Every penny you save becomes profit when you run a business, and that’s especially important during the first few years when you need to show growth.
When you think about your business outgoings, which expenses spring to mind first? Probably the salaries of your staff and the cost of renting premises, as well as business rates and other important overheads like transport and fuel.
It's likely that the stationery bill or the cost of tea bags doesn't feature highly on the list. However, our research has found that small business owners often underestimate the financial impact of the little things – those everyday expenses you need to keep your business going (and your staff topped up with caffeine).
In 2022, the biggest challenges for small businesses are the rises in inflation and interest rates. The financial issues can make it hard for businesses to make ends meet as is, let alone consider growth.
If your businesses is looking to cut costs in face of the cost crises, here are some surprising stealth costs that can easily mount up:
Invest in energy efficient equipment
If your office equipment is guzzling energy, it's time to look at some alternatives. Energy efficient printers are available, as are energy efficient kettles – both true office essentials. Even swapping your regular light bulbs for their energy efficient counterparts can make a significant difference to your bill, especially during the darker months.
According to the Energy Saving Trust compact fluorescent lamps (CFLs) use around 70-80% less electricity than the equivalent traditional bulbs, and last almost 10 times longer.
As far as cost savings, CFL bulbs can save you around £8 per bulb per year, and LED bulbs can save around £9 per bulb per year. As LED bulbs can last up to 30 years, this is a great investment. Eco-friendly solar chargers can keep your mobile phone and laptop batteries full without eating into your electricity bill.
Phone Bills
Failing to keep an eye on phone usage, as well as not shopping around for the most competitive tariff, can leave small business owners with a nasty surprise when the bill arrives. One way to keep bills down is to make use of VoIP services like Skype, which allows you to make calls over the internet, and offers business packages on a 'per user, per month' basis, enabling you to monitor and manage monthly spend.
Postage
Email may have replaced some of your written communications and delivery requirements, but many small firms still rely heavily on the postal service. Royal Mail recommends investing in a franking machine as a cost-effective alternative to paying for postage stamps, as you'll save between 2% and 15% per item of post if you use a franking machine rather than a stamp.
Compare providers regularly
Don't assume that you're getting the best deal. Sit down once a year (or once a quarter, if you have time) to compare energy providers. Most suppliers launch new tariffs and deals every six months, so it's worth checking often. While the energy price crisis is ongoing, switching may not help much at the moment but it is always worth researching. There may be other ways to save with your current energy provider such as changing the way you pay your bill or going paperless.
⇒ Find out more about how small businesses can deal with the energy crisis: UK Energy Crisis: How Small Businesses Can Handle It (axa.co.uk)
Company cars
With petrol prices skyrocketing, looking into an eco-vehicle for your van or company car could help you cut prices in the long-term. Not only can they be cheaper to run, but there are many local and central government incentive schemes to help you get a more efficient vehicle. Barring the purchase of a hybrid or electric vehicle, you can also save money with driving and maintenance techniques that will cut down on fuel and servicing costs.
Stationery
Every business needs stationery, but this is another cost that can quickly escalate if you're not careful, particularly when you factor in pricey items like printer ink. You can help to minimise spend on stationery and ink by encouraging your staff to print documents sparingly, and by promoting paperless communication and collaboration systems like Slack or Google Docs.
Tea and Coffee
The office tea and coffee supply may seem like a minor consideration, but it's easy to waste money if you don't buy in bulk and shop around for the best deal.
Claim all of your allowable expenses
Spanning stationery and phone bills to insurance and staff costs, some small business expenses are tax deductible. Make sure you know what expenses you can claim as an allowable expense so that you don’t pay any more tax than you need to. If there’s an allowable expense you’ve been missing out on, claiming it in the future may enable you to save more money for your business.
Keep an eye on usage
Charging gadgets, making countless cups of tea or leaving the fan running during hot afternoons – it's easy to see how electricity bills can quickly add up. A home energy monitor can help you track how much electricity you're using throughout the working day.
The cost of a smart meter can range anywhere from £30 - £150 if you’re buying it personally, however many suppliers offer them for free. Once you know which appliances are using the most energy, you can either swap them for more energy efficient models or cut down usage.
Take small steps if big ones are out of reach
If you try to approach cost cutting by doing everything at once, it'll feel like an impossible task. So, take on some small changes first and gradually add on more until your business is as cost-efficient as possible. To start, consider undertaking an audit to identify where money is being wasted.
Taking these small steps can help you make substantial savings on your monthly bills. Some even have the benefit of helping your business go green, which can be an added draw to potential customers. You might be surprised how soon the savings can stack up – putting your business in a strong position for growth.
