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Spring/Summer 2013

here’s how

we can help your business‌

Support that can make a difference

Succeed

How a business plan can help you thrive

Save Energy efficiency for all types of business

Credit Tips to help beat late payers 1


Welcome

Energy Energy Market marketView view

Changes to benefit businesses

In these challenging times, the right support can make all the difference between success and failure. So this issue, we’ve chosen to feature some ideas you may find helpful.

For starters, our Hot Topic looks at how business planning could help you succeed (page 6). This follows our own research which found that many SMEs aren’t benefiting from this key business aid.

Despite a change at the top, the Energy Bill looks set to become law, and earlier developments could be good news for SMEs. Janet Wood reports.

What’s inside

To help you save money, we ask one of our energy efficiency experts to share his top tips across a number of business sectors – see page 9. And we look at sustainable travel and the tools available to help you cut transport costs (page 12).

Energy market view

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npower news

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Hot topic: Planning for success

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Focus on: Energy efficiency

9

Green spotlight: Sustainable travel

12

How to: Beat the late payers

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Your feedback matters We value your comments and suggestions, so if you have something to share, please email us at

Late payers are a concern for many businesses, so we ask an expert to offer some advice to help get the credit flowing again (page 14).

hereshow@npower.com

We hope you enjoy this issue, and please do let us know what you think. Rachel Barrass Customer Service Manager

Janet Wood is an independent energy journalist and former editor of Utility Week

A change of energy minister in April, when Michael Fallon took over from John Hayes, won’t disrupt work on the Energy Bill. There is dispute on some detail in the bill, but cross-party support on the broad provisions, so although there will be opportunities for grandstanding speeches, the bill should be law by the end of the year.

The smart shift For business energy customers, there are more immediate policy developments. The regulator Ofgem has been busy with plans to switch all customers from dumb – or passive – meters to ‘smart’ versions, and business customers are the first on the list. Some businesses have already been upgraded and some will receive new meters in the next two or three years. The new versions will give businesses far more information about their energy use which, it’s hoped, could help them cut demand. For example, they will make it obvious just how much energy is being used to run lights or appliances when they aren’t needed. For larger businesses, it could enable them to consider different tariffs to better reflect peak energy use.

Efficiency funding Meanwhile, the long-promised Green Deal has finally gone into operation. This measure aims to tackle a persistent problem for many homes and businesses – despite it being clear that improving energy efficiency will pay off in the long term, the big upfront cost is hard to swallow. Now a Green Deal Provider, who may or may not be part of an energy supplier, will fund your improvements and then be repaid out of savings on your energy bill. You probably won’t see a lower energy bill to start with – but nor will you have a large bill to pay for the installation. Over time, as the loan is paid off, you will see the financial benefit. It’s worth finding out more about an assessment to see if it could work for you.

Some larger businesses will already be using meters with automated meter reading (AMR) technology, which are especially useful where companies want to understand and compare energy use in different parts of their operation. If that’s already working for you, you won’t have to switch to smart meters. Editorial content provided by Susannah Lawson & Associates (www.slcommunications.co.uk). npower is a registered trademark and a trading name of 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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Ofgem has also been making progress on its Retail Market Reform. That may change the look of your bill – most obviously, there should be clear reminders about when your contract comes to an end.

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npower news

npower news

Local Rugby League player Omari Caro (centre left) joins the SME team for Comic Relief, as staff get into the spirit to raise funds ahead of manning the phones for public donations.

Car sharing can save commuters £400 npower staff at the company’s Solihull offices are being encouraged to reduce their carbon emissions, following the launch of a new car-sharing initiative at the site. The ‘Double Up’ scheme already operates across other areas of the business and aims to encourage car sharing by matching staff who register via the npower car-share database. Calculations reveal that doubling up with a colleague on a ten-mile commute to work can save around £400 per person each year. At the npower Solihull site, car sharers are also eligible for a priority space closest to the office building, providing the best opportunity for a quick and simple arrival and departure each day. See our article on page 12 for other sustainable travel ideas.

npower takes Red Nose calls Staff at the npower SME call centre in Hull handled around 2500 calls from Red Nose Day donors on 15 March, helping to secure around £66,000 for good causes. “After we were chosen as the regional call centre by Comic Relief, 120 staff volunteered to answer the phones and process donations from the public,” explains Ben Jones, Head of Service for SME. “Although the call volume was high and we had to remain extremely focussed, there was a really great atmosphere and sense of shared purpose.”

Number one by 2015 npower is committed to becoming number one in the industry for customer experience by 2015, according to new CEO Paul Massara (above). “In the past we’ve been an engineering-led company and we were known as number one for investment and innovation in the UK’s infrastructure,” says Paul, who stepped into the CEO role in January. “From now on, we’re a new customer-led business and we want to be number one at this too.”

