Energy prices have been on an upward trend for some time and for you, as a business owner who no doubt needs to manage cost, the only strategy is of damage limitation.
Here is a summary of our 3 golden rules for managing the impact of rising energy costs.
Even though we’re only four months into the year, prices have remained consistently higher than the same period last year, with gas around its highest level since 2009.
Frustrating though it is, the only thing you can do is to control how your business buys and uses energy by developing an effective and realistic energy strategy.
The detail will depend upon the complexity of your business. However, the process of developing a strategy means you are actively focusing on the issue of energy, and this, in our experience, inevitably results in either lower costs or better management of higher costs.
Broadly, your strategy needs to incorporate the following three elements:
1. Reduce unit cost
Ensure energy is purchased at best value. Best value may not always mean seeking the cheapest unit cost of gas or electricity – best value is also about getting the best contract terms to suit your business. It’s also worthwhile analysing bills to reduce errors and to ensure errors are corrected. Every month we validate invoices for most of our clients and have managed to recuperate significant amounts in over-charges.
2. Reduce the amount you purchase
Identify opportunities to use less energy by modifying or replacing plant and equipment. Outdated and inefficient production equipment and processes can swallow your resources. It may be necessary to develop a business case for any capital outlay.
3. Reduce wastage
Find and eliminate recurring waste and reduce unexpected waste through better monitoring. Understand how and where your business is most energy intensive. Alter employee behaviours where possible – simple habits such as switching off the lights and closing doors can have a significant impact over time.
Of course, it isn’t always easy to give the issue the time and resources required. For more information on how we can help you to reduce cost, please do get in touch with Mike Jones on 01244 571830.
