If You Aren’t Strategically Managing Your Utilities Then Your Business Is Burning More Money Than Fuel

THE ULTIMATE GUIDE TO AVOID OVERSPENDING ON UTILITIES

Burning Money on utilities

Across 5 of the UK’s biggest cities, £60 million is being spent on unnecessary energy bills. Businesses are paying for energy they are not using, with some studies showing that UK businesses are wasting nearly 50% of the energy they pay for.

Five sectors – offices, retail, industrial, health and hospitality – accounted for 71% of overall energy consumption in 2015. In one of these industries? It’s imperative you read on…

So, what causes this overspending? Often businesses over-delegate their utility management, meaning each aspect is isolated from the other. By decentralising your utilities management, you’re making it harder for your business to pay for bills strategically. How might this look in your business model?

  • The finance department approves what the company buys,
  • External facilities managers install and maintain equipment,
  • HR and management advise employees to turn off computers when idle to conserve energy,
  • The environmental department mange the sustainability report….

Does this business model sound familiar? Then you could be wasting millions of pounds each year.

A Green Conscience

There is a lot for companies to consider – from changing rates, new providers, and emerging technology – the energy market has never been more complex. It isn’t enough, anymore, to merely sign up and pay for bills mindlessly.

In recent years Green Energy has revolutionised the industry and there is more pressure on businesses to ensure that they are using the right suppliers and tariffs to reduce their carbon emissions.

Finding ways to make managing your utilities your company’s priority has never been more urgent.

Transform your utility bills from being an expense to a strategic marketing resource. Get your company’s name out there are the greenest business in [insert city name here], manage and track your consumption and implement ways to reduce expenditure and emissions.

With the repercussions of lockdown, and the climate emergency looming, now is the time to become an efficient business – both financially, and environmentally.

Managing Consumption

If you’re a baker, then you consider your flour, eggs, butter etc all to be critical resources. Likely you would shop around, looking for the best wholesale price for your ingredients as you know they’re a key expenditure for your business.

Why wouldn’t you regard your energy consumption in the same way? You must use an oven to bake your goods, too.

It is important to keep detailed reports on usage; in the same way a baker knows exactly how much flour they need to buy in order to meet their orders, a business should know how much energy they require to run their company.

The aforementioned business model of delegation is not structure to strategically organise and manage energy consumption. At best, it can manage costs. But, as explained earlier there is far more for businesses to consider nowadays. The wasted 50% of your business’ energy is not only costing you unnecessary money but it also costing the environment in the excessive carbon emissions.

You could be surprised by how much difference even a marginal reduction in your utility costs has on your profits. Every pound saved on utilities equals an additional pound in net profit.

Below are two main examples of areas businesses can save money on:

AreaConsumption %Changes PossiblePotential National Savings
Lighting20Switching to LEDs, installing motion control sensors£3.7 billion
Heating and Ventilation<10%Temperature reduction on thermostats, ensuring both ventilation and heating are not working simultaneously£1 billion

SME Enterprises

It isn’t just large-scale businesses who are overspending. Small and medium businesses are collectively overspending by £7.6 billion on their essentials each year, alone.

DID YOU KNOW? That is the equivalent of £1,427 per business being wasted each year on utilities

Nick Grogan, Energy Solutions

More so than larger companies who perhaps have the facilities to have dedicated finance teams and audits, small and medium businesses likely struggle to find the time to look over their utility expenditure. Only 20% of UK businesses admit to conducting regular invoice checks and bill audits.

It is easy to ignore utilities when your business may be busy as is, but when you appreciate the amount being mindful of your expenditure has the potential to save your business you may find it easier to make the time.

By failing to ‘shop around’ and compare bills, suppliers are able to take advantage of your custom.

Solutions

CENTRALISATION

The best approach to improving strategic utility management is by increasing centralisation. This reduces the isolation of tasks, meaning that energy consumption can all be processed and compared simultaneously; ultimately making your company’s consumption the most efficient and practical it has the potential to be.

DelegationTasks to CompleteOutcomes
Appoint a Chief Utility OfficerThe role would focus on reducing inefficient energy payments, figuring out business energy goals, and implementing theseImproved strategic utility management by centralising control.
 Hiring, training and leading teams which represent the CUI in different departmentsEnsure the spreading of advice across the company’s departments without infringing on centralisation of authority
 Smart purchasing of equipment such as LEDs and motion sensorsThey would know expert information about equipment and could then implement this across the company

GENERATION

DelegationTasks to CompleteOutcomes
Research large-scale energy generation possibilitiesSee if your company has the potential for the Combined Heat and Power GenerationCHP is onsite energy generation which allows a company to capture heat that would have been wasted (such as heat which comes off of a building) and repurpose it. It has the potential to reduce energy bills by up to 30%
 Look into onsite self-generation through solar panels or alternativesThis is a method of generating your own energy, if you have the means, which is an effective way to reduce energy expenditure as you are providing energy for yourself. It also increases your company’s green energy in your personal fuel mix, which reduces your carbon emissions.

SHOP AROUND

DelegationTasks to CompleteOutcomes
Make yourself aware of your contracts and of other available deals.Be aware and make a note of when your contract runs out and when you have to apply to renew/change it.Many businesses find themselves being placed on out-of-contract rates by suppliers, as the longer business contracts tend to have a rollover clause where you just keep paying your supplier even after the contract ends. Out-of-contract rates are one of the most expensive in the industry, and spending a long time on them will cost your business a lot of money. Making sure you’re familiar with your contracts and their end dates will help you avoid this situation.
 Shop around the marketThe Big Six haven’t been competitive in years; it is time to swap to smaller suppliers and take advantage of competitive prices. The energy market is designed to be competitive, so deals to swap your supplier are some of the cheapest and most attractive in the market. Take advantage of regularly swapping your energy contracts and benefitting from the rewards suppliers tend to offer new customers.

For more information about this post and how Energy Solutions can help with your Electricity, Gas, or Water, click on the links, or check out the contact details at the bottom of the page.