British Gas is urging businesses to prepare for a cold winter, with an estimated third of businesses being caught out by the cold weather every year.
The energy provider to businesses says it expects to see a 70 per cent increase in the number of call outs to businesses needing emergency repair work during the winter months, often due to boiler and heating breakdowns.
Despite this, many businesses overlook the regular, preventative checks on gas and electrical equipment that can maintain efficiency and ensure businesses safeguard their operations against these mishaps.
The following tips can help business keep the lights on even in the most severe weather:
- Give your boiler a healthcheck: Check to make sure your boiler is working properly before winter sets in. The older your boiler the more inefficient it will be – new energy efficient boilers can help you cut your heating bill by up to 20 per cent per year. Your heating appliances should be serviced once a year by a Gas Safe registered engineer.
- Check your central heating: Run your central heating on full to check that your radiators heat up properly. If you can feel any cold spots, especially at the top, they may need bleeding. Bleeding your radiators is a simple task that will make your business warmer and your central heating system more efficient.
- Prepare your business for the cold: Make sure your heating and drainage systems are in tip-top condition. Start by checking that your pipes are not too exposed to the cold. You should also lag water tanks and pipes to conserve heat and prevent freezing. Spending time to prepare your business now could prevent a crisis when temperatures plummet.
- Make your business energy efficient: Lighting accounts for 25 per cent of a company’s total electricity bill, and energy efficient lighting can help to cut these costs by up to a third. Use standby power savers that automatically turn appliances off, such as computer equipment, when it’s not being used. Each of these will save around £30 a year on your energy bills. Also speak to your provider about getting a smart meter. This will allow you to pay accurate bills based on accurate readings and give you valuable insight into your energy use allowing you to take measures to reduce it.
- Have a back-up plan: Make sure your business is covered by a Service & Maintenance contract. Use a trusted brand and seek assurances that engineer will be on site quickly if something does go wrong with your gas appliances or electrical installation. Putting this plan in place now can prevent a breakdown turning into a debilitating business crisis later on.
Phil Manock, British Gas Commercial Services, said: “During the winter months, thousands of businesses are hit by crises caused by the cold weather that can cost them thousands of pounds and seriously impact their daily operations. However, this is often caused by their failure to prepare for the cold through regular maintenance. Taking simple steps now to make sure your heating system is in top working condition and that you have a back-up plan if something does go wrong can save vital time and money in the long term.”
According to a recent survey conducted by connectingbusiness.com, 50 per cent of small businesses are on a consumer tariff, and half of these admitted that they thought their bills were too high. Many businesses are simply unaware of the benefits of switching from a consumer to a business tariff. Business tariffs are specifically tailored for business customers and not available to consumer customers, and so changing to a business contract could significantly reduce their bills.
There are three main ways in which being on a business tariff may bring the mobile costs of a business down:
1) Sharing tariffs: some business tariffs can be shared between users, which helps to reduce costs as the tariffs work on a lead/share system where the line rental for the sharers is set at a standard price, which is usually only around £12-£15 per line. However, even if only one phone is required for the business, there are other benefits to be had from a business tariff.
2) Free calls: many business tariffs offer free calls to landlines, whilst most networks offer free calls to other mobiles on the same network.
3) Claim VAT back: if your business is VAT registered, you can also claim the VAT back from the line rental, which it is not possible to do on a consumer tariff.
Andy Tow, managing director explained: “All businesses need to keep their mobile phone costs as low as possible, and connectingbusiness.com is here to help them find out how. It’s a shame that so many businesses are unaware of the savings they could benefit from by simply switching to a business tariff, even if they only need one mobile phone. By using our free mobile health check all businesses can find out which tariff would be most cost effective for them and connectingbusiness.com can organise the switch.”
Small firms are trapped in a vice of rising business costs, which is squeezing margins, choking growth and threatening their survival, according to a major new study by Make It Cheaper and the Centre for Economic and Business Research.
The research shows that overheads have risen by almost a quarter over the past five years, and more than half (55 per cent) of small business owners now warn that their company will simply not survive much longer if costs continue to rise at current rates.
Jonathan Elliott, managing director of Make It Cheaper, explained: “Rapid cost increases are placing the survival of small companies in jeopardy, and dampening the entrepreneurial spirit so crucial to economic recovery.”
The study is based on independent research among owners and managing directors of 750 UK small businesses commissioned by business saving advisor Make It Cheaper, supported by macroeconomic modeling by Cebr.
The vast majority of small business owners identify rising costs as the most significant threat to their company this year (78 per cent) and warn that the country has become an ‘unbearably expensive’ place to do business (81 per cent).
Cebr and Make It Cheaper have modeled an inflation tracker for small business overheads – the Business Cost Index.
The Index shows a 22.8 per cent rise in small business costs over the past 5 years, compared to the ONS’ Consumer Price Index increasing by 19.4 per cent over the same period. According to the Make It Cheaper research, businesses themselves report an overall average rise in business costs of 4.5 per cent year-on-year to July 2011.