Businesses go online for advice The npower blog is now receiving thousands of hits, despite only launching a few months ago. “Our aim is to respond to visitor demand,” explains Amrit Seehra, npower SME Online Marketing Lead. “What’s great about online content is that it’s easy to see what’s popular and also get instant feedback from visitors.”

Call centre staff also raised £1500 themselves from a wide range of activities including a cake bake, fancy dress and karaoke event and a raffle – and some staff even volunteered for a sponsored head shave. npower also donated £5000 of corporate funds to Comic Relief. “This is a great example of how well our people come together to support such worthy causes, and I’m really proud to be involved,” says Joel Chapman, npower Executive Relations Manager.

The comments come amid a complete company transformation in which all processes are being redesigned to make sure they reflect customer feedback and drive customer satisfaction. There is, admits Paul, much to do. “Energy companies must do better”, he says. “The changes we need to make are not going to happen overnight – but watch this space – the changes start here.”

Energy saving topics are of particular interest to businesses, so Amrit’s team has launched an energy efficiency series including how to save energy in key areas such as lighting and refrigeration, as well as targeted posts for different business sectors. “It’s great to see how popular the blog has become and we encourage all our business customers to visit npower.com/blog and to let us know if there are any topics they’d like us to focus on,” concludes Amrit. 4

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Hot topic

Hot topic

Planning for success Recent research commissioned by npower suggests planning isn’t a priority for many SMEs. Yet, as business journalist Mark Williams finds, it can make all the difference to survival and future growth.

A useful road map

Your average SME owner or manager might be good at many things, but planning doesn’t appear to be top of the list. Research carried out recently on behalf of npower suggests that 57 % of SMEs only plan for the next 6 to 12 months, with just 9% looking beyond three years. More than half (55%) wish they could plan further ahead, but 57% say an uncertain economic climate is the main barrier to doing so.

“Research tells us that new companies that plan are 60% more likely to survive their first year, and businesses with a sound business plan grow as much as 30% faster than others. Planning is key to success in business.” As Parsons points out, having an up-to-date plan helps you understand how well your business is doing, by comparing actual performance against data points. “For example, your business might need to turn over, say, £10,000 a month to achieve the objectives set out in the first year of a threeyear plan,” she explains.

The old adage would have us believe that failing to plan is planning to fail, yet for 21% of respondents, business planning isn’t a priority and 42% say they do not have the time or need more internal resources if they are to do so.

If your business plan is to have any credibility, the financial information must stand up to closer scrutiny. Any claims, forecasts or projections must be rooted in reality, not fantasy. Parsons recommends putting enough time and energy into finding out “the real numbers” and other key information that explains your business, its market, people, objectives and development strategy.

“If you don’t have a plan you can’t make informed decisions about how to take your business forward,” warns Sabrina Parsons, CEO of Palo Alto Software, global market leaders in business planning software. “You’re simply setting yourself up for what could prove a painful journey, which could lead to failure.”

In terms of length, Parsons says ten pages is often about right. “Your plan should be broken down monthly for the coming 12 months, then annually for years two and three. Beyond that, there’s too much uncertainty for your plan to be sufficiently reliable. Review your plan at least once a month and update it once a quarter,” she advises.

Sabrina Parsons CEO of Palo Alto Software

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Track your objectives

tendency to think the plan needs to be ‘right’, in that it conforms to what a business plan ‘should be’. But the plan needs to be about your business and its development strategy.

To implement your business plan effectively, Parsons recommends having clear objectives linked to tactics, with responsibility assigned to individuals within your business, with due dates stated. She adds: “You need to regularly review and track those objectives against your results. It helps you understand where you are and whether you are on track to achieve your objectives – including making sure the people assigned with responsibility are performing effectively.”

“Also, you’ve got to adjust your plan over time, because things won’t always pan out as you’d expected. It’s about understanding results – good and bad – accumulating intelligence and harnessing it to improve your plan and help grow your business over time.” So what final pieces of advice does Parsons have for small firms? “Think of your business plan as a tool that can help you to run and develop your business more effectively. The second it stops being a tool, it becomes irrelevant,” she concludes.

Parsons says some mistakes are common. “Number one is too many businesses don’t write a business plan – or they write one when they start up but never update it. There’s also a

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Hot topic

Energy efficiency

Quick steps to help save on energy Most organisations can reduce their energy consumption by up to 20% through better managing their energy use and investing in cost-effective measures. But where to start? We ask npower’s Energy Auditor and efficiency expert Andrew Fletcher to share his top tips across three popular business sectors.

Chris Wildman, Managing Director of Paganum

Case study

Chris Wildman is the managing director and founder of Skiptonbased online farmers market Paganum.co.uk, which sells Yorkshire Dales produce to consumers and trade.

