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energy crisis

22 Ways To Deal With Rising Costs And The Energy Crisis

Brexit, covid, the energy crisis and now the conflict in Ukraine; all are combining to create a difficult economic picture for small businesses as operating costs increase sharply. After an already punishing couple of years, it’s once again a case of survival for many business owners.

Whilst the external factors are outside your business’s control, what options do you have to ensure your business remains viable as your profits are squeezed?

1. Make sure you have a firm grasp on your financial situation. First things first, you need to have a clear understanding of what these rising operating costs are, and how they’re impacting your business. Once you know the full situation, you can plan your strategy to address the operational areas that need to be reviewed, updated, trimmed back, halted or removed. Working with an accountant is worth strong consideration, as they can give you tailored advice, ranging from sources of funding, to setting your prices to reviewing your budgets. Cloud accounting is also beneficial, as you can access up-to-date reports, helping you make informed decisions quickly. (For more information, see our guide on when you need to hire an accountant.

2. Review your pricing. Adding your fixed costs (such as rent, insurance, salary, equipment) to your variable costs (such as raw materials, electricity, packaging, etc) will give you your breakeven figure when setting your prices at the very beginning. Increasing the price your customers pay for your products/services is always risky; however, as we’ve seen, unprecedented events can cause variable costs to soar and this is when it’s worth re-assessing your pricing as part of your business’s response. Don’t be too afraid to increase your prices if you need to – most customers expect that the cost of their products won’t remain stagnant forever.

You might experience some customer churn if your competitors don’t follow suit, but if you handle the communication of it quickly and authentically with your customers, you might be surprised at how many are willing to stick by you when they understand the situation. Ways you can encourage a smooth implementation is to contact them directly, let them know in advance, explain the reasoning and make yourself available for any questions. It’s risky, but sometimes necessary to avoid operating at a loss. (For more information, see our guide on setting your prices.)

3. Analyse your business cost effectiveness. There’s only a limited amount of money you have to spend on your business, so it’s important you make your money work harder, especially during uncertain times. Making your business cost-effective is ensuring you are getting the maximum out of your available funds. It’s ensuring that you’re spending your budget on the right things with the aim to get the best value for money that you can. Regularly reviewing and analysing your costs as objectively as possible is good business practice. A great way to regularly monitor cost-effectiveness, is to download a budget tracker app. Again, this is something an accountant can assist you with if it isn’t your area of expertise.

4. Improve your financial skills. Investing in your understanding of the financial side of your business will help you make quicker, more confident decisions in response to any operational problems (and opportunities!) that come your way. Whether it’s learning by osmosis from your accountant, embracing cloud accounting software or investing in online finance courses, you’ll be able to budget and understand and analyse financial statements better.

energy crisis

5. Funding. Deciding how to fund a business can be challenging, in part because of the variety of funding structures available. Each type of funding has its own risks and rewards for the business and its founders. Looking for extra funding could be an option.

Banks are the obvious place to start – could you discuss a small business loan with them or an overdraft facility in order to help navigate some temporary financial difficulties? Bank of England interest rates are still fairly low, so the cost of borrowing is still also comparatively low, so it might be worth considering whether you allow your business to take on a little debt in order to stay afloat. This is very common in larger businesses in order to deal with peaks and troughs in the cashflow. However, you need to be comfortable that you continue to have a viable business and means of servicing any debt you take on.

6. Conduct a supply chain review. Supply chain management is a crucial process because an optimised supply chain results in lower costs and a faster production cycle. Dissect your supply chain fo ensure it’s operating efficiently and you’re getting the best value for money at each stage. Research the best value for money, without compromising on quality. This could involve trawling for better deals on your stock, to bulk buying packaging to reduce the unit cost, or reviewing your delivery provider to get a better deal.

7. Get rid of any unused services. Are you paying monthly annually for software services that you’re not really using? Consider downgrading to the free version or cancel altogether if you don’t see the value. Keep a log of your subscriptions and review it regularly. If you discover a service you like, but don’t require all the features, shop around, as there are a lot of affordable options out there. Set diary reminders to review your list of services – it’s a great way to run a lean ship.

8. Can you buy in bulk/pay annually to save in the long term? Many suppliers and software providers offer better deals when you commit to purchasing more items in one go/pay for an annual subscription. Review your budget and work out if you can afford a bigger one-off payment that equates to paying less each month.

