By Daniel Hunter

A study from AXA Business Insurance uncovers how little adjustments to running their business could add up to some big savings for the UK’s growing number of small to medium-sized enterprises (SMEs).

AXA, which insures around 20 per cent of these businesses, calculates that some companies could save themselves up to £1,435 per year if they were to make some small changes. On this basis, AXA calculates that SME UK as a whole could be throwing away a massive £2 billion.

To calculate the figures, the company identified some of the small but significant fundamental expenses that apply to most small businesses and asked their owners about their attitude and approach to dealing with them. Results were then compared to what is available to them and illustrated that by simply shopping around, switching suppliers or negotiating discounts, savings can run to hundreds of pounds.

The research focused on a sample of three hundred business owners of micro SMEs (businesses with less than ten employees), of which there are 4.6 million in the UK, comprising 96 per cent of all businesses in the UK.

Darrell Sansom, Managing Director of AXA Business Insurance said: “Some businesses are clearly very savvy and these figures certainly do not reflect how every SME in the country operates — but what is very clear is that a huge number of companies could make small changes which would result in significant savings.

“While the areas we analysed focus on aspects of business which require additional administration and common sense, it is also instructive that only a little over a third of the businesses to which we spoke take any form of financial advice. With some professional advice, there are certainly even more savings that could be made.”


With energy prices rising rapidly, this is a key area where SMEs can make a big difference. Yet 29 per cent of SMEs rarely or never check their energy tariffs. Data suggests that, on average, those that switch their energy supplier save 30 per cent - a saving of £399 on the average SME energy bill of £1,331. Applied to all those who never change tariff, that equates to over half a billion pounds.

Moreover, there are other ways of saving on energy bills other than switching, such as turning off appliances when not in use and keeping the heating a degree or two lower.


Cashflow is a very important part of running a business, but nearly a third of SMEs (32 per cent) keep their “spare” cash in an account that pays no interest. With an average balance of £7,879, even at a low interest rate of just 1.5 per cent, this adds up to £118.19 of “wasted” money. Extrapolating this across all those SMEs getting no return for their cash, this amounts to a massive £173,975,680.


Most SMEs use suppliers of some sort, for example for materials, IT support or office equipment and stationery. While many businesses have negotiated supplier discounts, more than a quarter (26 per cent) receive no discounts at all from their suppliers. With an average supplier spend of £6,393, even a modest six per cent discount (the average saving among those companies which have been able to negotiate reduced rates) would mean a saving of £384 per SME. This means that, for the UK’s SME’s as a whole, the “cost of not haggling” is £459,264,000.

Indeed, three per cent of canny business owners have negotiated discounts of 20 per cent or more from their suppliers, far above the average, demonstrating the benefits of actively seeking to drive a hard bargain.

Internet — broadband and mobile phones

Pretty much all businesses these days rely heavily on internet and mobile communication, yet a quarter of SMEs have never checked, or haven’t checked for over two years, the tariff they get for their broadband and mobile phones.

In the last two years, broadband costs have halved so those sitting on an old contract could be wasting £249 a year as the average SME broadband spend is £498. This means that the 24 per cent of SMEs who haven’t recently checked are wasting up to £274,896,000.

Meanwhile experts estimate that an average saving of 34 per cent can be made by getting the right mobile phone contract - a saving of £242 on the average SME mobile bill of £711. For the 25 per cent of SMEs lingering on an outdated tariff this adds up to £278,300,000.

SMEs are also advised that if they do switch providers, to double check they get a refund for any leftover credit from their previous supplier.


SMEs are often reliant on their cars or vans to get around. And on average they travel 5,391 business miles a year. However 63 per cent don’t look around for the cheapest fuel which, on an average sized car over the course of the year could mean a saving of £13 based on a 2p per litre saving.


Another area of motoring expense where a bit of shopping around can pay dividends is insurance. With motor insurance rates dropping at the fastest rate for several years, there are plenty of opportunities to make cost savings. Surprisingly, however, 11 per cent don’t ever shop around when it comes to renewal.

The average annual premium paid by the SMEs questioned was £264, so with just a small five per cent saving this is £13.20 — and often savings can be a lot more than this. For the 11 per cent of SMEs who fail to shop around this adds up to a total of £6,679,200.

Meanwhile, SMEs who take out business insurance to protect their livelihood are even less likely to consider the finances with nearly one in three (28 per cent) sticking with the same provider year after year. Again, applying a very small five per cent saving for shopping around adds up to £16.40 on the annual premium or a total across all businesses of £211,232,000.