Running any type of business requires paying for a long list of operational costs. A few notable examples of expenses you may need to pay include electricity, natural gas, and water. To help you calculate the percentage of total operational costs, there are a few things you need to take note of. We’re going to look at these utilities and understand how you can compute their respective percentages below.
Having a clear overview of your annual expenses
Gather all your business utility bills for a certain period. Analyse the trend and check for fluctuation across the different seasons. Aim to look at trends for the entire year.
Make sure to include the most crucial sources of expense such as water, electricity, oil, phone service, ISP subscription, and gas. If your business needs other services such as trash removal, make sure to include these in your analysis as well.
Find out how much expenditure was incurred
Aside from checking the trend, it’s equally important to sum up all of your bills from your selected timeframe. For example, you need to calculate how much you spend on electricity from January to December. This will help you determine how much you spend on each utility and which one costs you a lot of money.
Find out if you need to start switching to a different utility provider. You can compare the available providers in the area using platforms such as Utility Bidder.
Sum up everything to determine your overall expenses
After knowing how much money was spent on water, electricity and other business utilities, you should also look at the overall utility spending of your business. This will allow you to monitor how much money gets subtracted from your yearly earnings.
For a more detailed report, you should try grouping the expenses into specific categories. Some examples of categories you can use include labour and operational expenses, but you’re free to create as many categories as you want.
Compute the percentage costs
Now that you have the tallied amount for each type of expense and the overall cost of utilities, you can start computing the percentage costs. Simply divide the utility expenses by the total amount of money spent and multiply the result by 100.
Then, you should also compute the percentage of money used to pay for all the utility costs. For example, if you spent £10,000 on utilities and paid about £40,000 for the rest of the business costs, then it means your utilities accounted for 25 percent of your total expenses.
Evaluate your total spending and find out what arrangements you need to make in order to fully optimise your budget. Maybe you need to change your utility provider if you are blowing your budget for electricity or water bills. You might also need to implement some changes such as replacing equipment or adjusting work hours so you can save more money.
By understanding where you spend your money, you can maximise your earnings and create a more streamlined budget.