A recent business survey identified the top three overhead cost areas experiencing increased cost pressures as energy, wages and fuel. The pressure on energy and fuel prices is constant despite the reduction in the price of oil.
- Business energy is subject to contracts, which will normally be on a one-, two- or three-year basis. Make sure your nursery has a contract in place and diarise when it ends. Review the market for the best deals.
- Implementing energy efficiency measures is one way to reduce your usage and costs.
- Wage levels have started to rise in real terms, and it is forecasted that they will increase by 2% in 2016.
- April 2016 marks the introduction of the National Living Wage for employees aged 25 and over. This will have a direct impact on many nurseries, increasing their costs in 2016 by over £900/year for each employee affected, an increase of 7.5%. The increase to £7.20/hour in April will be followed by increases leading to £9/hour by 2020 (an increase of 34%).
- Managing fuel and its consumption is a key step to minimising your costs. It is part of a wider picture of cost savings such as route planning, mileage, insurance and contract hire costs to total fleet management.
- Fuel Cards can form part of a fuel strategy and offer significant advantages. Obvious commercial benefits include significant reductions on national average pump prices, the avoidance of price creep and premium fuel products, and savings in administration with consolidated VAT invoices.
- If you are already using a Fuel Card, you should review any existing agreement as it may no longer reflect the current requirements of your business or the fuel market.
To help offset these increased burdens on costs, introduce a strategic cost management review that will deliver achievable cost savings on a regular basis. Review all your operational running costs and look for savings, not just those achieved by cutting one-off costs.
The article “Review your costs” was first published in Teach Nursery Magazine.