Winter/Spring 2012
here’s how
we can help your business…
Prepare for the future
Predict
Tomorrow’s trends revealed today
Promote Raise your profile for free
Forecast Tips to aid cashflow
Welcome
Energy Energy Market marketView view
A new year can be the ideal time to take a fresh look at your business. So for this first quarter of 2012, we’re focusing on topics to help you better prepare for the year ahead.
What’s inside Energy market view
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Hot topic: Looking ahead
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How to: Generate free publicity
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Energy savers
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Business movers
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Spotlight: Cash is king
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Ways to reduce your bills
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Benefits of Direct Debit
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Energy market view If you spent the last quarter wondering when winter was going to arrive, you were not alone. The year 2011 has been the tenth warmest since records began. That means gas usage has been lower than expected so there is now plenty to go around, and we don’t expect to see the gas price spikes of last winter.
What will tomorrow bring – and how can you be one step ahead? Dr Frank Shaw of the Centre for Future Studies foretells the latest business trends on page 4.
That may mean energy efficiency becomes less of a priority. But lower business gas prices this year don’t mean they won’t rise again in future, so if you want to avoid wasting money in the long term you should be talking to your supplier about practical ways to save energy.
Promote
The energy league
Objections under scrutiny
Bigger energy customers got to measure their energy usage against other organisations recently, when the Environment Agency published its first ‘league table’ of companies having to participate in the government’s CRC Energy Efficiency Scheme. The same companies will be ranked again next year and there could be a big publicity bonus for those that have moved up the energy efficiency scale. But even smaller companies who fall outside the scheme can benefit from energy efficiency in the form of smaller bills.
What will change? Ofgem wants to reduce the objections some energy suppliers make when companies want to change supplier. It plans to monitor those objections very closely and it has promised to investigate if necessary.
Predict
Tips on how to generate valuable publicity for your business, without having to spend much. Find out more on page 7.
Forecast When it comes to maintaining healthy cashflow, accurately forecasting future spending and income is just one valuable tool. For others, see page 12.
Energy savers case study Find out how a simple energy audit helped a Nottingham bar reduce their energy bills significantly.
We hope you enjoy this issue. Pam Andrew Customer Service Manager
Read more on page 10
Telephone calls: We may monitor and/or record calls for security, quality or training purposes. Calls from BT landlines to numbers beginning with 0800 or 0845 may be free. The price of calls may vary with other operators and calls from mobiles may be considerably higher. Please check with your operator for exact charges. Editorial content provided by Susannah Lawson & Associates (www.slcommunications.co.uk). Npower Direct Limited (registered in England and Wales No.3782443) and associated companies. Registered Office: Windmill Hill Business Park, Whitehill Way, Swindon SN5 6PB.
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Janet Wood is editor of Utility Week.
Second, Ofgem wants to make sure that energy brokers’ practices are up to scratch. At the moment it does not have any direct powers over these companies, but that could change. The regulator wants to be authorised to investigate and fine brokers that fail their customers. What is more, it wants to make sure that all energy brokers have a Code of Practice in place, and one that the regulator has accredited.
Meanwhile, energy regulator Ofgem’s review of the energy market has reached the business sector. Late last year, it published a suite of proposals that it said should improve the service businesses get from energy suppliers and from the raft of energy brokers that act as middle men.
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Hot topic
Hot topic
Looking ahead
A view to the future: understanding what trends are likely to emerge can help you adapt your business to meet market needs.
What will the world be like for small and medium-sized businesses in 2020 and beyond – and what key opportunities will there be? Business strategist, process consultant and futurist Dr Frank Shaw has a fantastic job title. He is Foresight Director at the Centre for Future Studies, a Kent University Innovation Centre-based consultancy he founded in 1996. Dr Shaw has been an advisor on the future for more than 30 years. “Our foresight work involves research and analysis across political, economic, social and technological themes,” he explains. “We help our clients – national and international companies, not-forprofit organisations, government departments and agencies – to anticipate the future and manage change in their external environment.” Over the past 14 years, the Centre has gained international recognition for its contribution to future thinking.
they pubs, restaurants or shops. Enabled by digital technologies, products and services will be subsumed into a wider experience.”
Will the high street survive?
Micro-business growth
The closing of large numbers of small retail businesses in the UK and the ongoing phenomenal rise of online selling has led some to believe that the high street will largely be dead in the next 10 or 20 years, but Shaw disagrees. “The high street won’t die, but patterns of shopping behaviour will change and the retail environment will be transformed to become even more leisure and entertainment-focused.”
