The rising price of fuel is the topic of the moment. Although, at the time of writing, the government has announced that it will be bringing in further support for households and businesses in order to help keep costs down, the unprecedented cost of gas and electricity is continuing to impact all manner of businesses – not least those in the consumption-heavy hospitality, manufacturing and agricultural sectors.
In fact, a recent report by MakeUK – which is the lobby group for UK factories – found that six in ten manufacturing businesses in the country are at risk of folding.
And on a wider scale, research from Simply Business has found that rising fuel and energy costs are the biggest challenge for 54% of small companies.
The UK’s new Prime Minister, Liz Truss, has said that the energy costs for businesses will be capped at the same price per unit as residential consumers. More support is expected, but no-one is yet sure what these packages will look like (or if, indeed, they will be made available for companies in all sectors, or just those in the most vulnerable industries).
Regardless of the support that may or may not be offered by the government in the coming months, the best thing you can do for your business right now is eliminate wastage and make sure you’re operating as leanly as you can. A little while ago, we put together a series of tips on how to offset some of the rising costs that may be impacting your firm’s operations and eating into your bottom line. Here, we’ve introduced four specific ways you can mitigate soaring energy costs.
Explore your options
Not many suppliers are offering new tariffs at the moment due to changes within the energy industry – but keep an eye on comparison websites and marketing communications for new offers. Specialist energy brokers can also help you track down a more competitive deal (but remember to check their charging structure or sign-up fees before you commit to their recommendation).
Be aware that you will need to check your current contract to see whether you are able to switch; whether you are locked into your existing arrangement; and whether any exit fees may be payable if you decide to change provider. If the exit charges amount to more than you can expect to save in a twelve-month period, it may be best to sit tight for the time being.
Set up a payment plan
If you are struggling to pay your bills, contact your supplier to arrange a payment plan that works within your short-term budget.
Most companies will understand that you need to spread the cost of your bills to keep cash flowing – but some may not be willing to take a view on your situation. Take a look at this excellent resource on the Citizens Advice website for more information on what to do if your provider will not put you on a suitable repayment schedule.
Refusing to pay what you owe – whether out of necessity or protest – is the worst thing you can do in these circumstances, as you will risk being disconnected from your essential services. Your supplier will usually charge you additional disconnection and reconnection fees, too. Avoid these unnecessary expenses and keep your business up and running by trying to find a practical solution to the issue at hand, not burying your head in the sand.
Get smarter with your energy consumption
We understand that, as a business, your consumption is likely to be much higher than an average household. But small changes can have a big impact on the price you pay for your energy – especially when implemented consistently, over a longer period of time.
Invest in a smart meter. Not only will you be able to see precisely how much you are spending on your gas and electricity every day, you’ll also be able to monitor the meter for any noticeable spikes in consumption that could be avoided by using different equipment, changing internal processes, or just asking your staff to be more energy conscious throughout the day.
Similarly, replacing manual thermostats with smart thermostats that automatically adjust room temperatures according to pre-set requirements could lead to savings as high as 23%.
Invest in newer equipment
It may seem counter-productive to spend money on new appliances or machinery when you’re trying to cut back on expenditure. But old and outdated equipment could be costing you far too much in running costs and unexpected repairs. If you have the capital for new purchases, we recommend replacing sub-par equipment sooner rather than later.
For example, LED lighting is up to 80% more efficient than incandescent lighting, and every bulb will last between three and 25 times as long (depending on usage). Investing in LED lights now could save you a great deal of money over the course of a year.
If your budget doesn’t yet stretch to new equipment, make sure the items you do have are serviced regularly. Preventative maintenance will help to ensure that any heavy-load appliances – such as HVAC units, commercial ovens, or commercial extractor systems – are performing at their best and running as energy efficiently as possible.
Our final piece of advice: keep your eye on the news for any updates regarding incoming support packages for businesses. The situation is changing almost by the day, and new incentives are being announced all the time. It is just speculation right now, but according to news sources, discretionary energy grants may be on the cards, and funding may become available using schemes similar to those launched throughout the Covid-19 pandemic.
UPDATE: The government has announced the launch of the Energy Bill Relief Scheme (EBRS) for non-domestic energy customers, which will initially apply discounts to energy usage for six months in the period 1st October 2022 to 31st March 2023. For more information on the support your business may be eligible to receive this winter, click here.