Hopefully, your business has come through the worst of times caused by the pandemic.
Maybe you are thriving, to the extent that you need to expand.
Perhaps your current premises just don’t adequately serve your company anymore.
So, you need to find a new home to meet the demands of your customer base.
Moving into a new headquarters is a real milestone for any business. It marks the start of a new era – for better or worse – but it does mean you’ve got a huge to-do list to trawl through.
Relocating can be hugely disruptive to your business, and opening a brand-new business brings its own organisational and logistical problems.
But, whether you’re opening your first base or moving your premises, one thing you will need is an energy supply.
And, as business energy is vastly different to arrange a domestic energy deal, it’s important to know all the ins and outs.
Decisions, decisions, decisions
Firstly, you need to decide on your tariff.
You can usually have either a fixed-term or variable-rate tariff for your business.
With the former you’ll be charged an agreed amount per energy unit, a deal that will last for a pre-set period of time. A variable rate, not unnaturally, varies according to prices on the wholesale energy market.
Fixed-term contracts are usually one-to-five years long and are more expensive the longer the term. If you’re running a small-to-medium-size enterprise (SME) you may prefer to pay that extra on your tariff so that you have a degree of security with your outgoings.
It does, however, mean you have no cheap and easy way to leave your agreement, should you wish to. Even if you can get out of your fixed-rate deal – and there’s no guarantee of that – there will be charges, often pretty steep ones.
You could have your business energy prices rely on the market price at any given time. The recent rises in energy prices illustrate what a risky strategy a variable-rate deal could be for your business, though.
A steep drop in global prices would mean a similarly sharp reduction in your energy bills but there seems no indication that could happen any time soon.
We are seeing huge demand for limited fuel supplies. There’s a shortage of storage and the conflict in Ukraine, which mean energy bills – domestic and business – are a major ongoing concern.
So, what can you do to ensure you get a good deal on your business energy?
Employing the services of a broker could be a prudent move. A good broker knows the market and can source a good deal for your business. They may even be able to access options that aren’t available if you carried out your own research or used an online comparison service.
But, what if they mis-sell your contract to you? You need to consider how they are paid for their services and what the cost to you is.
If a third-party intermediary isn’t completely honest and transparent about their commission – which could be added to your bills and costing you money in the long term – you need to take action.
Barings Law‘s legal experts can examine how your business energy was sold to you. If there is a case for mis-selling, then we can professionally prepare a claim for you to recover money you have lost as a result.
If you would like to know more, speak to one of our customer service agents by calling 0161 200 9960.
But, back to your business and arranging your energy deal.
It’s worth noting that, whether you’re on a fixed or variable rate, you need to take action before your contract ends.
If it expires and you haven’t switched to a new one (after comparing the deals on offer, of course) you will automatically move to a new contract, one that’s significantly more expensive.
So let’s look at the difference between setting up your business energy deal and arranging a domestic supply.
Firstly, business deals are usually cheaper because, unlike household energy which is bought and paid for monthly, commercial contracts are longer-term, with the business buying in bulk. Business energy terms can be up to five years long.
Once again, while the length of a deal is much longer for a business, ending a contract early, for whatever reason, could be difficult and/or costly.
Prices and tariffs for business contracts are based on a customer’s specific needs, making comparisons between providers slightly trickier. It’s not impossible, however, so take advantage of the comparison tools, apps and sites out there.
Also bear in mind that switches for businesses can take double the amount of time as moving domestic suppliers. The change at home should usually be completed in three weeks at the most while your company supply would normally take at least a month. It’s something else to bear in mind when your renewal period is looming.
What else? Well, when you sign up for energy for your home, you will often buy your gas and electricity as a dual package. Typically, you can’t do this for your business premises, you’ll need to arrange separate contracts for each.
They can be with the same supplier but they will, strictly speaking, be different deals and both will need to be properly investigated as such.
Your research is important because, as we’ve already highlighted, you need to make the right choice when you sign up because, even if you can get out of the deal you arrange, it could cost you heavily. And as you won’t have a cooling-off period it’s vital you choose a plan that suits your business.
Sure, there’s a lot to think about but it’s worth taking the time to make sure you don’t regret agreeing to. And you could regret it – maybe not today, maybe not tomorrow, but soon. And for the entirety of your business energy contract.
That shameless paraphrasing may seem overly-dramatic but these things can help to make or break a fledgling business.
Remember, if you have used an energy broker to source your SME’s business energy deal, you need to consider if you have been mis-sold your plan. If you were not informed about the commission added to your bills you may have a case to claim compensation.
Speak to Barings Law’s trained advisors by calling 0161 200 9960 or start a webchat by clicking the icon at the bottom-right of this page.