Long-established businesses will become less common. Shaw anticipates a significant surge in micro-businesses, many of which will be part-time enterprises “formed to satisfy a demand for a short period before the owner closes it down to start another venture”. The current trend for people running more than one small business at a time will grow.
People will still want to visit shops in town centres, says Shaw, but their expectations will change. “It will be about exploration, adventure and social gathering. The outlets that succeed will be those that offer a unique consumer experience – be
Dr Frank Shaw, Foresight Director at the Centre for Future Studies
Money will be entirely electronic in the near future, he says. And the ‘working week’ will cease to exist, as the boundary between work and leisure will no longer apply. Although earnings have slowed down dramatically in recent years, Shaw says they will increase, as in the past. “Perhaps of more relevance 4
is that quality of life will improve and standards of living will be much higher. There will be a need for ‘re-skilling’, but many people will earn a living as freelancers working for several businesses, rather than being an employee at one.”
Did you know? • A ccording to the Office for National Statistics, the UK’s population will reach 67.2m by 2020 and 73.2m by 2035 (in 2010 it was 62.3m).
Growth sectors
• T he average age of people in the UK will rise to 39.9 years by 2020 and 42.2 years by 2035 (in 2010 it was 39.7 years).
Over the next ten years, Shaw says the main growth sectors will be healthcare (especially elderly care, home healthcare services and nursing care facilities), technology, nano-technology, energy, food, water, the creative industries, management, scientific and technical consulting services, computer systems design (and related services), employment services, education and full-service restaurants.
• T he number of people in the UK aged 85-plus is expected to reach 1.9m by 2020 and 3.5 million by 2035 (in 2010 it was 1.4m). • T he number of people aged 90-plus is expected to triple by 2035, and the number aged 95-plus will quadruple.
“The fastest-growing firms will outsource more, focus on IT integration and be willing to invest in production and distribution,” says Shaw. “Over the period to 2020, successful small businesses will incorporate technology into every process.
• T he number of UK centenarians will reach 110,000 come 2035 – an increase of more than eight-fold on 2010’s total of 13,000.
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Hot topic
How to
Generate free publicity Despite shrinking marketing and advertising budgets, there is still an overwhelming need to let potential customers know about your business. Penny Wells asks whether DIY PR is the perfect no-cost solution.
Techno boom: devices that utilise technology for every process are set to become the norm.
The technology revolution will leave no person or organisation untouched. The digitisation and mobilisation of every process will affect us all.”
Specialise to prosper The SMEs that prosper will be niche businesses operating in ever-finer market segments. “Affordable e-commerce solutions, together with cheap outsourced manufacturing or product sourcing, will enable SMEs to connect with market segments identified through social media,” says Shaw. Size will become less of an issue in business, Shaw predicts, as long as you harness technology’s potential. “Classifying the nature of an organisation by the number of employees or turnover will become meaningless. More important will be the number of IT staff they have, the type of roles they perform and what level of IT expertise they possess to support the organisation,” he concludes.
To find out more about the Centre for Future Studies visit
futurestudies.co.uk
Something newsworthy
“Some PR ideas are so effective they generate publicity time after time – and often they’re quite simple,” observes former journalist Paul Green, who now runs his own PR agency, Northantsbased Publicity Heaven (publicityheaven.com).
Mega trends 2020 • 5 0 billion devices will be connected worldwide, continually ‘talking’ to each other via mobile broadband. • Consumers will demand an ‘eco-conscience’ from their brands. • ‘Social shopping’ (a method of e-commerce where the shoppers’ friends become involved in the shopping experience) will be common.
“You’ve got to give journalists something newsworthy. All day long they receive uninspiring press releases, so your story must stand out. Journalists also like to write about the first, newest, oldest, biggest, etc. And they like to write about pioneers – which is why entrepreneurs such as Richard Branson have become globally famous.”
Green says the obvious advantage that gaining press coverage has over advertising is that it costs nothing. “You can employ a PR agency, of course, as writing a professional-looking press release requires skill, and getting it to the right journalist can take perseverance,” he explains. But, says Green, to increase your chances of success if you choose to do it yourself, there are a few golden rules.
“ Your press releases must also be targeted to the most appropriate media, and if possible, to a specific individual rather than a general news desk.”
• Today’s ‘digital natives’ (someone born during or after the introduction of digital technology) will be in their 30s and make important corporate buying decisions.
