Failure to switch energy providers is costing SMEs
The majority of the nation’s small businesses are failing to consider the impact of their energy outgoings on overall operational costs, new research has revealed.
Businesses that have failed to switch in the last three years – a situation that applies to the majority of firms – could save money by looking at their options and seeking more information.
However, the research from EDF Energy found that one in three firms said they were unsure where to start looking, while one in 50 went to such extremes as asking their hairdresser for advice.
The key finding though, was that nearly a third of businesses did not know what proportion of their annual outgoings is spent on energy.
Given that four in ten small businesses fail to last five years, controlling outgoings therefore forms an essential part of survival.
Energy costs form part of operational outlays, which are often some of the highest outgoings for small firms.
Taking steps to reduce the costs can therefore ease pressure on a firm’s finances, while reducing the risk of requiring insolvency and recovery procedures.
The research suggests that more can be done to engage small businesses so that energy is considered alongside other major outgoings such as rent, mortgage, staff costs and business rates.
Given their workloads, many business owners may overlook energy as they concentrate on driving sales, developing products and growing the firm.
However, addressing energy outgoings could save both time and money in the long-term, providing much needed finance for growth.
The research follows revelations in early August that the vast majority of SMEs are being overcharged for their energy.
Those fearing financial trouble should consider options reviews to find potential solutions, as refinancing or restructuring options may be available.
At the same time, focusing on energy could represent the first step towards a more financially-secure future for a small business.
By Phil Smith