If you want to start a business, you shouldn’t forget this comes with a lot of expenses. Even after the business is on, you should still take into account a lot of costs. A part of these go to utilities, which are essential for the good functioning of your company. Therefore, you should learn how to estimate the utility costs for a business both before and after you start it.

Electricity lines on a pillar

Why keep track of the utility costs

Utility costs involve those money that you pay for electricity, gas, water, or whatever you might need to offer your employees suitable conditions to work. They represent an important part of all your monthly expenses, so knowing how to estimate the utility costs for a business is essential. By knowing how these costs evolve over time, you can find a strategy to cope with them or even reduce them.

What costs should you consider?

Before starting estimating any costs, you should first decide which of them fall into the utility category. This way, it will be easier for you to manage them. First of all, it’s important to know that rent is not among the utilities. This is a higher independent cost, and there are usually no strategies to reduce it. Also, in case the office or working space is your property, you can strike down this cost from the list.

Water and sewer

These prices are related to the water you consume when using the sinks and the toilets. Although your employees don’t take showers at work, there is a lot of water consumed from regular day-to-day activities. These costs are usually not that high for a smaller house, but a big office building might consume more than you would expect.

Trash pick-up

Just like in any home, there will be plenty of trash in your offices at the end of the day. You have to pay to have your trash collected, and the good news is the prices should stay constant. However, if you want it recycled or ecologically sorted, you might have to pay some extra money.

Power and internet

The most important utility is power, as your profit depends on it. No matter what your business is, you will definitely consume quite a lot of power, or at least more than in a regular home. You can adopt some strategies to reduce your consumption. Since there’s not much to do about the electricity consumed by laptops and other electronics, you can replace all the light bulbs with eco-friendly devices.

However, there’s still something you cannot change. The electricity prices vary from one region to another. They might fluctuate over time, but there’s not much you can do. You can only monitor them and manage your investments more cleverly when the prices go up.

Also, don’t forget to account for other services strictly related to power. This includes internet, which is present in all companies, but can also mean phone or television.

Laptop with a pair of headphones on top

Gas

Gas is, again, extremely important. It is vital during the colder season, as you need it to run the heating system. You can’t afford to reduce the consumption too much, as the comfort of your employees is essential. What you can do is try to keep the heating system when you don’t really need it and, again, monitor the prices.

How to estimate the utility costs for a business

After knowing what costs you should look at, then you should learn several strategies on how to deal with them. When you get the total amount of money you have to spend on utilities, you’ll see how much went to a particular need. This way, you can see how to cut some of the costs.

1.      Gather all bills

The best way to spot the fluctuations is to look at all utility bills for a fixed period of time. Some of the utilities have different prices depending on the season, so it’s good to put them all together for a period of at least a year.

2.      Calculate the overall expenses over the period in question

After you have gathered the bills, you can see how much you have paid for each utility. Also, mark the seasons or months where you have to pay more. Then, compare these costs with the overall expenses for the same period. This can include anything, such as rent, licenses or insurance, and any other things that you had to pay for.

3.      Calculate the percentage of utility expenses

When learning how to estimate utility costs for a business, you should know how much you should spend on them. This involves finding out how much of your overall expenses go on utilities. To do this, you have to divide your total expenses to the sum of utility costs. Then, multiply the result by 100. You will obtain a percentage.

What to do with the result

After the calculations are done, you have found out how much of your costs go to utilities. This is good to know when managing your future expenses. If you know how much you spend over a fixed period of time, you will know how much of your future earnings should be reserved for utilities.

Also, this can help you cut some expenses. From one month to another, you might see that some costs have increased. Take a close look at those particular months, and see what made you spend more. Then, you can develop a strategy to cut these costs, either by reducing the consumption on certain utilities or by replacing the equipment with something more efficient.

Modern kitchen in an office

Conclusion

Learning how to estimate utility costs of a business is vital for the well-being of your earnings. Offering your employees great working conditions is necessary to have great results, so you shouldn’t refrain from paying for some essential services.

However, there are always a lot of methods to reduce costs. You can still offer comfort to your employees while using ecological light bulbs, equipment that doesn’t consume much energy, or good internet at a good price. Instead of choosing the most expensive services, do a little research and find good deals at affordable prices.

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