70% of SMEs believe their energy bill impacts the growth of their business

by | Jan 18, 2022

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Tyl by NatWest explores the rising costs of energy prices for SMEs and how energy efficiency measures can impact profits and save the environment.

At a time of record gas prices and the energy price cap rising, energy costs and potential savings are more important than ever for SMEs. But how savvy are small businesses when it comes to their energy consumption? Tyl by Natwest surveyed 500 UK SME owners to find out more about their energy spending habits, and whether they’re investing in sustainable alternatives.

New data reveals that 30% of UK SMEs spend between £3,000 and £3,999 on annual energy bills, while almost a quarter (24%) spend over £4,000 annually. Average annual spend on energy bills is highest among businesses based in Yorkshire and the Humber, at over £5,000 per year.

These spends can have a significant impact on a small business and their overall costs. 65% of SMEs are spending up to one fifth (0-20%) of their total business costs on energy consumption, while 8% of SMEs are spending a whopping 35-50% of their total business costs.

High energy costs can affect the long-term operation of a business too, according to SME owners. 70% believe that the cost of their energy bill impacts the growth of their business – this was highest among businesses in the East Midlands (78%).

Adopting effective energy-saving measures can help cut costs for small businesses. However, 50% of SME business owners agreed that they could improve on the energy efficiency measures they currently have in place. Tyl’s research found that SME owners face several barriers when it comes to implementing them.

  • 31% of business owners do not have enough time to dedicate to enforcing more sustainable measures
  • 24% of business owners said they were not in a financial position to consider further energy saving efforts
  • 31% of SME owners said they don’t have enough information on the potential measures they could take

The Government offers various initiatives to help SMEs implement more sustainable practice, such as environmental tax reliefs, the Feed-in Tariffs (FIT) scheme and capital allowances for energy efficient equipment. However, 37% of small business owners have said they are unaware of the support they’re entitled to from the government and would therefore benefit from an increased awareness of the help available.

Fortunately, 72% of small business owners are currently adopting energy efficiency measures within the workplace. Popular sustainability practices among small businesses include using energy efficient LED lightbulbs (40%), turning off production equipment at the end of each working day (38%), and using a smart meter to review energy usage (34%).

Whether big or small, making such energy-efficient changes can reap tangible benefits for a small business. Almost a fifth (19%) of businesses are saving between £2,000 and £3,000 a year through energy efficient measures, while 35% are saving between £1,000 and £1,999. In a time when energy costs are on the rise, SMEs can really benefit from such savings.

Mike Elliff, CEO of Tyl comments: “It’s clear that SMEs across the UK are finding the cost of energy a barrier to the growth of their business. Improving energy efficiency in the workplace can be the most effective way to reduce these costs, whilst also playing a key role in the UK’s journey to net zero. 50% of the business owners Tyl spoke to know that they can improve on the sustainable measures they have in place, but financial concerns and lack of information are holding them back. Small firms require more support and information on the ways they can make savings and implement initiatives”.

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