9. Operate more efficiently with automation technology. Automation technology is transforming how businesses operate, as it allows you to do more with less, helping you scale in ways that were never before possible. The right software will speed up and streamline operational elements of your business, releasing time for you to re-channel into profit-focused activities such as new business development. Accounting, project management, email marketing, social media posting, appointment booking, payment processing, database management – there is no shortage of cloud-based solutions and apps out there that can help. Most solutions offer free trials, which are worth taking advantage of to ensure they’re the right fit for you. 

If you’re not particularly tech-savvy, is there an employee who could step up into a more operational role, who’s particularly good with technology and can conduct research and trials for you, and be responsible for implementing it into the business?

10. Outsource for extra efficiency. Delegating specific tasks to subject matter experts outside of your business can be an effective long term investment, particularly until you’re in a position to consider hiring in-house expertise. As a small business owner, you’re understandably spinning a number of plates - why not outsource your marketing activity for a period of time, and review the results from an ROI perspective?

Small firms are emerging from lockdowns under the strain of spiralling input and shipping costs, skills shortages, new exporting paperwork, emergency debt repayments, rent accruals and business rates.

Mike Cherry FSB National Chairman

11. Review your staff structure. Permanent staff significantly increases your operating costs – from insurance, to paid time off, to payroll taxes. Having a full-time employee for infrequent tasks doesn’t make sense. Freelancers can fill a gap for roles in your business that aren’t needed all the time. Consider whether the roles of your team significantly impact your business’s bottom line, right now. Can technology replace some of their responsibilities, so they can focus more on ROI-driven activities? There are plenty of online marketplaces that allow you to browse and hire freelancers from all over the world. Make sure to do your vetting though – cheap might not mean quality, so be prepared to invest in freelancers who produce higher quality work for a slightly larger fee. 

Interns are also a great way to lower costs – not only are they paid less than a regular employee, but they reduce recruitment costs should you wish to hire them, if they prove to be an asset to your company. Time spent training them as an official employee is also reduced.

12. Use free apps wherever possible. Sometimes the features included in the free, base model of a program is all you need. It’s also a great way to trial out the software to see if it’s a good fit before investing further if required.

13. Go paperless. Printing costs shouldn’t be ignored – from internal documents to presentations to flyers, it all increases your operating expenses. Put signs up in your office to remind people to question whether something really needs to be printed. And it’s not just about cutting energy use – going paperless reduces your impact on forests, decreases the amount of waste that is dumped into landfills, and helps lessen the impact of climate change. There are easy ways to operate paper-free, from services such as DocuSign for signing documents, to online project collaboration tools such as Asana and

14. Reduce your travel budget. Do you really need to meet in person? You can cut back expensive travel plans by conducting meetings via video conferencing tools such as Microsoft Teams and Zoom.

15. Make small changes to cut down your energy bill. Whilst the energy crisis might be dire, lots of incremental improvements can bring your energy costs down:

  • Install smart meters, which will show you how much you’re spending on your business’s energy throughout the day, helping you adjust and trim any energy-heavy tasks. Smart meters will also give you more accurate bills, rather than estimates based on time-consuming manual meter readings. 
  • Swap incandescent filament bulbs with modern LEDs. While there’s an upfront cost to replace them, you’ll save your business a lot of energy long term, plus they often last longer.
  • Get your employees on board with the changes you’re making, and why you’re making them. For example, turning off any lights in rooms that aren’t being used.
  • Consider motion sensors in your corridors and toilets that only turn lights on when required.
  • Using air conditioning all day during the summer can add up to around 30% of your energy bill. Keeping the office heated in winter can increase your energy cost by up to 8%. Use both sparingly if you can.
  • Improve insulation to take the pressure off heaters during the winter.
  • If your employees have a uniform, offer a jumper and fleece option or allow greater flexibility on office attire to allow employees to layer up.
  • Clean vents, fans and air conditioning filters so they don’t have to work as hard.
  • Is office furniture blocking any radiators? Can they be moved elsewhere?
  • Turn things off in the office which aren’t being used - avoid standby mode e.g. computers, laptops. Do big banks of switches and plugs need to be on? Unplug printers, chargers, etc when not in use
  • Cut down costs in the office kitchen e.g. only boil as much water in the kettle as needed, switch off the microwave at the plug after use, wait until the dishwasher is full before switching it on, clean fridge/freezer filters regularly, etc. The next time you buy new appliances – from toasters to freezers -go for A+++ rated ones. They may cost a little more upfront but can make up for it in long-term energy savings.
  • As previously mentioned, be as paperless as possible to avoid having the printer on all the time. Make sure it’s turned off when not in use.