In terms of individual overheads, the biggest risers predicted by the Index are transport costs, which are expected to rise 20.5 per cent, energy bills, forecast to grow 8.5 per cent and insurance premiums, set to rise 7.1 per cent in 2011.
Spiraling overheads hit SME growth and margins, forcing closures
Rising costs over the past five years have damaged the growth of three quarters (74 per cent) of small UK firms, and will limit the growth of 78 per cent this year, according to the Make It Cheaper research.
More than two thirds (67 per cent) of firms have seen their profit margins hit by increasing costs over the past 3 years, to the tune of 22 per cent on average, whilst approaching half (46 per cent) have been forced to increase prices and nearly a quarter (22 per cent) have cut staff.
Worryingly, three fifths (59 per cent) of small business owners claim that the high cost of doing business in the UK is acting as a disincentive for growth, whilst 86 per cent believe it is damaging economic recovery.
Jonathan Elliott comments: “Government policy needs to curb business cost inflation this year. However not all threats identified by entrepreneurs are outside of their control.
“By shopping around, comparing prices, regularly switching suppliers and taking care not to get caught in contract renewal traps, companies can go a long way to bringing their overheads, such as energy, under control.”
Small businesses must be protected by electricity market safeguards to prevent energy bills from escalating further as small firms say they are concerned about the rising cost of energy, the Federation of Small Businesses (FSB) said in a new report.
In the 2011 Budget, the Government announced plans to reform the electricity market and introduce carbon pricing – a mechanism that artificially increases the prices of electricity generated from fossil fuels – in order to make renewable and nuclear energy more attractive energy sources and decrease the UK’s dependence on fossil fuel energy.
But, ahead of the While Paper on Electricity Market Reform due tomorrow (Tuesday 12), the FSB is raising concern that electricity generators will pass on the extra costs to consumers. This comes at a time when two of the big six energy companies have recently announced large price increases with the rest likely to follow.
In a new report, ‘Small business and infrastructure: Energy’, the FSB is arguing that while it supports the idea of incentives to invest in low carbon infrastructure, there needs to be safeguards in place to prevent electricity generators from passing the carbon price on to consumers by pushing prices up further.
Research from the FSB’s ‘Voice of Small Business’ survey panel shows that eight in 10 (81 per cent) small firms are worried about the rising cost of energy. The survey also found that small businesses are concerned that they have limited knowledge of the energy options open to their business (18 per cent) and very few understand energy contracts (18 per cent).
The FSB has long argued that the smallest of businesses are similar to domestic energy users, but they do not receive the same regulatory safeguards as domestic users and are unable to negotiate contracts the way that larger businesses can.
The FSB is calling on the Government to ensure that any safeguards put in place around carbon pricing treat small businesses in the same way as domestic users, and that this be extended across other market regulations, so that small businesses are not penalised because of their limited knowledge and purchasing power and the unpredictability of their demand.
John Walker, national chairman, Federation of Small Businesses, said:
“Energy companies have increased prices sharply over the past five years, with yet more rises over the past few weeks. There is a huge risk that introducing a mechanism to increase electricity prices generated by fossil fuels will further inflate prices for the smaller players as generators pass on the extra costs to consumers and small firms. This concern comes at a troubling time for small firms and is yet another thing that will prevent them from growing their business and taking on staff – precisely what the Government is asking them to do. The Government must ensure it puts safeguards in place to protect consumers – including small businesses – and prevent energy companies from passing on the levy.”
Some of the smallest businesses are losing out on the best energy deals because of the ways some brokers work when they negotiate contracts with energy suppliers, new Consumer Focus research, Watching the middlemen shows.
The problems micro-businesses face are compounded by a ‘protection gap’ with confusion about who takes lead responsibility – Ofgem or the Office of Fair Trading – for making sure this part of the market works well. To boost consumer protection in this sector, Consumer Focus would like to see Ofgem take further action. The first step must include clear standards and genuine buy-in from the brokers and energy companies, with the backstop of stronger regulation if improvements aren’t delivered.
Brokers are important because they can guide a busy business through the range of complex tariffs. Often, it will be a direct approach from a broker that makes a micro-business realise they could get a better deal. But the report highlights some serious problems. One of the most common is that brokers often aren’t clear about their role or don’t explicitly say that they do not have to search the whole market for the best deal. This leads to small businesses assuming they are dealing with impartial advisers rather than third parties who are often paid commission by energy companies.
Other issues are that some brokers:
- misrepresent offers from suppliers
- aren’t up-front about their fees and offer poor quality advice.
- aren’t clear how much a commission they receive and who pays it.
- there is also confusion about whether brokers are paid commission by a limited number of energy companies, or will advise on all suppliers and products.
Consumer Focus energy expert, Andrew Hallett, said: “Small businesses need to know they’re getting sound advice from brokers otherwise there is little point in their role. When micro- businesses are under more pressure than ever before, it’s vital that they can be confident they’re getting the energy deal that’s best for them.
“Confidence in the energy market is becoming even more pressing as the Government wants small businesses to go green with Green Deal loans to improve energy efficiency. Small businesses need strengthened consumer protection.”
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