Cost Inflation - DMT solutions

Why businesses need to reduce costs during an inflation

“Reduce Costs, Reduce Costs, Reduce Costs” –
That’s all we seem to be hearing from employers.

As we find ourselves amid an inflationary period, businesses must look closely at their finances and find ways to reduce costs and overheads.

Inflation can have a significant impact on businesses, causing prices to rise and putting a strain on profits. In 2020 UK inflation was around 1%, and by October 2022, it shot up to a whopping 11.%.

In this blog post, I will discuss why businesses need to reduce costs and overheads during inflation and provide some funny examples to make it more enjoyable.

Firstly, let’s talk about what we mean by overheads. Overheads are expenses not directly related to producing goods or services but are still necessary for running a business. Examples of overheads include rent, salaries, business energy, and office supplies.

Inflation

During inflation, expenses can rise, and businesses need to quickly find ways to offset these costs.

Now, I know what you’re thinking – “Reduce costs? That sounds boring!” But fear not, my friends, for I have some amusing examples to help illustrate my points.

Global Cost Inflation - DMT Solutions

Business Rates

Let’s start with rent.

Imagine you are the bakery owner, and your landlord has just informed you that they will be increasing your rent due to inflation.

What do you do?

You could negotiate with your landlord to make any alternative arrangements. For example, you could offer them some of your delicious pastries in exchange for a rent reduction. Maybe your landlord has a sweet tooth and would be happy to make a deal.

Another way could be to look at your business rates to see if your business is eligible for discounts or savings.

Next, let’s talk about salaries. Of course, as an employer, you want to ensure that your employees are compensated for their hard work. However, wages can become a significant expense for businesses during times of inflation.

One way to reduce this cost is by offering non-monetary benefits such as flexible working hours, stock options or the option to work from home.

Working from home can be a great way to keep employees motivated and happy, reducing your salary expenses and employees saving on travel costs.

Another way to reduce overheads during inflation is by finding ways to reduce office expenses. For example, encourage your team to get creative with DIY solutions instead of buying expensive office supplies. For instance, you could include making paperclips out of wire or repurposing old cardboard boxes as storage containers.

Not only will this save you money, but it could also lead to some entertaining team-building activities.

Finally, let’s talk about utilities. During inflation, the cost of energy utilities such as electricity, gas and water rates can rise, putting a strain on businesses.

To reduce these costs, encourage your team to be more mindful of their energy usage. For example, you could hold a competition to see who can develop the most creative ways to reduce energy consumption, such as turning off lights when leaving a room or only filling the kettle with the water you need rather than a whole kettle.

Not only will this reduce your utility bills, but it could also promote a sense of camaraderie and environmental responsibility among your team.

Conclusion

Reducing costs and overheads during inflation is essential for businesses to stay profitable and competitive.

Companies can easily weather the inflationary storm by finding creative solutions to reduce expenses and promote mindful habits.

So, let us all embrace our inner DIY enthusiasts and find ways to reduce costs while having fun.

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Ten ways to reduce business energy bills immediately - DMT Solutions

Ten ways to reduce business energy bills immediately

Ten ways to reduce business energy bills immediately - DMT Solutions
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Ten Ways To Reduce Business Energy Bills Immediately

Business energy bills are skyrocketing. As of August 2022, Ofgemโ€™s combined energy tariff, which includes domestic and business rates, has increased by 80 percent to ยฃ3,549 per year.

Manufacturing and production in the UK might be expensive. However, there are always ways for manufacturers and businesses to cut costs and lower energy consumption.

Before starting, conduct a thorough energy review to see if there are any easy wins, such as unplugging unused electronics, turning off devices at the end of the day, or enabling standby mode when not in use.

We have put together ten of the best ways to cut down your energy usage:

1. Keep and reuse heat

Factory machines, electric motors, factory workers and heating equipment emit heat. Stop heat from escaping and recycle the heat with a heat recovery system to reduce your heating bill drastically.

Fitting a typical factory heat recovery system in the UK would cost between ยฃ8,000 to ยฃ12,000. However, according to the Carbon Trust, a heat recovery ventilation (HRV) system running at an average of 70% efficiency will save about 38% of a business’s energy bills.

Other factors to include are the age of the building and the type of windows installed. Heat is often lost through old glazing, drafts, uninsulated roofs, non-insulated walls and loading doors without heat-retaining curtains.

Insulation can significantly reduce your business energy bills during cold winters and hot summers.

2. Solar energy

As solar panel technology improves, they become increasingly affordable. With the LCOE (levelised cost of electricity) for new utility-scale solar projects decreasing by 88% from 2010 to 2021, solar power is becoming more and more attractive.

A typical single-story factory with a large roof is ideal for mounting solar panels. Many solar arrays can generate enough power to cover significant periods of the day with electricity. Solar-powered energy contributions are possible even on cloudy days.

Another bonus for using solar is selling electricity back to the grid or storing it in on-site batteries to use later.

An additional option is solar heaters or solar thermal systems mounted on rooftops. Solar heaters are a cheap way to heat water.

3. Energy storage

As well as selling your excess electricity back to the grid, you can also store it. New battery storage technology is continuously developing. You can install as many storage batteries as needed by the business.