“You have to set aside enough time when writing or updating a business plan, which can be a challenge when you have so many other things competing for your attention. Writing is only part of it; you must research the facts, especially when it comes to financial information. “I update my plan at least once a year. Unless you update your plan it’s no use to you, things change so quickly in business and often things don’t turn out as expected. One of my most popular items now is Yorkshire Chorizo sausage, which is a new development. Revisiting your plan enables you to assess how well your business is doing, and change your objectives or strategy if necessary. My business plans have certainly proved highly useful tools, I strongly disagree with those who tell you that business plans are a waste of time.”

“We started the business five years ago and produced a start-up business plan. That forces you to think about what your business is and where it fits into the market, as well as test whether your business is financially viable. “I had some experience of producing business plans previously, but I looked online for advice and examples. You can learn a lot from other business plans, although, obviously, you have to input your own information when writing yours.

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Hotels, pubs and restaurants

Offices

• L ook to zone heating – fitting thermostatic controls to heating equipment such as radiators in different areas can help you cut back on overheating and overpaying for energy. For bars and lounges, 20-22˚C is the ideal temperature, 22-24˚C in restaurants and dining areas, 19-21˚C in guest bedrooms, 26-27˚C in guest bathrooms, 19-21˚C in corridors and 16-18˚C in kitchens.

• A void blinds down and lights on – blinds are often used to cut out glare but what frequently happens is lights are then turned on when the sun goes in. Using daylight blinds can solve this, as these redirect natural light onto the ceiling and prevent glare simultaneously – and many also have perforated blades to allow a view outside, which appeals to staff.

• R educe hot water waste – firstly check you are not overheating your water – 60˚C is optimal for staff and guest use and is sufficient to kill off the Legionella bacteria. Then look at installing tap controls in communal areas to prevent hot taps being left to run. Spray taps and waterefficient (aerating) shower heads can also reduce the volume of water without diminishing user experience.

• P ower down – turning off electrical equipment overnight and when not in use can make considerable energy savings as well as prolonging lifespan. Switching off just one computer and monitor out of hours can reduce running costs from £45 a year to just £10, for example. Perhaps look at using stickers to remind people. 9


Energy efficiency

Energy efficiency

“Simply turning off lights, heating, ventilation and air conditioning when they are not needed can reduce energy bills by as much as 10%.” Andrew Fletcher

Garden centres and florists

Three quick wins for all

• D on’t waste heat – if you are growing plants in a warmed environment, make sure you keep doors and windows shut and regularly check timers to ensure your system operating hours match what you actually require. Using simple time switches can help to automate this process so that nobody forgets. A 1˚C error in the control temperature can also increase heating costs by 8%, so check this is appropriate too.

1. Turn it off! Simply turning off lights, heating, ventilation and air conditioning when they are not needed can reduce energy bills by as much as 10%.

2. Review lighting – low-energy alternatives to existing lighting could bring considerable savings. For example, changing from halogen spotlights to LEDs could save up to 80% in energy and reduce maintenance costs too, as they last many times longer.

• M aintain refrigeration equipment – when using refrigeration to keep flowers and plants fresh, it is important to ensure any debris is removed which may restrict airflow around the unit as this can lead to fridges consuming more energy. Also make sure it is set to the lowest optimal temperature needed to maintain the quality of your stock.

3. Appoint a champion – asking for a volunteer to help spearhead efficiency measures and encourage other staff to save energy can make all the difference when it comes to changing behaviour in your workplace.

For more help and advice, log on to

npower.com/SmartStart 10

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Green spotlight

Green spotlight

Green is for go Small changes could set your business along the road to a strategy for greener transport. Motoring expert Simon Hacker offers some handy route markers.

Be a friendly spy

A cost-effective transport plan can help your business in many ways. It’s a broad issue that fans out into how employees access their work, what and how they drive, how you deliver your product or service and, ultimately, how you’re perceived by current and potential clients. As a consequence, wise management can be daunting. But there are easy steps to develop sustainable transport practices, while the change can bring immediate savings and trigger a raft of benefits which can extend beyond the balance sheet.

If your fleet feels like a juggling act, Telematics can help maximise efficiency. Using satellite positioning to record on your PC exact vehicle locations, plus such data as speed, makes this a popular tool among large fleets. And with connection now coming in as low as £170 per vehicle, telemetry is increasingly within reach of smaller operations. Is it green? Certainly – if you have drivers out and about, you can assign delivery or collection jobs according to their exact location, saving time, fuel and vehicle wear and tear.

Wise-up your drivers

Simply stay in Despite repeated initiatives to encourage working from home, latest Office for National Statistics (ONS) data shows 57.5% of us still join the logjam and drive to work. Nevertheless, the Confederation of British Industry says more and more businesses now offer teleworking schemes. BT believes this boosts productivity by up to 20%, while cutting absenteeism.

