Rising energy costs have an impact on every business operating in the UK today, but new businesses are at an advantage. As the owner of a start-up, you have the opportunity to build energy management and procurement strategies into your operational procedures from the ground up. Good energy procurement and management can be the difference between success and failure; get your energy prices right and you could have a significant competitive advantage over your rivals.
The range of tariff and contract options available from suppliers in the UK market can be intimidating, especially if you’re just starting out. To help you navigate the energy market, we’ve put together our top five energy procurement tips for new businesses.
- Know what you want. Don’t enter into an energy contract without first researching the kind of products that are available to new businesses. You may think new businesses are limited to fixed price contracts, but you may also be able to get a flexible or semi-flexible deal. Flexible deals can help you make significant savings over the length of your contract. You should also decide how long you’d like your contract to last. For instance, fixing your energy price for three years will give your business some budget stability while it’s getting off the ground.
- Set a realistic budget. Factor your energy overheads into your operating budget and make sure you can meet your financial obligations to your energy supplier. As a new business, it’s important to establish a good credit history with energy suppliers.
- Prepare to face credit objections. New businesses do not have an established credit history with energy suppliers, so you could face credit objections from your proposed supplier that will prevent your energy contracts from going live. The UK has a complex energy market and suppliers take on a lot of risk, so they can often be particular about the kind of customers they’re willing to accept. Some suppliers won’t deal with new businesses at all. If you find yourself facing credit objections, seek expert advice.
- Compare prices. Your energy supplier will send you a list of unit prices available for each contract type you’re considering. At this point, you should shop around and compare prices with other suppliers to make sure you get the best deal you can.
- Buy at the right time. Make the energy market your business. You don’t have to read the OPEC Monthly Oil Market Report, but keep an eye on the news for pricing news and events that may affect energy supplies. By becoming more aware of the energy market and how prices fluctuate, you have a better chance of fixing your deal when prices are low.
In short: make sure you know what you can afford to pay, the type of contract you’d like to agree, and the length of the contract you’re prepared to enter into. The more informed you are about the energy industry and your own requirements, the better off you’ll be when you’re setting up your energy accounts.