you compare the best deals
For some SMEs, gas bills have risen by as much as 310%, according to Cornwall Insight
Install smart light switches
Smart light switches include an occupancy sensor, which automatically turns lights on and off.This can be useful for rooms such as conference rooms or meeting booths where lights are left on a lot.
Be sparing with air conditioning
British summers are not known for being particularly hot, so you may not need air conditioning during most summer days.You will need to put the heating on in winter though – just make sure you keep a keen eye on the thermostat.
Switch off computers at night
Turning off a single monitor when it’s not in use and over the weekends could save your organisation 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 fridges, computers and even boilers are far less efficient than modern versions.It is worth doing an appliance audit and looking into the appliances that could do with an upgrade.
Install a smart meter
Consider installing a smart meter in order to monitor the amount of energy you use, avoiding any unnecessary costs.
You’ll need to talk to your energy supplier about your eligibility.If you rent your office space, it is also worth asking your landlord if they plan to get one for your building.
Remember smart meter offerings will vary between different suppliers so you will need to contact them regarding terms and conditions – and always take note of the fine print.
Factor bill hikes into your business plan
Whilst conducting business plans, it might 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.
Speak to your provider if you’re struggling to pay
Even if this is only by a small amount, you should inform your energy supplier as there may be help they can offer.
How else can small businesses trim their budgets?
As well as cutting down energy costs, there are plenty of other ways that small businesses and sole traders can trim their expenses.
This might include switching suppliers for phone and broadband, or switching your current account of savings account to make the most of your hard-earned cash.
Get the best bank account for your business
Getting the best small business bank account is a way to make your firm’s money go further and make your life easier.
Changing their small business current account may not be at the forefront of most owners’ minds.
But with monthly fees, transaction costs, integrated accountancy software, automated invoices and international charges all to be considered, doing so can make a difference to your bottom line.
Whilst owners of limited companies are required to have a business account by law, sole traders can use their personal current account for both business and non-business transactions.
The prospect of monthly fees and transaction costs may leave many sole traders wondering whether it’s worth having a business current account.
But even if not legally obliged 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 , where we compare monthly fees, interest, overdrafts and bonuses.
Investec has recently increased the interest it pays on its business savings account
Get a business banking savings deal
If you have extra cash that you do not want to re-invest right away into your business, it might be worth putting it in a savings account.
While no account will beat inflation, as that stands at an eye-watering 9 per cent, it can at least earn something.
Investec, for example, has recently increased the interest it pays on its business savings account, which features free unlimited withdrawals.
The bank has increased the interest rate on its from 0.75 per cent to 0.95 per cent AER on balances between £40,000 and £800,000.
However, no interest is paid on deposits of below £40,000, or above £800,000.
Customers can benefit from free unlimited withdrawals, but have to give the bank 32 days’ notice in order not to incur charges or penalties.
Shop around for cheaper broadband and phone deals
Most telephone and internet providers are continuing to hike prices, many well above inflation in the latest round
But looking at new deals for these can help you cut costs.
If you are running a smaller business, perhaps from home, this is easy to do with a comparison service, such as .
Other websites, like Uswitch can help you figure out what deal is best for your business.
Mobile phone costs can also easily mount up and it is worth checking out – a Sim-only tariff for existing handsets can often save large sums.
Get the best deal on web hosting
Every small business needs a website, and finding the right web hosting package for your needs is important.
When choosing, you should consider how many email addresses and inbox storage are included in the plan and what kind of customer support the company offers, among other things.
You also may want to check if the SSL certificate, which enables encrypted connection, is included or you have to pay for it separately.
Paying for a Virtual Private Server (VPS) – a form of web hosting that means you are not sharing server with other users – will make your website more reliable.
Most providers offer different plans catering for different needs, which you can then upgrade if your business grows.
Website building and hosting service GoDaddy offers a special , which could give you a good value way of getting an existing site up to scratch or solve problems, without the need to employ a developer yourself.
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