Poor Value Deals Hurt Small Businesses

Startups and small businesses just don’t get the same value from suppliers as their larger competitors. Managing costs is vital for businesses with less cash flow to stay viable and often business owners are juggling their cash resources to meet payment deadlines.

Often there is no correlation between usage and revenue, so utilities like power can keep creeping up in use and cost with the increase in sales to pay for it. Hunting around for the deal is a great idea, but it’s essential for all power users to regularly monitor their usage and analyse the value they’re getting from their supplier.

According to statistics, small businesses lose circa £2 billion every single year due to using rogue energy brokers and being locked into long-term deals that turn out to be bad-value.

The Best Energy Deal

Naturally, owners and CFOs of fresh/small businesses will almost always choose the seemingly cheaper option when it comes to utilities – especially if their business is a heavy consumer. Researching the best value deal is time-consuming, and this is one of the main reasons why they don’t put time into securing the best deal throughout the contract.

Fortunately, business energy suppliers are in abundance, so there is no need to choose the first deal that comes your way.

Avoid accepting the first deal offered especially if it’s with a broker as their job is to find you the ‘best’ deal for you and your business, not the contract that pays them the most commission!

How Energy Brokers Work

By definition, a broker – of something – should provide you with a list of deals from providers that you could choose from, according to your budget and plans. However, the energy brokers that we’re talking about today actually provide companies only with the deals that are the most lucrative for them – in short, hand-picked ones that are meant to boost the broker’s profit without considering the well-being of the business.

On top of that, brokers give small businesses such deals at no charge, trying to make it look like their deal is really the best on the market. Reportedly, such a practice helps brokers claim billions of dollars or pounds in commissions from inflated supply deals that may be in some cases, longer than three years.

Why Does This Happen?

Sources report that rogue power brokers are still a thing mainly because there are no official regulations that can protect small businesses against them.

Furthermore, analysts claim that roughly 90% of these small businesses that relied on a broker for their deal/contract may have been subject to these too-good-to-be-true deals.

The most worrying aspect is the fact that most suppliers work with the brokers and hide their commission in the bills that they issue for every business they work with. The mentioned £2 billion are said to be the commission that all the brokers get per year – while small businesses spend £25 billion to cover their energy expenses.

Small Businesses Fight Back

What goes without saying is that businesses as well as churches, care homes, and charities, fight back and as such, companies have been able to win back commissions from as little as £2,000 to as high as £500,000.

However, not many of them can actually afford to fight with the brokers or with the suppliers behind them, as they have more important things on their mind – such as keeping themselves alive.

The Bottom Line

In short, business owners have to think twice before agreeing with the first offer they are presented with – especially when it comes to aspects that may make or break their business.

Power is an essential service for businesses and yet there are profiteers out to rout the system and regulations. Don’t become a victim, take control of who you use for all your services starting with your energy. Naturally, it would also be better to avoid brokers altogether and go to directly to the source!