Business Cost Reduction Activities Are a Bit Like New Year Resolutions

– you have good intentions but it is not so easy to put those intentions into practice.

Yet it is not as hard as it might at first seem, there are several good service providers out there offering to undertake your business cost reduction activities for you. And I sure you would not argue with me that with prices soaring skyward it is important to get a good deal on everything you purchase to keep your costs down. But it seems that many businesses want to achieve cost reductions but don’t have the stomach for it or perhaps the time to devote to it.

KPMG, did a worldwide survey looking at all types and size of business and found that

Nine out of ten companies are potentially missing out on major opportunities to boost profits” through business cost reduction activities.

There are however some understandable and very human reasons why the best intentions don’t happen. For example, if you want to switch energy suppliers you have got to do it before your contact rolls over so it is easy to miss the opportunity and end up locked into an expensive contact for several more years.

To switch energy provider you need to know how and when you can terminate your contact and you need to make the right choice to achieve maximum business cost reduction benefits. Here are a few points to bear in mind:

• Unlike household utilities, businesses are not free to switch suppliers at any time;
• 95% of businesses are in a contract which lasts 1-5 years;
• Suppliers offer attractive ‘new customer’ rates and penalise loyal customers with uncompetitive rates;
• A current rule of thumb is that – if you are paying anything over 10p/unit for electricity or over 4p/unit for gas – it would be worth taking some form of action;
• If as a business customer you do not serve notice on your supplier you will be automatically rolled into a new contract typically on higher rates for another 1-2 years.

Business cost reduction service providers mostly do what they say and reduce your costs, but the amount you will pay for the service varies considerably. Some operate by taking a share of the costs saved so it is in their interest to find you a significantly cheaper deal and they will do the paperwork for you. Auditel franchisees operate on this model and offer a good service but I can’t help feeling that is would be more attractive if the cost reduction service were to charge you nothing for their service and this model does exits. One notable such company is Make It Cheaper their business cost reduction service is free and highly regarded.

In both types of approach you should be able to rely on your service provider to deal with the nitty gritty – as they say the devil is in the detail – and getting bogged down in the sometimes complex tariff and pricing structures is exactly why businesses don’t carry through their cost reduction plans.

Of course besides switching suppliers to get a better price there are lots of things you can do to reduce your consumption, by using less energy for example, which is good for your budget and good for the planet. For some ideas check out the Energy Saving Trust’s website.

There are also online business energy price comparison sites - Business Electricity Prices is one such site, but you still need to do the work yourself and they have a single focus, while a good cost reduction service will cover a broad range of services including gas, electricity, insurance, telecoms and merchant credit card facilities. See our Business Cost Reduction Services and work some magic in your company.