If you are announcing a new team member or customer, Green advises sticking to the trade press. “It must be very newsworthy for a regional paper to write about that stuff, but if you win a national award, local papers will be interested – that’s why it pays to enter awards. Your press releases must also be targeted to the most appropriate media, and if possible, to a specific individual rather than a general news desk.”
• ‘Augmented reality’ will help people find information about a place simply by pointing their camera phone. • L aptops will feature holographic keyboards projected onto any type of surface. • E-health kits will help doctors to monitor patients in real time – sometimes thousands of miles away. Taken from Accessing the future, a report produced by the Centre for Future Studies and Access UK. 6
Some business-owners now put themselves up as business commentators, notes Green. “Journalists and readers like expert opinion. And if your writing skills are good enough, you could contribute free articles to publications or write blogs for websites. Your business will usually get a mention.”
Paul Green, PR Agency Publicity Heaven
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How to
How to
Speak out: making an announcement about a business win (top right) or a new team member (right) can generate free publicity for your business, as can offering expert opinion to relevant media.
Common mistakes
Developing a public persona
Net gains
Green says common DIY PR mistakes include business-owners trying to push dull, irrelevant or non-stories. “Journalists don’t really care about your business, they’re focused on their readers. They often have to spend time wading through ‘guff’, so when something special comes along – they jump on it.”
Ling Valentine has a great track record for generating publicity. Partly as a result, her Gateshead-based online contract vehicle hire business, LINGsCARS.com, has become hugely successful.
LINGsCARS has also gained publicity for its unconventional website (lingscars.com), which divides opinion massively. Some describe it as one of the ugliest websites ever, yet it has won awards and attracts 100,000-plus unique visitors every month. Love it or hate it – you can’t ignore it.
“ Gaining media coverage saves a lot of money on advertising and marketing,” says Valentine. “That means I can keep my prices attractive, I don’t have to pass costs onto customers. I stopped paying for advertising years ago – it was a waste of money.”
Perseverance is also key. “Often business-owners give up after one failed press release, but not every one you send out will lead to coverage – no matter how good your story,” explains Green. “Your expectations should be realistic. PR shouldn’t be seen solely as a lead-generation tool either, it’s more about raising awareness and supporting the rest of your marketing activity.”
Valentine appeared on Dragons’ Den in 2007 and famously turned down investment from Duncan Bannatyne and Richard Farleigh. “I’d won an entrepreneur of the year award and I was asked by the BBC to go on Dragons’ Den,” she explains. But while the deal on offer was not attractive enough to make her concede a share of her business, it did still have a positive effect. That appearance really helped her business.
Publicity stunts are a tried and tested method of gaining press coverage, but Green sounds a cautionary note: “Your stunt must be fresh, fun, exciting and highly visual. Make sure it’s legal, too – otherwise you could well get the wrong type of publicity!”
“ Ten minutes on prime-time TV on a hugely popular show, plus all the associated publicity, would have cost me hundreds of thousands of pounds.”
“Visitors want to find out about my vehicles and prices, but they also want to be entertained. They visit lots of other websites, so I need to grab their attention,” explains Valentine. “Most other car sites think their visitors are ready to buy there and then, but that’s not so. I play with visitors for months and years, before they have a car from me.”
Ling Valentine talking about the benefits of appearing on the BBC’s Dragon’s Den.
To generate yet more publicity, Valentine bought a truck, complete with giant rocket, which she used to advertise her business to motorists on the A1. “I get massive visitor spikes after my publicity stunts,” she says. “I do it because it’s cheaper than advertising and – crucially – it works.” Ling Valentine, owner of LINGsCARs
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Energy savers
Business movers
Moving premises? When you’re moving premises, there’s a lot to think about. That’s why we have a dedicated Business Movers Team to take the hassle out of finalising your energy bills. npower’s energy efficiency expert provides tailored advice to the Southbank Bar.
Improving efficiency
Step 1: Before your moving day
How a Nottingham sports bar has reduced its fuel bills and carbon footprint - thanks to an energy audit from npower
• Y our npower customer reference number (this is on your last bill).
