Business owners all over the UK are reeling in the face of the latest challenge to their survival. In what many are interpreting as the latest pandemic-related challenge to small businesses, most are facing huge increases in their energy bills thanks to a number of factors driving up utility costs across the UK and beyond. Business loans can be a solution, but this option isn't realistic for those businesses that can't afford repayments.
For businesses that need large amounts of energy to operate; such as hotels, laundries, nurseries, care homes, cafes and bars; the energy crisis is pushing them to the brink. Covid is on the back foot and demand has returned in many industries. But without the money to cover soaring energy bills, many small businesses risk losing it all this year, despite coming through the pandemic in one piece.
The increase in energy bills over the past year for small businesses is quite staggering. The Federation of Small Businesses (FSB) found that between February 2021 and February 2022, the average small business with commercial premises in London saw their electricity bill increase from £4,724.73 to £11,589.89, which is a 145% rise over a single year. For gas, the increase is even greater, rising by 258% from £1,345.07 to £4,815.36.
Why are energy prices so high?
It’s a simple case of supply and demand. Supplies are down due to factors like the war in Ukraine, and wholesale prices have risen as a result. Demand is up, due to the relaxing of Covid restrictions across the globe, and the result is consumers having to pay more for their energy.
The FSB says that the current rate of energy bill increases could spell the end for many small businesses. They stated: “When small businesses go under, that sends shockwaves through local communities in the form of lost jobs, reduced investment and damaged consumer confidence.”
However, as a small business owner, you aren't entirely helpless when it comes to your energy bills. There are measures you can take to try to reduce your energy usage and increase your energy efficiency and technology makes it easier than ever to do so. And these changes will have long-term benefits, both financially and reputationally, to your business.
Can technology help small businesses to cut energy usage?
Much of the technology available to help businesses become more energy efficient used to be the reserve of large companies. A combination of price and complicated onboarding put small businesses off. However, these technologies are far more accessible these days and each is worth considering:
Building Energy Management Systems (BEMS) is a term used to describe software that helps businesses to monitor and manage the energy needs of their buildings. BEMS can help you to collect energy consumption data and manage the levels of energy consumed in various parts of a building.
This can include anything from lighting and heating to servers and machinery. Anything that requires energy to operate can be connected to your BEMS computer system, enabling you to closely oversee and manage how much energy is being used.
Thermostats can help you to control the energy you’re using to heat your commercial premises. According to research by the Carbon Trust, the cost of heating increases by 8% for just a single degree increase on your thermostat - so you can imagine the savings you could generate by turning your thermostats down, even just by a couple of degrees.
Timers are also a worthwhile investment if you do not already have them installed on your central heating. Timers will allow you to switch off heating outside of working hours and weekends if possible.
If you can automate the switching off of your equipment, especially in an office, you can save a huge amount on your energy bills. According to British Gas, more than 40% of office energy consumption takes place outside of standard operating hours. This means your computer monitors, your vending machines and your lighting are all costing you money when you're not even at work.
Occupancy sensors for lighting
Instaling occupancy sensors, which automatically switch lights on when a room is occupied, and off when it is not, can save huge amounts of electricity. These are particularly useful in areas that need lights, such as warehouse spaces, storerooms and toilets that have no natural lighting. Asking staff to switch off lights only goes so far. Automating the process guarantees energy is not wasted on lighting rooms that are unoccupied.
Sensors should also be installed in outside floodlights, over spaces such as car parks. If these are left on overnight, it can add hundreds to your energy bills.
Prioritise management of motors
If you use motors in your production operations, these are bound to account for the majority of your energy costs. Motors are energy-hungry and should only be in operation when you are actually using the production equipment they are powering. You can automate and interlock controls of motors to make sure they do not run when not in use, saving you big.
Ensure your equipment is energy efficient
When you come to replace equipment, purchasing something from the government’s Energy Technology List will ensure that you're getting something which is top-of-the-range in terms of energy efficiency. And remember, becoming more energy efficient comes with reputational advantages as well. By improving this area of your business you’ll be helping to reduce your impact on climate change, saving money and attracting consumers who prioritise environmental credentials and sustainability in their consumer choices.
A study by SmartestEnergy found that 80% of people said they prefer buying from businesses that have a positive approach to environmental sustainability. It also found that 90% of the consumers they questioned agreed that it is vital that society becomes more energy conscious.
Indeed, energy efficiency has moved from a nice to have to a must-have in recent years, and the current increase in energy bills is the final push that so many businesses required to make much-needed improvements. Business finance can help you to fund your energy efficiency drive now, so you can start to save money this year, and enjoy the benefits energy efficiency brings for years to come.