Reduce Your Business Costs

Save your business money by reducing these often over looked business costs.

Finance and legal

10 August 2016

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).

With 62% of small businesses looking to grow their business in 2015, and 22% citing finance as the biggest barrier to growth – all those little expenses could add up to extra pennies to fund and grow your business.

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. CFL bulbs can save you around £7 per bulb per year, and LED bulbs can save around £7.50 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. In our survey, 9% of SMEs said they were stunned by the money spent on phone calls. 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. We found that 6% of bosses were amazed by the total cost of postage for their business. Royal Mail recommends investing in a franking machine as a cost-effective alternative to paying for postage stamps, with a franked 1st Class letter costing 52p – a saving of 11p compared to a 1st Class stamp (63p).

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. You can save up to £488 per year by switching – an impressive number to boost your profits. If you're on a fixed-rate contract you might incur a fee for leaving early, although you can usually leave up to 49 days before your contract ends without any extra cost.

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. A further 13% of small business owners described stationery as their most surprising stealth cost. 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. In our survey, 13% of respondents described the cost of these 'sundry and miscellaneous' items as the biggest shocker.

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.

You can buy them for about £30-£150, or get them for free from certain suppliers. Once you know which appliances are using the most energy, you can either swap them for more energy efficient models or cut down usage.

If these stealth costs are starting to mount up for your business, consider undertaking an audit to identify where money is being wasted. You might be surprised how soon the savings from switching suppliers and choosing different brands can stack up – putting your business in a strong position for growth.

Taking these small steps can help you make substantial savings on your monthly bills. Some also have the benefit of helping your business go green, which can be an added draw to potential customers. Why not check if you could be saving money on your business insurance, with cover from AXA starting from just £77 a year.