Could switching lightbulbs help keep your firm afloat?
THE cost-of-living crisis is not confined to households – small business owners are also facing acute challenges that are eating into their incomes and threatening their livelihoods. From soaring energy bills to higher prices for raw materials and shipping, many small businesses may feel their outgoings are spiralling out of control. And that’s before the impact of higher taxes and salary expectations.
Martin McTague, national chair of the Federation of Small Businesses, says: ‘They are at the mercy of eye-watering hikes in energy bills. They don’t have the negotiating power of big business, nor do they enjoy the financial protection offered to consumers.’
Some small firms’ bills have gone up fivefold, he says, adding: ‘We know many have little or no cash reserves while for those with loans, the prospect of rising interest rates is frightening.’
Here are some steps business owners can take to keep a lid on rising costs.
CURB ENERGY BILLS: Tim Rundle-Wood, owner of Twoodle Co, which sells candles and diffusers made from natural ingredients, was amazed when a tiny change made a huge difference to costs at his East London shop.
In response to his bill shooting up from £84 to £353 a month in April, Tim turned off some spotlights inherited from the previous occupant. He says: ‘I thought they were energy-saving LEDs. They weren’t as our bill dropped to £157 – without affecting sales.’
Consumer champion Helen Dewdney, who dubs herself ‘the complaining cow’, says a 20 per cent cut in energy costs can be as beneficial to a firm’s bottom line as a 5 per cent rise in sales.
She says: ‘If you run a small firm, encourage staff not to leave doors open and make it a rule that
the last one out of the office or shop turns off the lights.’
Draught strips can prevent heat loss, as can sealing unused windows and doors. Timers ensure heating is not on when premises are empty. Temperatures can be set lower in areas where physical movement is higher, such as stairs and corridors. Staff should switch off items such as computers, printers, monitors and televisions at the end of the day.
Amber Leach runs Established By Her, a marketing agency in Plymouth. She was shocked when her electricity bill almost doubled from £60 a month to £110. She says: ‘I rang the supplier to reduce the standing charge. Now, we pay more per unit of electricity, but a lower standing charge, so we’re more in control.’
Amber also has a solar-powered generator in the office which charges mobile phones, laptops and camera equipment.
CLAIM ALL ALLOWANCES:
Small firms should ensure they claim all tax breaks available.
For example, the FSB offers access to legal advice and provides late payment support, while local authorities often provide discretionary support.
The employment allowance helps small employers to mitigate National Insurance costs. Pubs, shops and hotels can apply to have their business rates halved for the current year while grants help firms reduce energy costs and develop new products. Visit gov.uk/business-finance-support.
REDUCE SHIPPING COSTS:
Husband-and-wife team Lisa and Philip Ingram halved the costs of importing goods for their Hampshire business LittleLeaf Organic by handling some of the supply chain themselves.
They founded their organic cotton firm five years ago, employing shipping agents to get goods delivered from India to Alton. During the pandemic, their shipping costs more than trebled to £1,850, so the couple looked at how they could reduce them.
‘For our last shipment, we hired a van, drove to Southampton and loaded the goods ourselves. In total, it cost less than half what we normally pay,’ says Lisa. The Ingrams have also saved money by buying a Leaf electric car which they use to take fulfilled orders to the local post office.