Small Business Advice Week: The easy ways to cut your costs
Make It Cheaper CEO and founder Jonathan Elliott shares some of the easy ways Britain's small businesses can save money
This week, SMEs across the UK have the chance to share advice and tips with each other as part of the 11th annual Small Business Advice Week (SBAW).
The event runs from the 1st to the 7th of September, and invites Britain’s 4.9 million small and medium sized businesses to share their expertise with each other to help promote future growth.
Throughout the week, I’ll be revealing some of my tips to show how easy it can be for small businesses to reduce their running costs. I’ll be looking at four key expenses - energy, insurance, merchant services and telecommunications - and explaining how to tackle them. Starting Tuesday, I’ll be posting three top tips every day, so be sure to keep checking back to get the full insight.
Tuesday: Energy bills
Energy can be a frustrating expense for small business owners, but the good news is that there are some easy ways to minimise the cost of your bills.
It's all about getting to grips with your energy contract, and here are three simple steps to ensure you're not paying over the odds for your gas or electricity.
- Switch: The first step is to switch to a cheaper contract, and if you've never done this before you could quickly slash your bills by 30%. The easiest way to do this is to find a copy of your latest bill and call a business energy broker - they'll be able to help you identify when you can switch and which deals represent the best value for money. Once you've chosen a contract that suits you, they'll set the deal up on your behalf while you sit back and enjoy the savings.
- Take regular meter readings: In most cases your energy supplier will want to charge you a monthly direct debit based on your estimated usage. To ensure they aren't charging you more than necessary, it's sensible to submit regular meter readings so they can send you accurate bills. Most suppliers will let you submit readings online, so this is a quick and easy way to guarantee that you're only paying for energy you're actually using.
- Remember the dates: It's important to remember that your business's energy contract will last for a defined period of time, after which there's a risk your supplier will automatically place you on more expensive rates. As such, it's essential to know when your deal is expiring so as you can arrange a new one before the cut-off date. This is something a good broker should do for you, but it doesn't hurt to make sure you're ready to arrange a new contract when the time comes.
Insuring your business can be an effective way to guard against unexpected costs - but a policy doesn't always come cheap. Luckily, there are a number of ways that you could reduce your insurance premium to save your business money. Here are my three top tips for saving on your insurance:
- Balance cover and cost: It's important that the insurance you take out is comprehensive enough to cover all potential threats to your business, but it's equally essential that you make sure you're not paying for cover that you don't need. Consider every insurance policy carefully, and decide how relevant each one is to your business's requirements. Take what you need, and leave what you don't.
- Reduce your risk: The price of an insurance package is directly influenced by the level of risk a business presents to an insurer. As such, lowering the risk your business poses can help to bring your insurance premium down. You can prove to your insurer that your business is low risk by taking steps such as installing new locks and alarm systems, and showing that you practice proper risk management.
- Take charge of your renewal: When your renewal date is approaching, don't hesitate to start looking for a better deal. You should give yourself 30 days before your current policy is up to shop around and negotiate with brokers. Speak to your current broker to see if they are able to get you a cheaper deal - or even a customer loyalty discount for staying with your insurer. If not, then you've still got plenty of time to find another provider.
Thursday: Merchant services
Chip and pin machines are becoming an essential part of the modern business world, with more than 150 transactions taking place every second. However, as the popularity of card payments continues to increase, so do merchants' processing fees. In fact, the amount businesses pay to process transactions has increased by almost 20% in the past six years.
Fortunately, there are a few easy steps you can take to help reduce the amount that your business is paying for merchant services. Here are my top three tips for finding and negotiating a cheaper PDQ contract.
- Understand what you're being charged for: A great way to start saving is to make sure your chip and pin provider is offering you competitive rates. Different providers charge different amounts for their services - as high as 4% per credit card transaction, and up to 50 pence per transaction for a debit card - so it's important that you take the time to shop around to get a better deal.
- Rent, don't buy your machine: Some business owners might think that purchasing a card machine outright will work out cheaper than renting. However, your business stands to save more money through the cost of maintenance, data charges and repair by renting a machine from your merchant service provider. You can typically expect to pay between £15 and £25 a month to rent a card machine, although prices will vary between providers, so make sure you compare different suppliers for the best deal.
- Don't settle with your bank: When organising a merchant bank account for your business, there's a good chance that you'll be offered PDQ services along with it - but it's important to remember that you're not obliged to accept your bank's chip and pin offer. There are other suppliers out there, and you should take time to compare quotes from across the market before signing a contract. Also, bear in mind that you may be able to get a cheaper renewal quote as part of a loyalty discount if you stay with your current PDQ supplier.
Telecoms are vital for many businesses, and with so many deals available it’s important to ensure you’re not paying over the odds to stay connected. With this in mind, here are my three top tips for cutting the cost of your telecoms:
- Get a package deal: One of the easiest ways to cut your telecoms bills is with a package deal. Package deals tend to be cheaper and often include extras such as capped rates, low recursive charges, voicemail facilities and caller ID, so you should always compare prices from across the market to see which providers offer the most attractive additions. However, you should also think about whether or not any extras or discounts are likely to be useful to your business, as you don’t want to pay for features that you aren’t going to use.
- Balance cost against service: To run your business efficiently while lowering the cost of your telecoms, it’s important to find a package which fulfils your requirements for a reasonable price, rather than one that’s simply the cheapest. Indeed, it wouldn’t make sense for a digital agency to compromise internet speed just for the sake of signing up to the cheapest telecoms contract available, as this could have a detrimental impact on the business. The key is to find the right package at the best price.
- Look into VoIP: VoIP (Voice over Internet Protocol) is the name given to a phone service delivered through an internet connection, and can be a useful way to reduce the cost of calls made by your business. If your business makes a VoIP to VoIP call – even internationally – the call would be free of charge through a standard internet connection. Even if you call a business which doesn’t use VoIP, the cost can still be cheaper than calls made using a traditional landline or mobile phone.
Jonathan Elliott is Make It Cheaper's CEO and founder. He recognises that small businesses are the lifeblood of the British economy, and is passionate about making it easy for them to save time and money, boost their profits and improve prospects for growth. As a vocal campaigner for fair treatment of SMEs by utility companies, Jonathan collected ‘SME Consumer Champion’ & ‘Most Trusted’ at the 2013 Energy Live Consultancy Awards.
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