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Why entrepreneurs need to worry about utilities

The office space you’re renting comes with water and power and you need to know how they’re managed

You’re running a business. It’s new or perhaps you’ve moved into new premises. As you juggle furniture, invoicing, staff, addressing and the other critical aspects of getting your business set up, are you paying attention to how your utilities are managed? Probably not. Usually, the cost of your water and electricity arrives in your inbox and you just pay it. Sometimes it’s high, sometimes it’s low, often it’s late or confusing. This is not ideal, especially when managing budgets and ensuring tight cost controls are a crucial part of running a business. 

Cost management is an essential business skill 

One of the most critical aspects of running a business is staying on top of costs. It may not be glamorous and it can certainly be time-consuming and challenging, but financial understanding is a key metric for long-term business success. Knowing where your business money goes and what influences that expenditure provides you with a solid foundation, it also gives you a clear picture of the health of your company. Which means that every cost needs to be assessed and managed to ensure you’re spending your money on what counts. 

This includes utilities 

The last thing you want to worry about as a business owner is your utility management. You don’t want to spend hours each month working out what you used versus what you’ve been charged, or trying to find extra cash to cover an unexpectedly large bill. Remember that space you so carefully chose? Remember how you paid attention to the square meter price for space – this influences your utilities. Landlords will often allocate electricity costs per square meter and then share the costs out ‘fairly’ across other tenants in the space.

 This means that you can end up paying for your neighbours’ power or water. It’s not a great solution. Like many other startups, you may have been really careful with your consumption but that doesn’t mean the other tenants have been careful. They may not care about the costs. Costs that you now have to cover.  You really don’t want to carry the bill for another company that uses a lot of power or water. 

What’s the solution? 

There are different ways to approach your utility billing before it becomes a problem. On top of a large bill, the last thing you want is an unpleasant relationship with your landlord or other tenants so go into any office space with a very clear understanding of how utilities are managed and billed. 

If you’re not comfortable with how these costs are allocated, consider asking your landlord if they’d be interested in alternative solutions such as prepaid meters. These do put the responsibility for managing the costs into your pocket – you can’t blame the landlord if your power runs out because you didn’t top it up – but they also cut out any middlemen.  Another solution is to get a comprehensive breakdown of average costs for your workspace over the past six months. This will allow you to get a good idea of what to expect from your office and then you can budget accordingly. 

No matter what solution you choose or which route you go down, the most important thing is to not avoid having the utility conversation. It’s an often forgotten cost that can hurt your bottom line.

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