Inflation hits 9%: how can your small business budget for rising fuel and energy costs?

How can I save on energy costs?

Invest in energy-saving equipment

Outdated models of computers, fridges and even boilers tend to be far less energy efficient. Updating your office equipment with energy efficient products now will lead to long-term savings.

Using greener bulbs will cut energy usage and save money – they use up to 80% less energy than standard lamps and they don’t need to be replaced as often either.

Similarly, motion sensitive lighting will turn off automatically when rooms are not in use. Make the most of natural lighting this summer by opening window blinds in daylight hours to cut back on business energy costs.

Encourage company behavioural changes 

Simple steps like asking your staff to turn off their computers at the end of the day can produce long-term savings. Something as easy as turning a single monitor off when it’s not in use could save your organisation up to £35 a year on business electricity bills.

Similarly, educating the workforce on water use can be a good way to reduce costs. Even filling the kettle up more than necessary can add up over time.

Weekly email reminders, or intranet headlines, are a good way to get this guidance across.

Conduct an energy audit 

7 in 10 small businesses said energy bills were a barrier to growth last year, according to a survey carried out by Tyl. 54% of respondents said they were currently spending £3,000 or more on annual energy bills.

Take regular meter readings around your premises to keep track of your energy consumption. That way you will know what processes use the most energy and will be able to identify areas where savings could be made.

Consider installing a smart meter as a self-reading gas and electricity meters that shows how much energy you’re using in pounds and pence.

Use an energy broker

The gas and electricity market is hugely complicated at the moment.

As prices rise, Ofgem has introduced an energy price cap to protect households from extortionate bills.

Given the current strain on the industry, the common advice for sole traders is to stick with this energy price cap tariff (£1,971) as it offers the cheapest deal.

However for small businesses, who don’t qualify for the energy price cap, we recommend investing in an energy switching service to locate the best selection of tariffs and rates to choose from.

Small business energy brokers act as an intermediary between you and electricity suppliers. They can sometimes have exclusive deals with providers. Many also offer a free consultation of your current energy usage and requirements.

That means there is a benefit to shopping around for a deal that’s less than 30% higher than the current price cap now, as you’ll be in a better position when October rolls around.

How can I save on fuel costs?

You’ll be most-affected by rising fuel costs if you are involved in delivery and transportation, as diesel and petrol will be your biggest expense.

Purchase fuel cards

One of the simplest ways to minimise fuel costs is to purchase a fuel card. These are essentially like a business credit card that gives users access to discounted fuel from specific providers.

Fuel cards can be allocated either to every driver in your company or every vehicle in your fleet.

Your drivers can then load up with discounted fuel at stations in the fuel card’s network. They’ll pay for their fuel using a chip and PIN card.

Depending on the fuel card, you can get discounted fuel at anywhere from 1,300+ to over 7,700 UK fuel stations, including supermarkets.

To get started with a fuel card you need to request a quote from providers. You can do this easily with our free, Startups’-exclusive simple cost comparison tool.

Once you’ve received a quote, it takes around four to seven days to receive a card, so it’s a good idea to start comparing costs as soon as possible.

How else can I minimise fuel costs?

Other techniques we recommend to SMEs wanted to reduce petrol costs are:

• Adopting conscious driving habits by educating your employees on the bad driving habits that can increase fuel consumption, such as fast acceleration, driving in low gears, heavy braking, speeding, and revving.
• Avoid travelling where possible by holding digital meetings instead of in-person.
• Examine your current travel requirements and routes to locate the opportunities where you might be able to cut back. Are you drivers crossing over at all during routes, for example?
• Invest in green vehicles. While energy costs have impacted EV vehicles (recharging at home is now 43% more expensive than a year ago) they are still much cheaper to run than petrol and diesel cars. Electric vehicles should also have greater longevity as the government phases out petrol/diesel counterparts.

I’m not involved in delivery or transportation: am I safe from fuel increases?

Even if you don’t own and operate company vehicles directly, you’ll still likely be hit by higher pricing thanks to its effect on the supply chain.

Vendors or suppliers that transport goods for your service will have to offset the increased costs in some form – usually by passing the cost onto buyers.

We recommend that you get ahead of this outcome by staying knowledgeable about your finances.

Speak to a financial advisor, or make use of free small business accounting software, to carry out a revenue forecast and be aware of what increases you could afford.

Depending on your relationship with your suppliers, now is also a good time to reach out and check whether they are planning any cost changes in the coming months. This will help you to prepare for any potential price hikes.