Increase cash in the business with lower energy costs
Written by Michael Rossman of Energy Bill Kill
Small business owners are some of the hardest working people around. We sleep, dream and breathe our businesses. Sometimes though, bills keep us awake. Bills are painful, they hit our cash flow, they hit our bottom line and they take time away from our business. The administrative hassle, alone, is simply depressing. One of the worst is energy bills, with prices rising by nearly 20% in the last year. Looking for a good energy deal and moving suppliers is an inexplicable nightmare. A 20% price hike simply drains cash from the business, so we don’t buy a new PC, invest in stock or take that weekend off.
Keeping more of our hard-earned cash
One of the simplest ways to keep hold of more cash is to lower energy costs; and the best way to cut energy costs is to switch providers. Money saving websites deserve credit for highlighting the value of switching.
You can save significant cash by checking you’re on the most cost-effective tariff, avoiding hidden broker fees and being aware of price hikes when your fixed contract is up.
Business energy has two cost components: firstly, the charge from the energy company themselves, and then the charge from the broker.Broker charges are hidden within energy company bills so they’re not easy to unpick – they’re buried in the price per Kilowatt hour. If you don’t switch providers, you are likely to get the loyalty surcharge! In other words, you pay more to stay with the same company. That alone is a good reason for every business owner to review their energy provider annually.
The switching challenge
People are strangely reluctant to switch. True, it is harder to switch business energy, than to switch home energy. To get the best energy deals we have to call around, trawl the web or, worse still, deal with cold-calling energy brokers. Even when we do find a seemingly good deal, the paperwork is a pain and we’re never really sure it’s the best decision. Nevertheless, switching will almost certainly be the right decision.
Brokers have their own agendas
Energy brokers regularly bombard businesses with cold-calling and time-consuming chit-chat; and they all claim to offer a better deal than their peers. These deals are difficult to understand when you’re not in the energy industry – how can you tell that you’re actually getting a bargain? Brokers have sweetheart deals with certain energy companies who offer them hidden commissions, so you have to take their advice with a pinch of salt. Of course, all of them will talk about how wonderful switching is (which is true) but will fail to mention their high broker commission that can be as much as 20% of your energy costs. Plus, they may not show you all of the energy deals available. Therefore, dealing with energy brokers can cost your business a lot of time and money.
A typical micro or small business will spend between £2,000 – £5,000 per year. If they’ve never switched they are likely paying £400 – £1,500 more per year than they have to. Meanwhile, a larger business spending £10,000 – £100,000 per year on their energy bills likely to be overspending by £1,000 – £10,000 per year – depending on their switching habits along with how high their broker fees are.
The golden rules of saving on energy costs
We follow three simple rules for energy switching:
- It’s the same product, regardless of where you buy it, like diesel or petrol. Forget brands, go for price and convenience
- Shop around and know all the charges that you are paying. Don’t let brokers line their pockets with hidden sweetheart deals.
- Review energy bills regularly, at least once a year. Most energy companies charge more to loyal customers who never switch (strange but true). You can set an annual calendar reminder to switch.
Lowering our energy costs through switching is a simple way to look after the bottom line. After all, nobody wants to work day and night building a dream, if their profits go up in smoke when they turn on the heating, make a tea round, or present their latest show-stopping work.