Business may be thriving for the Nottinghambased Southbank Bar, but Assistant Manager Andrew Nicholls still believes reducing the business’s carbon footprint is important. “As far as energy efficiency goes, we are always looking to improve,” he says. “I think more and more people are now realising we all have to do our bit – and it all makes a difference.” The venue is the number one sports bar in Nottingham – located a stone’s throw away from both Nottingham Forest and Notts County football clubs – and also hosts regular live music events. But despite being popular with the punters, how did it fare in npower’s energy assessment? The audit identified that the bar can implement some very simple measures to make significant savings both in terms of cost and business energy. npower’s energy specialists calculated that the business could make annual savings of £757, nearly 10% of its annual energy costs, through simple changes, such as replacing 15 x 35 Watt
Step 3: After your moving day
Here’s what to do if you’re leaving a premises supplied by npower, whether you’re the tenant or the owner.
Job done! We’ll handle the rest. Once we’ve received and agreed your reading(s), we’ll send you a final bill so that you can clear the account(s) for this property.
Please remember
Gather together the following information and call us at least 30 days before your move:
halogen lamps with 5 Watt LED, and by sealing a gap in the beer cellar wall where the drinks pipes pass through. Nicholls and his team have already changed the lighting, with no noticeable impact to the ambiance of the bar. “All our spotlights have now been reduced to a lower wattage, and we adjust them via a dimmer to suit the conditions in the bar at the time - but no-one’s noticed any difference in terms of brightness,” he says. Other measures are still in the process of being actioned, but Nicholls is impressed with how easy it is to make a difference. “Anything that can save the business money is always welcome,” he says. “And when you know you are also doing your bit for the environment, that makes it even better.”
Call our energy efficiency helpline to find out which audit option is best for your business and how much it would cost
0845 070 4019
I f you don’t let us know you’re moving out, you’ll continue to be liable for all charges until the new tenant confirms their moving in date.
• Date of occupancy change. Of course, we’d be delighted if you’d take us with you to your new premises! When you call us we can also set up a new supply account at your new premises quickly and easily.
• A forwarding address where we can send your final bill (or your refund if you’re in credit). • Contact details of your landlord or letting agent (if applicable). • The new occupier’s details (if known).
Step 2: On your moving day Read your meter(s) and call the Business Movers Team with your meter readings and account numbers to hand.
To talk to the Business Movers Team Call
0845 166 3360 Or visit
npower.com/businessmovers to find out more Lines are open Monday to Friday 9am to 5pm
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Stoplight
Spotlight
Cash is king It’s perhaps one of the cruellest entrepreneurial ironies that even seemingly profitable businesses can fail if they run out of cash. Mark Williams looks at what can be done to make sure your cashflow remains healthy. The well-worn business cliché has never been more true or relevant: turnover is vanity; profit is sanity; cash is reality. Sales and margins only matter up to a point. Not having enough cash to pay your bills on demand can have disastrous consequences. “Maintaining healthy cashflow is a key challenge that all businesses face,” says chartered accountant Elaine Clark, Managing Director of online accountancy practice CheapAccounting.co.uk. “Some make the classic mistake of spending large sums of money they don’t have – usually on stock. They make some sales, but not enough to pay their suppliers or they don’t get the money in soon enough. Running out of cash is fatal. Often there’s no coming back.”
Optimising prices Clark advises keeping your prices at optimum level, which means generating sufficient profit, while remaining competitive and attractive to customers. “You need to maximise sales, too, of course, and the easiest – and cheapest – way to do this is, if possible, to sell more to existing customers. “If your sales slow down, employ different tactics, such as offering special prices, early payment discounts, cheaper prices for cash up-front. Obviously, work out whether your business can afford this – never go below a base line gross margin. But if you aren’t making enough sales, you’ll experience a serious cashflow crisis – probably sooner rather than later.”
Don’t bank on help As Clark points out, post-credit crunch, businesses can no longer expect their bank to always help them out of a short-term cashflow crisis. “New businesses will find it almost impossible to get bank credit. Many owners put themselves at financial risk by using their personal savings to get their business through tough times.” Effective cashflow management isn’t just a case of making sure your outgoings don’t exceed income. Cash must enter your business on time. The first step to maintaining healthy cashflow, says Clark, is cost control. “It’s an ongoing job – your business should remain lean and efficient at all times. Only buy what you need and negotiate hard for the best price and payment terms.”
Elaine Clark, Managing Director, CheapAccounting.co.uk
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If you grant credit, issue your invoices promptly and chase them as soon as payment is overdue. New customers should be checked thoroughly before credit is granted. Clark advises creditchecking existing customers at least every year (better still, every six months). To lessen your exposure on large sales, you could ask for deposits on order or cash on delivery.
