Iain Stevenson, head of dental at Wesleyan Financial Services, shares top tips for small businesses to mitigate the impact of energy prices.
Last week, many practice owners may have breathed a small sigh of relief following the new Chancellor’s emergency mini-budget announcement.
In it, it was reiterated that small businesses will receive the equivalent of the £2,500 energy price cap that was announced for typical homeowners. But where homeowners are protected for two years, small businesses have only been given a six-month safety net.
While the plans go some way to support practices through the winter, more needs to be done to support small businesses against the impact of energy cost hikes on profitability.
NHS practices in particular are left with few options, being as they will be unable to pass on any of the increased energy prices to patients. And then, with many patients already struggling with rising costs of living, mixed and private practices understandably might be reluctant to impose further costs.
With that in mind, here are some steps that can be taken to face the energy price challenge:
Clamp down on existing outgoings
Keep an eye on your energy bills on a monthly basis. Tedious as this might be, it will help you identify areas of excessive energy waste within the premises. You can also carry out an energy audit to further highlight any particularly inefficient energy habits.
A good place to start is to look at Carbon Trust’s energy-saving tools and resources, geared to help small businesses measure, manage and reduce energy costs. There are also checklists and spreadsheets available online that you can access for free to help you through this process.
Stick or twist
Energy bills are astronomical across the board. But it still might be worth seeing if you can get a better deal elsewhere.
Like other comparison sites that you might use for car or pet insurance, there are comparison sites for business energy, such as Simply Switch. There are also independent consultancies that can do a comparison on a range of business utility costs with the aim of reducing them and finding the best deal.
Some small businesses are eligible for further government support in the form of loans and grants to help with operational costs, including rising energy bills. Ofgem provides a comprehensive guide for areas of improvement where you might be able to apply, including:
- Introducing energy efficiency measures
- Upfront costs of energy-efficient equipment
- Waste management
- Sustainable development initiatives.
Otherwise, it might be worth asking your local council if they provide funding.
It might sound obvious but check the lighting throughout the premises and swap out any incandescent filament bulbs with halogens or modern LEDs. There’s an upfront cost but depending on the size of the building, it could very quickly provide a return on investment.
That also goes for ageing equipment such as vents, fans and aircon filters too.
Are the ergonomics of the practice impacting the efficiency of your heating? Obstructed radiators can negatively impact energy efficiency.
It might not be the right time or practical for some practices, but solar panels, heat pumps, and more efficient boilers can be a good swap too.
Think outside the box
If you’re struggling to make any inroads when cutting down energy expenses, sometimes it helps to do a business review to see if some of these costs can be offset in other areas.
There are some immediate areas that you can look at; are you confident that your insurances offer the right level of cover at the right price?
Have you got membership plans and finance options in place to support regular cash flow? Have you thought tactically about price changes and introducing private income streams?
Benefit to invest
For the longer term, it can be a benefit to invest in yourself and your business to offer specialist or in-demand services at a higher price point.
Also, it’s worth considering whether a portion of your business funds is better off invested rather than sitting in a business bank account where purchasing power is eroded by inflation, providing the business with the potential for better returns.
Of course, it’s worth bearing in mind the value of investments can go down as well as up and you may get back less than you invest. You need to operate within your own risk appetite and approach investing with a long-term view.
If you need help with offsetting costs, you can book a no-obligation financial review to get the ball rolling by visiting www.wesleyan.co.uk/dental or calling 0800 316 3784.
‘WESLEYAN’ is a trading name of the Wesleyan Group of companies.
Wesleyan Financial Services Ltd (Registered in England and Wales No. 1651212) is authorised and regulated by the Financial Conduct Authority and is wholly owned by Wesleyan Assurance Society and Wesleyan Assurance Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Incorporated in England and Wales by Private Act of Parliament (No. ZC145). Registered Office: Colmore Circus, Birmingham B4 6AR. Telephone: 0345 351 2352. Fax: 0121 200 2971. Calls may be recorded to help us provide, monitor and improve our services to you.