Rising energy prices have dominated many a headline in recent weeks, and on this blog we've devoted a substantial amount of time to the impact that the increases will have on small firms.
Yet while gas and electricity bills have always required businesses to keep an eye on their budgets, it's now apparent that the costs are forcing some SMEs to completely re-evaluate their models - in particular nurseries, with many having to ditch plans to grow poinsettias in the build up to Christmas.
Without getting too bogged down in the intricacies of the problem, the main issue is that the popular festive plants only grow in high temperatures. As energy prices have jumped and production costs soared, the expense of maintaining the appropriate level of heat has now proved too steep for some to bear.
Christmas is supposed to be the time of year when trade picks up for businesses in the retail chain, so it's frustrating to see small firms struggling to benefit from the festive season simply because the cost of energy is standing in their way
Last year Roundstone Nurseries in West Sussex grew more than 200,000 poinsettias as part of a deal with Sainsbury's and Marks & Spencer, and in 2011 the business even had to install an extra four acres of greenhouse space to cope with demand for the Christmas plant. However, with energy bills breaking the £50,000 barrier during 2012, managing director Peter Cook explained that the nursery is now growing cyclamen instead.
It's disappointing news for both businesses and consumers - especially considering the growing popularity of poinsettias among the British public - and is also indicative of just how significantly gas and electricity bills affect small firms.
The fact is that numerous nurseries have faced the problem, and it's also leading them to lose business to foreign companies. Retailers are increasingly importing from Dutch firms to meet demand from their own customers, irrespective of claims that these products lack the quality of those grown in Britain.
Christmas is supposed to be the time of year when trade picks up for businesses in the retail chain, so it's frustrating to see small firms struggling to benefit from the festive season simply because the cost of energy is standing in their way.
With energy prices only going in one direction, it's more important than ever that Britain's businesses are not paying over the odds for their power - but according to the regulator Ofgem, over half of companies are on the wrong type of contract. Ultimately, this means they're paying much more than they could be - for example, a gas bill of £50,000 on a supplier's automatic renewal rate would look more like £40,000 on a typical switching rate.
It's clear that rising gas and electricity bills are a problem, but businesses must be sure that they review their contracts before deciding the exorbitant cost of energy prohibits activity in any way. This could be a simple - and extremely effective - way to give their finances the boost they need and keep their business plan on track.
Image credit: Robert Nunnally
Dan O’Sullivan is Make It Cheaper's Web Content Manager, which means much of his time is dedicated to ensuring we have plenty of online material to help business owners understand the energy, insurance and telecoms industries. With years of experience working alongside SMEs, Dan is committed to making life as easy as possible for smaller firms. You can email Dan at email@example.com
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