The Energy Saving Trust (EST) offers free advice for small businesses to help steer along a greener road. Sometimes, solutions can be small yet powerful. Minicab firm Addison Lee offered its drivers a 50-minute training opportunity with economy experts from the EST. With a sharper focus on techniques for improving consumption, the firm’s average mpg rate shot up from 38 to 43.7, with some drivers achieving 40% more. The firm said the change was a revelation: “We were amazed at how a few simple techniques – like lifting your line of vision or looking ahead a little more – could make such a difference.”

If it’s vital for staff to be on site, car-sharing can slash employee travel costs and free-up parking space for clients (see page 5 for more on npower’s own car-share scheme). The ONS says average vehicle occupancy is just 1.09 people per car, so the potential for developing an in-house scheme to buck this trend is huge.

Cautious, mpg-friendly driving also spells a reduction in accidents and lower insurance premiums. As Jakes de Kock, Marketing Director of Fuelcard explains: “The techniques taught are inherently defensive, so fleet managers often find collision and incident rates reduced, along with vehicle wear and tear.”

As an option to by-pass the entire costs of providing wheels for workers, car clubs can offer a lean solution. Organisations like co-wheels.org.uk are keen to work with small enterprises.

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Be-spoke solutions?

When you must drive…

Despite the impetus and initiatives from Sustrans (sustrans.org.uk) and local government, Department of Transport statistics reveal that only 1% of employees cycle to work. Consider shower facilities and secure bike storage to make this healthy option more practical.

Consider investing in electric vehicles (EVs) or hybrids. EV benefits could make your transport emissionsfree – and make a bold corporate statement your customers can see. Perceptions of limited ability, as npower’s head of e-mobility Jonathan Woodthorpe explains, can be misleading: “Most EVs now offer a range of 90 miles between charges, which extends well beyond the UK’s average daily drive of 8.4 miles.” npower and parent company RWE have installed 1900 charge points across Europe and a new npower tariff enables EV charging for around £1.20 from home. Typical savings against fossil-fuel powered vehicles equate to 90% – go to npower’s own calculator at npower.com/ev to work out the benefits.

Aside from the sizeable cash benefits, cycling brings a healthier glow to your working team – and speaks volumes about your company image. You can sign up to the government’s cycle scheme (cyclescheme.co.uk) to help employees to get tax-free savings of up to 42% on new bikes. On average, a cycling employee cuts your company’s emissions by 225g/CO2 per week.

DID YOU KNOW? The Energy Saving Trust gives advice for small businesses, including a free health check from a fleet expert, typically finding savings to the tune of 20%. It is also actively looking for businesses to take part in research for plug-in fleet options. Call 0845 602 1425 or visit www.energysavingtrust.gov.uk

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How to…

Beat the late payers Chartered accountant Elaine Clark of CheapAccounting.co.uk provides practical advice on how to limit the chances that late payment will affect your business.

1. Know your customer

4. Take appropriate action

Carry out a credit check when you acquire new customers that request credit. Because circumstances can change – often rapidly – repeat the process, at least once every six months for customers that expect high-value credit. Also, find out about their business history. What do their accounts look like? What about the directors or owners of the business – have they been involved in a failed business?

Add to your knowledge of late paying customers. Are they going through a difficult time or is this their usual modus operandi? Being patient could help you to keep a good customer, but there is a fine balance between allowing more time and having a customer abuse your credit terms. Don’t be afraid of limiting future supply to late payers until their account is back in balance. Also consider arranging additional payment terms (eg a set amount each week to clear unpaid debts). As a next step, consider factoring the debt or using debt collection agencies. There will be a cost, but at least you may get most of your money back.

2. Limit your exposure Depending on your type of business, you could ask for a deposit upfront or cash on delivery for goods or services supplied. Develop clear but short credit terms. They don’t have to be 30 days – less is perfectly acceptable. Communicate your credit terms with all orders and sales.

5. Be more selective Many firms worry about turning business away, especially in this day and age. But if people end up not paying you, they’re not customers. And for others, you might have to consider whether extra time spent chasing overdue/unpaid debts really is worth it.

3. Don’t make the problem worse Monitor your sales ledger and debtors’ balance (ie people who owe you money) closely. It will help you to see how much is outstanding and how long payment is overdue. Checking your sales ledger should be a daily task. When money is due – chase, chase and chase again. Don’t delay. Develop standard chase letters and a clear credit control policy. Use a polite reminder first; a quick phone call is best, leading to more serious and constant reminders if you still haven’t been paid.

Elaine Clark Chartered accountant

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Npower Q2 2013 SME Billing Booklet