Here’s how small businesses can slash their bills during the coronavirus shutdown and afterward
The scramble for federal assistance isn’t the only way that small businesses can fight to survive the COVID-19 shutdown. From suspending garbage service to trimming the fat on a phone contract and more, these bill-cutting measures can help during better economic times, too.
Cost savings is front of mind as many small businesses seek a lifeline after the coronavirus pandemic slowed the economy to a crawl. The reality is, distribution of funds has been inconsistent. The initial $349 billion set aside for the Paycheck Protection Program ran out on April 16 after being available for less than two weeks. Congress approved an additional $310 billion for the program that kicked in this week amid a backlog of demand and a few technical glitches.
Most businesses will have to help themselves if they are able, and these steps can clean up the expenditure side of the ledger, says Aaron Stahl, co-founder and CEO of Springdale, Ark.-based P3 Cost Analysts, a consulting firm working with the private sector and school systems. Since P3’s inception in 1991, it has restored more than $200 million back to clients’ bottom lines, taking its slice only when savings are realized.
Lock in low utility rates. Many states have open and deregulated markets for electricity and gas. In these markets, business owners should consider bidding out the energy supplier contract and locking in low rates. Markets are at all-time lows right now, so locking in even three-year deals can make a lot of sense, says Stahl. Find a broker you trust to run these analyses for you, he adds.
If energy usage has dropped dramatically and is expected to stay down for quite some time, consider running a usage projection (and history). Then determine which electrical tariff is best for your business. This can result in direct savings per kWh, which can have a significant impact on costs. Note, however, that most utilities allow for only one tariff change per 12 months. So if you do not get the math right and change the tariff, this could result in overspending for 12 months, before you can revert back.
Meter-reader no-shows. Make sure usage on your bill actually aligns with how much power you’re likely consuming. If you notice an estimated meter reading on your bill — signified by an ‘E’ on your invoice — this means the meter was not actually read and was instead estimated off-site by the vendor. For their part, vendors will defend the practice and likely insist that even estimated readings eventually self-correct over time. But the pandemic means this is as good a time as any for businesses to fight any discrepancy. An estimate in error may trigger extra demand charges, which can ratchet up and result in thousands of lost dollars, says Stahl.
Reduce waste and recycling spending. If production or business has slowed or stopped, consider reducing and adjusting waste volumes with your hauler. But ask for special, temporary terms and be careful not to sign or extend a new agreement when you do this. Haulers will often use service changes as an opportunity to lock you into a longer-term agreement, typically under their standard and sometimes onerous terms and conditions.
Keep a watchful eye on “contamination” and “overage” charges from haulers. Some have become very aggressive charging customers for fees that are questionable at best and they can add up to thousands of dollars, says Stahl. You can typically negotiate these fees down (or out of the contract entirely).
Scrutinize telecom and wireless plans. If you identify an error on your invoice you are generally entitled to a refund. Many times, the vendor will try and simply give you a three-month credit. Do not accept this without further investigation, urges Stahl. Depending on the error you may be entitled to a refund back to the point of error, as stipulated in the regulations. While it can take perseverance, and sometimes over a year, to achieve satisfaction, the amounts can be enormous and a great cash benefit to your company.
It may also be a good time to take inventory of phone usage overall. Any lines that do not answer after multiple attempts can be considered for disconnection. You will want to request a copy of your telecom customer service record to do a proper check and accurately build a list of every number your company is paying for. All billed lines are not always disclosed on the invoices and can only be seen on the CSR (customer service record). Even the smallest of organizations can find themselves paying for considerable amounts of services they no longer use.
Consider a property tax appeal. Loss of revenue can impact the valuation of your property. And even in normal times, properties are often overvalued for tax. Locate a professional who has experience successfully contesting appraised property values.
Leverage any work-from-home learnings. Stahl, an executive who has been set up to work from home long before the pandemic, believes that businesses can use the challenges of COVID-19 to better outfit remote offices in the event of small and large disruptions to their operations (many retailers and most restaurants, of course, look forward to returning to fully staffed, on-site workforces). The optimist’s take-away is that businesses will be more efficient because they will reduce commute times for employees and may be able to rethink office-space rentals, certainly shrinking footage in some cases to accommodate a blend of communal office space and work-from-home days, with not all staff on-site at once.
Updating home technology can often occur faster and for a lower expense because it’s specific to the user: “For instance, virtual phone connections that are cheaper than AT&T copper lines, cloud storage for documents, digital sharing of documents” can all reduce the need for a centralized office and can sometimes be less costly, said Stahl.
“There’s a chance, depending on the business, that the longer the crisis stretches out, the less it feels like a crisis and may start to feel like business as usual,” said Stahl. “Workforces in some cases can be scattered and that’s fine. When fully-functioning business comes back on line, operations will be set up for the next time there’s an issue, and maybe we won’t have to consider interruptions as a crisis.”
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