Cut SME costs without damaging your business
Reducing costs should be made top of the agenda for owner-managers of small and medium sized firms. Whether your goal is to boost profits, or simply to survive in a turbulent market place – getting to grips with your costs can often be a more effective strategy than increasing revenue. Utility Helpline have been helping SMEs cut their energy costs and achieve growth for nearly a decade. We understand that cutting costs isn’t always easy and know that spending strategies need to be balanced if they are to work.
Develop a balanced cost-reduction strategy
When the economy turns south, or things aren’t going to plan, the knee-jerk reaction is often to take a mighty hack at the budget. Close down an office, cut staff levels, stop advertising – these options might seem reasonable but sometimes these ‘savings’ can end up costing the business. Putting the brakes on a successful ad campaign can mean your business fades into insignificance. And other costs like redundancy settlements can sometimes be just as expensive as ‘riding out the storm’. Other hidden costs can also damage your business. Every hour which you or a manager spends agonising over cost-reduction is another hour spent not steering the business properly. Equally though, a manager who fails to address any shortfalls will not be in business very long. Missing monthly bills is one of the quickest ways to drive a business into the ground. A balanced and effective cost saving strategy does not shy away from spending money where it is needed, but equally it is not afraid of eliminating spending in areas where it is not.
Balanced and effective cost savings
There are two key things for you to consider:
- which elements of spending add the most value to your business
- where does most of your spending go
Evaluating which elements of spending add the most value can be difficult, but managers and staff on ‘ground level’ should have a firm idea of where money is being put to good use. Areas where money is being wasted should be the first go. But bear in mind that cuts can have unintended consequences, if you do not think them through effectively. It is better to scale back operations than eliminate them completely. You could, for example, ask some full-time staff to go part-time or swap radio advertising for something cheaper. As a rule of thumb, the areas where you spend the most are also likely to be the areas which will be easiest to cut. You can often generate big cost savings just by making high spending areas fractionally more efficient.
Cutting your energy budget
For energy-intensive businesses, gas and electricity costs can make up a significant proportion of the monthly outgoings. Sectors like manufacturing can be severely impacted by energy price rises. Energy adds value to a business, but there are ways of getting more bang out of the same energy spend.
- Managers should clamp-down on inefficient energy use making sure machines are turned off
- Buying more efficient equipment (such as energy-saving motion controls) can sometimes be a sound investment but you must make sure you work out the repayment time
- If you are metered half-hourly then you should try to perform the most energy-intensive processes at night when electricity is cheaper to purchase.
Before you try to make difficult efficiency savings though it is important that you make sure you are purchasing energy at the right rate possible. Utility Helpline have a wealth of experience helping businesses to reduce their energy bills. We negotiate with our preferred suppliers to get clients the right rate for their gas and electricity and then help generate efficiencies with the use of smart metering technology. To find out how Utility Helpline can help reduce your energy bills call us today on 0800 043 0423
Published by Utility Helpline on (modified )
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