There are many more energy-saving tips out there! A quick Google will provide more ideas, even ones specific to your sector.

energy crisis

16. Be more mindful of your water usage. You can reduce your water bill by: 

  • Installing low-flow plumbing fixtures
  • Turning off taps when not in use
  • Quickly addressing any leaky taps (you could lose up to 20 gallons of water a day!)
  • Installing a short-flush button in toilets to reduce water usage when flushing
  • Repurposing non-toxic waste water to flush toilets or water plants (if your business produces trade effluent), then ensuring that you are remaining within your business’s given threshold, otherwise you will be incurred hefty fines for abuse of the system
  • Getting your employees on board by educating them on water usage in the workplace, leaving signs up as mini reminders as to why it’s so important
  • If you have outside space, consider using mulch in your landscaping as it prevents loss of water from the soil, keeping the ground moist for longer and therefore requiring less watering.

17. Make sure you’re paying for the broadband and telecoms service you actually need. Your type of business will impact your broadband speed requirement. For example, if you’re a software startup, you’re going to need the highest speeds to operate. While a soft play centre offering free WiFi would require lower speeds. 

Does your business handle many calls? If not, consider a VoIP system over other excessive telecoms packages. A VoIP phone system is a technology to make phone calls through your internet connection instead of a regular landline or a mobile network.

18. Cut down your spending on utilities by switching to a better deal. When it comes to switching utility providers, make sure you have your bills to hand when comparing a handful of alternative suppliers. Contact them directly to discuss your specific requirements. Negotiate for their best offer. Don’t forget to let your current supplier know you’re shopping around, as they might offer you an incentive to stay.

When switching electricity and gas, look out for misleading advertising around low rates. For example, in the UK, electricity is billed on your usage in kWh, as well as a daily fixed rate ‘standing charge’ that covers maintenance and supply of your electricity. While some suppliers promote a low rate for each unit of electricity, they’ll hike up the standing charge price to above average. 

Also consider dual-tariffs (your gas and electricity is supplied by a single company) as this might offer up cheaper rates. (Keep researching though - just because the same company supplies your gas and electric doesn’t mean it’s the best deal.) 

Eco-friendly electricity tariffs, although free of the Climate Change Levy, are slightly more expensive than standard tariffs due to the added cost of sourcing renewable energy. If you’re looking to make major long-term cost reductions, consider renewable energy sources that you could host on site e.g. solar panels.

Like energy, you’ll need to pay a standing charge on your water bill, so you should pay attention to each charge to ensure advertised prices don’t include hidden costs.

19. Review your payment processing. Are you wasting money on expensive contracts that include multiple card terminals? Review your usage and ensure you have enough card terminals to operate without being excessive. There are also more affordable card machine options such as SumUp, which allows you to ‘get paid without a contract.’ You can get paid in-store, online, as well as on-the-go. No paperwork or fixed contract required.

20. Do you really need an office right now? As recent years have taught us, it’s very achievable to run a successful business from your home if you want to. Renting an office, furnishing it, sorting insurance, travelling to your office, etc, all adds to your operating costs. However, it’s all about the timing. There’s less pressure for startups to secure an office straight away, especially as teams are generally more prepared to work remotely now compared to the past. However, keep it in mind as part of your startup journey, as an office space is part of putting roots down as a business, can provide more structure, offer a clearer definition between working hours and downtime at home, while also holding teams more accountable.

Coworking spaces are also an option worth considering. There are a lot of pros and cons – consider whether your current situation is right for the business, right now. 

21. Work from home wisely. If you work from home, consider ways to reduce operating costs such as heating only the room you’re working in, speaking to your accountant about putting relevant household costs on your tax return, etc.

22. How are other small businesses dealing with rising operating costs? Reach out to your business contacts (some great tips for growing your business network can be found here) to see how they’re addressing rising operating costs. If you have a good relationship, you could swap some ideas and findings – you never know, they might have a supplier contact they can introduce you to, have just finished reviewing a selection of energy companies or made some office changes that’s saving them operating costs already. Share your knowledge to encourage others to offer up their insights also. Small businesses owners share many common problems – add your voice to the mix and encourage knowledge sharing that will benefit everyone.



As you can see, there’s a balance to be struck when dealing with rising operating costs. Yes, it’s a case of tightening your belt, but it’s also about pro-actively finding ways to increase your profitability through smart insight. Keep a close, regular eye on your finances – you’ll not only spot upcoming issues but feel better prepared to deal with any unforeseen ones.

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Jenny Lambert

Jenny Lambert is a freelance writer, interiors blogger and Etsy shop owner with extensive experience working in marketing, digital and publishing roles.

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