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How To Estimate Utility Costs For A Small Business: Understanding Typical Businesses Utility Costs

Business owners need to check their utility costs now and then to ensure they are not wasting too much money down the utility drain. Utilities are the highest expense for any business operating nowadays. But the issue here is that most business owners don’t give the required attention to it and end up paying high rates for utility consumption.

This is especially true for new and smaller businesses trying to survive in the competitive market. So, if you are a business owner trying to make the most out of your business, you must estimate the utility costs beforehand to ensure that you are not spending too much on them. Estimating the utility costs is simple and can be easily done once you get used to it.

It also allows you to check the current rates you are getting the utilities from providers. And with this, you know beforehand if you want to switch your supplier(s) or stick with the same ones. But you don’t have to worry much here as well, as, with the help of certain comparison websites, you can perform power company comparisons in a single click!


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Let us now talk about how you can easily estimate your utility costs and what this estimate will help you with.

Estimating Utility Costs for Small Businesses

Before jumping into how to estimate, let us first mention which costs come under these utilities:

  • Electricity Costs (Power Costs)
  • Natural Gas Costs
  • Water and Sewer Costs
  • Internet Costs
  • Phone Costs

These are the usual utility costs every small business has to bear monthly! Now that you know about the expenses, let us dive into the process of estimating these costs beforehand!

Gather the Previous Utility Bills

First, you must gather all the utility bills for at least the past year. The bills might be monthly, quarterly or yearly, but you still have to gather all the bills to calculate the estimate. When you have everything for the past year, you will only have to consider seasonal changes in the bills as well!

But here you have to remember not to leave the electricity bill, as this is considered the biggest culprit in your business’s expenses.

What if you are starting a new business and don’t have the bills of the past year? In this case, you can easily use the publicly available averages of utility costs of the businesses operating in your area. This can be easily found online. Or you can also contact the utility companies for the rate they are providing to you.

Add Up All the Utility Bills!

Once you have all the utility bills with you, the next step is to add up all the bills to get a total of utility costs for the year. We suggest you create an excel sheet with all the bills, as this will help you sum up the bills accurately and also will allow you to compare specific months’ statements. 

Compare the Utility Bills Total with your Total Expenses!

The next step is to compare your utility expenses with the total costs of your business for the year. The total expenses will be the sum of the utility costs and all the other business costs, i.e., rent of the office space, equipment, vehicles and fuel, advertising, payroll, insurance, etc.

Once done, you have to check your business’s utility percentage. This will give you a clearer idea of how much you spend on the utilities out of the total cost of your business. In return, you will know where you can and need to save to lower your expenses and augment your profits.

What to Do Now?

Now that you know the total costs for all the utilities and the subtotals, you have a complete picture of all your expenses. Now you can check which expenses cost you more in specific periods and which are expensive throughout the year and try to lower the costs accordingly.

To lower the specific costs, you can limit the utility’s use and have the option to switch to a cheaper provider. With this, you can create a separate tab in the same file with more specific details of each utility. These can include the downtimes experienced with the utilities, especially the internet connection downtime. This will give you an even clearer picture so that you can take the necessary actions on it timely!

How To Estimate Utility Costs For A Small Business: Understanding Typical Businesses Utility Costs - 1

Estimate and Lower the Costs Efficiently

With the process described above, you can easily estimate the total costs for your small business and take the necessary actions to lower them. Lowering your costs will allow you to increase your profits in return!