You can also use batteries to store electricity at off-peak rates, releasing it back into the network during peak hours. Energy storage can act as a reserve to protect against power cuts or system failure.

Some companies have arranged their batteries to form a local grid with others firms to share energy when there is a surplus of energy.

There are many battery storage providers on the market, such as Tesla, Toshiba, Panasonic, LG, Mercedes-Benz Energy, Samsung SDI and Siemens, to name a few.

As science and technology continue to advance, more options will become available for energy storage that is not reliant on lithium-ion.

4. LED Lighting

Over the last decade, one of the significant advances has been the development of low-powered, cool, running LED lights. LED lights use a small percentage of energy compared to traditional lamps and lights.

An obvious, yet sometimes neglected, way to cut energy use immediately is to replace incandescent bulbs, โ€˜energy saversโ€™, or halogen lights, with LEDs.

Compared to an incandescent lightbulb, an LED consumes less energy than a halogen lamp or a compact fluorescent lamp (CFL).

LED prices have plummeted in recent years. As a result, many businesses have switched from traditional lightbulbs to LED lights, but some still rely on fluorescent tubes.ย 

Fluorescent tubes are already more energy efficient than incandescent and halogens.

However, each LED array consumes approximately 40% less electricity than its fluorescence counterpart and lasts 35,000 hours or between 15 to 34 years.

LED can easily be fitted into offices, factories and other business areas, lowering the cost of lighting and using up to 75% less energy than incandescent lighting.

5. Energy audit

An energy audit will provide a baseline assessment of your energy usage, help you understand your current energy use and offer a clear money-saving roadmap for reducing your electricity consumption.

DMT Solutions can offer a free energy audit and benchmark your supplier’s pricing to ensure you get the best market rates.

6. Invest in energy-efficient equipment

Purchase energy-efficient office equipment. Before you buy or lease office electronic equipment, check to see the energy efficiency of the equipment and its ratings.

A cost-effective energy-rating system has been developed for evaluating appliances, which can help you save money and better control your energy usage.

The Energy Savings Trust has published a guide with everything you need to know regarding energy ratings.

7. Program thermostats

Pre-programming thermostats are one of the most crucial energy-saving tips that are particularly useful for an office or factory environment.

You don’t need to heat or cool or light an office after everyone has left for the day.

If your employees’ hours change, using programmable or smart thermostats to control the temperature during quiet hours can help save energy.

8. Turn off computers and other equipment

If computers and photocopiers are not used during nonworking time, have your team turn off the equipment before leaving for the day.

Unplugging and turning off as many electronic gadgets as possible at the end of each day is an easy way to save electricity. These include energy-saving coffee machines, toasters, ovens, and similar appliances.

9. Encourage employees to adopt energy-efficient practices

Business owners think increasing energy efficiency is the quickest, cheapest, and most effective way to save energy and money.

Encouragement for employees to become more environmentally conscious can increase their motivation and create an atmosphere where they feel empowered to take action.

Ensure your employees understand why they’re changing their behaviour. For example, they may resist changing if they don’t know why they must turn off equipment.

Post signs in conspicuous areas around the workplace advising employees of ways they can save electricity. Reminders can help employees get started by nudging them in the right direction, even if they don’t turn off the light switch or power down the devices.

Invest in new technology. If employees see their company leaders investing in energy-saving technology, theyโ€™ll be inspired to take action. You could start a cultural shift towards greater efficiency by making such investments within the organisation.

You are encouraging energy innovation within your organisation. Ask your team members to develop ways they think their company could be more environmentally friendly. Or you could give them an anonymous platform where they can post suggestions without fear of reprisal.

10. Get wise with water

Hot water accounts for roughly 10 percent of the average British householdโ€™s annual electricity bill.ย 

Even though that percentage may be lower in some locations, itโ€™s always good to keep an eye on your usage to know how much water is consumed.

First, consider whether there might be ways to reduce the hours of hot water available.

Could you turn off the boiler or hot water at the end of the working day?

Look out for any dripping water taps. The amount of water wasted through water leaks can be astonishing.ย 

Itโ€™s been estimated that British households waste an average of ยฃ68 million annually because they fill their kettles too full. Ensure staff are sensible when making teas or coffee and only fill the kettle with the water they need.

You could extend this to the kitchen appliances you use and opt for energy-efficient ones.

An automatic dishwasher with an air drying setting can save up to 10 percent on dishwashing electricity bills by turning off the dishwasher when the dishes are done rinsing.

Teach your staff dishwasher etiquette, such as only running complete loads in the dishwasher.

Conclusion

Reducing energy usage is integral to any organisationโ€™s life cycle and helping the environment. The money saved can be used to improve profits, cut down on expenses, expand operations, or stay afloat during tough economic times.

A business’s sustainability programme can help reduce costs by switching to greener suppliers, using economical packaging and offsetting carbon emissions.

Management should revisit business operating models to ensure that efficiency and productivity are at their highest.

Other areas businesses can look to save money include conducting a cost reduction review. A cost reduction review will benchmark your existing costs to ensure you get the best value from your suppliers.

Get a Free Cost Reduction Review. Get in touch with Digital Media Technology Solutions today.ย 

If your business wants to do its part for the environment and cut your carbon footprint, buy green at www.greenbuying.co.uk โ€“ 5% discount codeDM048.