School for Startups is happy to announce that Make It Cheaper has decided to become a sponsor. We are particularly proud of this affiliation because Make It Cheaper has a truly exceptional business model. Initially set up to save businesses money on their gas and electricity Make It Cheaper now help small and medium sized enterprises save thousands of pounds across a whole range of business services.
The following is a short interview with Joint MDs Jonathan Elliott and Chris Cole. Both men are hard working, innovative, serial entrepreneurs and a first-person understanding of what their customers need to succeed.
Question: This year you’ve elected to sponsor Doug Richard’s School for Startups. It would be interesting to hear why you made that decision.
We have a real affinity with start-ups as we hear from so many looking for advice on paying a fair price for their utilities. Often this is because they’ve already learnt about the pitfalls the hard way – entirely innocently but frustrating and costly nonetheless. Businesses who’ve just moved into new premises are the most vulnerable to higher costs. This is because:
- The previous tenant’s supplier is charging you punishing ‘out-of-contract’ rates Rather than paying the same rates as the previous tenant, the supplier charges higher rates until you get in touch with them and agree to lower rates on a fixed-term contract – or give a month’s notice and switch to a ‘new customer tariff’ with another supplier altogether. OOC rates can be two or three times the norm and it can takes months for the new tenant to realise they are paying through the nose. EG We had a call last week from a Fried Chicken Shop that had been sent its first bill six months after moving in…. for £20k.
- You have fallen victim to a scam by a dishonest broker and are tied into a long-term contract that you don’t want. Dishonest energy brokers buy new company details (see below from ThomsonLocal) and pose as Meter Registration Officials with the aim of tricking businesses into legally-binding verbal contracts for up to five years on uncompetitive rates. EG a property company fell victim to this scam last week and contacted us to ask if 11p/kwh was fair for a two year contract he’s been tied into when we could have offered him 8p/kwh (or £500 a year less).
Question: School for Startups and Make it Cheaper seem to share a common interest in supporting entrepreneurs and helping them be more profitable. Can you review some of the unique ways in which Make it Cheaper works toward these objectives?
Mention price comparison websites in conversation and people either start opera singing or speaking with a Russian accent. But did you know that none of the big sites you see advertised on TV offer their own comprehensive B2B price comparison service? With 4.5 million SMEs in the UK, that’s a lot of utility prices going un-compared, particularly at a time when prices are rising. In fact, only 7% of businesses switched their gas or electricity last year, compared to 18% of households.
SMEs think on average they can save 9.5% by switching electricity but that they would need a 13% discount to persuade them to switch. Make It Cheaper, however, saves businesses an average of 32% per year by arranging the switch from one electricity supplier to another (£1,121 off an average annual spend of £3,459) and 38% with gas (£1,230 off an average annual spend of £3,205).
These savings go straight to the bottom line of a balance sheet so a pub that saves £10,000, for example, would have to take three or four times that amount over the bar in order to make the same kind of difference.
Question: A lot of entrepreneurs set-up or get involved with charities, does Make It Cheaper help them too?
Yes, all non-domestic premises are treated as businesses in the eyes of the utility companies. We’ve calculated that a third of the UK’s 180,000 Registered Charities are paying too much for their energy, unaware that they qualify for a reduced VAT rate of 5% and could be in line for rebates worth £100 million. Charities will have made a collective VAT overpayment of £22.6 million on their electricity bills alone in 2010, plus a further £8.5 million on Climate Change Levy (CCL) payments from which they are also exempt. Make It Cheaper has published a VAT advisory guide for energy bill payers which includes details of qualifying organisations, a standard 5% VAT Declaration form and contact details for all the major energy suppliers. www.makeitcheaper.com/charityVAT
To find out more information about Make it Cheaper go to www.makeitcheaper.com. Follow them on Twitter @MakeitCheaper
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