Electricity and Energy Cost Savings for Small Businesses
Many small businesses who seek to improve profitability will begin by attempting to improve their marketing, introduce new products and boost sales. However, it can often be more fruitful to look at reducing costs within the business, which will essentially have the same effect. The Carbon Trust states that a 20 per cent reduction in business costs is the same as a five per cent increase in sales, and who wouldn’t love to increase sales by 5 per cent?
Some costs can be expected and budgeted for, such as insurance, utility bills and rent, but where many SME’s are hit the hardest is when other costs begin to creep in. Late payments from clients, recruitment mistakes and other unexpected bills can leave SME’s struggling to stay in the black. Here, we look at some of the hidden expenses experienced by SME’s and how they can mitigate these crafty costs.
- Make a cost saving plan
The first step for making savings in a business is to write a workable financial plan and stick to it. Local business groups can be a great source of expertise and advice in relation to this, so sharing successful strategies with other small business owners is a great place to start. Many small businesses such as hair salons or food take away shops still undercharge for their products and services, so perform a market analysis to make sure you’re price point is relevant for the quality you are offering.
- Switch to a cheaper energy tariff
Energy bills are one of the biggest expenses in any business. Thankfully, unlike rent which is completely in the hands of the property market, businesses do have some level of control over their energy bills. Your business is free to switch supplier, dependant on your current contractual obligations, and could save hugely by shopping around. It can also be a good idea to talk to your supplier about any products they have on offer to help you manage your energy more effectively, such as smart meters or powerdown plugs.
- Offer low cost incentives to talented staff
For SME’s, competing with large businesses to recruit and retain high performing staff can be tricky. While you might not be able to offer the substantial bonuses and private healthcare of your larger competitors, there are still incentives you can offer which your hardworking employees will appreciate. Think about giving more responsibility, more autonomy and other perks like flexible working to those who deserve it most.
- Outsource intelligently
Small businesses with very few members of staff might find a skills gap in some areas, requiring them to seek outside assistance. Sourcing freelance experts in various fields has recently got a lot easier, thanks to the proliferation of sites like PeoplePerHour and ODesk, and these individual, self-employed people tend to be much more cost effective than relying on an agency.
- Focus on modern marketing methods
Businesses of all shapes and sizes can significantly cut costs by moving away from traditional, print based marketing methods. Mailshots, poster campaigns and newspaper advertisements are expensive, and generally elicit less of a response than modern, digital marketing methods. By moving to email marketing, social media and digital campaigns, businesses can reduce the waste and cost associated with traditional marketing.
For more help on cutting costs in your business, and advice on switching to a cheaper tariff, talk to Simply Business Energy today. Visit our website at www.simplybusinessenergy.co.uk for a quote to switch suppliers, or call us on 0800 313 4213 for advice.
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