Cashflow solution? Asset-based lending (eg invoice discounting and factoring) could provide a cashflow solution. The Centre for Economics and Business Research estimates it could benefit as many as 650,000 SMEs and lead to an increase of between £531m and £1.4bn to the UK’s GDP by the end of 2012.
The benefit of forecasting
Invoice discounting is a facility usually provided by specialist divisions of banks that allows businesses to draw against their unpaid invoices, while retaining control over their sales ledger. Factoring means selling your unpaid invoices to a ‘debt factor’ that collects your debts and takes over your ledger management.
Predictably, Clark is a big fan of cashflow projections. “You must include all outgoings otherwise they can be dangerously inaccurate, but cashflow projections can help you spot potential crises before they happen, which can enable you to take preventative action. Those who can maintain and interpret financial forecasts have a much better chance of managing an effective business.” If serious cashflow problems persist, Clark strongly advises decisive action. “You might need to completely rethink your business. Making a few changes might put your business on a better financial footing, and independent advice from an accountant should help, but doing nothing in the hope that your cashflow problems will simply go away isn’t an option,” she concludes.
Typically, you receive most (up to 80 per cent) of the invoice’s value and get the balance once paid, minus interest and a ‘transition fee’.
For more information See the cashflow advice in the finance section at
businesslink.gov.uk 13
Ways to reduce your bills
Ways to reduce your bills
How to… Cut your energy bill
Agriculture: save up to 60% Cleaning fans and ducts in agricultural environments – for example in animal, milking and feed sheds or where crops are stored in ventilated areas – helps to remove any build-up of dirt and other matter which can reduce operating efficiency. Regular cleaning and maintenance can save up to 60% on energy costs.
According to the Carbon Trust, most businesses can save 10% on energy costs simply by implementing a few basic efficiency measures – and with a little investment, savings can increase to 20%. In short, reducing energy waste reduces energy spend. No matter what type of business you run, there are likely to be some simple measures you can take to become more energy efficient, which will benefit your bottom line. If you’re not sure where to start, these three steps cost nothing to implement and can save you money from day one.
1. Don’t overheat Heating can be a significant cost in any business where people work inside. For example, around 12% of all energy consumed by manufacturing industries is used for space heating. Checking that heating is programmed to come on and go off at appropriate times can save a significant amount each year, especially over the colder months. You can also be sure you don’t overheat your workplace by using the following temperature guidelines:
2. Become switch aware
Savings for food and drink businesses
Encourage staff to switch off electrical equipment and lights when not needed, and always at the end of each working day. Turning off lights when not in use can save around 15% on lighting energy costs. And for a small office-based business, leaving computers, monitors, printers and photocopiers on standby, even when they are switched off at the weekends and in holiday periods, can still cost nearly £350 over the course of a year.
Refrigeration costs can form a significant part of a food shop, restaurant, bar or pub’s energy costs. Basic maintenance checks can reduce refrigeration costs by around 20% and also prolong the life of the refrigeration equipment. For example, just replacing a faulty door seal can cut energy consumption by as much as 11%.
Light your shop for less
3. Prioritise maintenance
Lighting can be a major energy cost for retail outlets, accounting for up to 70% of overall spend. Simply replacing conventional tungsten filament bulbs or halogen spots with more efficient lighting types, such as compact fluorescent lamps or LED spots, is a quick way to significantly reduce the energy consumption of display and retail lighting systems.
Regularly servicing and maintaining boilers and heating systems can save on fuel costs. Aim to service your boiler every 12 months to ensure optimal efficiency, which can save you up to 20% on running costs.
Offices 19-21°C Workshops 16-19°C Heavy work 11-14°C Stores 10-12°C
More ways to save For more energy saving advice, visit
npower.com/smartstartQ1
Statistics: the Carbon Trust, 2011
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Save time and money with Direct Debit Savings You could pay 2% less for your electricity bills if you switch to Direct Debit. Because your payments become easier to administer, we can remove the surcharge that’s added to bills paid by other means.
Service Save time paying bills. With Direct Debit, the payment is automatic – so once it’s set up, you don’t need to do anything more.
Choice Choose the best way to pay. You can opt for variable Direct Debit and just pay for what you used in the previous billing period. Or for easier budgeting, you can pay the same amount each month throughout the year. Your account is then reviewed every six to eight months to ensure your payment is appropriate.
To set up a Direct Debit, call us on
0845 166 3360 npm9651/01.12