By Gary Young, Equinox.
As a startup you want to get the best deal for your business telecoms, broadband and mobile. As your business grows it’s important not fall in to the “if it ain’t broke, don’t fix it” trap where telecoms are concerned. If you review your contracts on a regular basis there is a good chance that you will save money, something that should make entrepreneurs happy.
Let’s look at why telecoms costs are reducing and specific ways in which you can save money.
Why entrepreneurs should be able to save money on telecoms:
- Consumer Telecoms spend
Between 2017 and 2018, the average consumer household spent 8.5% less on their telecoms. If anything, the consumption of telecoms is going up (more data, more calls etc.) so this strongly suggests that it is costs that are dropping. And this applies to businesses too.
- Operator revenues have dropped
Operator reported revenues between 2012 and 2017 dropped by 8% but the number of fixed phone lines stayed the same and the number of fixed internet connections increased by 19%. By definition that means unit costs are falling.
- Mobile Data costs
Consumer and business mobile data tariffs have plummeted over the last few years. In 2015, the cost of 1Gb of data was about £10. Today you can get business deals for data at less than £1 per Gb and, even, Unlimited data for £30 per month.
- Unmonitored costs
We have any number of case studies where we have saved somewhere between 30% and 80% for companies and schools.
Recently released data from Onecom shows that SMEs are spending, on average, £2,052 per year on telecoms. Is 30-80% of that figure worth doing something about?
How to save money on your telecoms as a startup or growth business
Identifying your call patterns
Do you make lots of very short calls or do you tend to make long calls? Fixed line call tariffs are, generally, either cost per call- or cost per time-based. If you make lots of calls and pay per call, you are almost certainly paying much more than you should and would be better off using a cost per second tariff.
Avoid your contract defaulting to standard terms
Many telecoms contracts are for an initial term, perhaps two years. After that, the terms, and prices, can often change for the worse. Make sure that you review your options before the contract’s initial term finishes. Make sure that your review takes place in sufficient time that, if necessary, you can give notice to your current telecoms supplier. Many companies try to add long notice periods so that you are tied into them for the long term.
How many lines do you need?
If you have an ISDN-based phone system, how many lines are you paying for? If your business has changed significantly you may be paying for lines you no longer use. If you are still in contract, you may not be able to change that number, but if you are past your minimum term, you will be able to.
Are unlimited calls necessary?
Many startups take out unlimited call contracts for business mobiles just in case people make huge numbers of calls. You may not be making the savings you expect by doing this. It’s like an All You Can Eat at your local Chinese or Indian restaurant; they rely on the fact that you will eat far less than you expect. It’s the same for the mobile operators.
Switching to VoIP
Openreach aims to stop all ISDN-based services by 2025, so you will have to switch relatively soon, but the benefits of VoIP mean you are highly likely to be able to save money by switching sooner rather than later:
- Lower call costs
- Ability to change line count, up and down, as needed
- Making maximum use of your internet connection will also deliver economies of scale.
When you’ve paid off the hardware…
Once you reach the minimum term on your mobile contract, you have paid off the hardware part of the monthly cost. If you don’t yet need to upgrade the hardware, you should talk to your mobile operator about only paying for the calls, texts and data.
Finding cheaper handsets
The mobile operators are not always the best people for entrepreneur to get their phones from, particularly if you are buying in bulk. Better deals can, almost always, be found elsewhere. Even if you don’t want to add this to your Capex (capital expenditure) spend, you can always ask the mobile operator for the hardware fund. You can then spend that elsewhere, and pay it back to the operator on a monthly basis.
Up in the air
If your startup is in an area with poor internet connections, look at alternatives that are air-based. Line of site, satellite and 4/5G are all options to consider. Some may be short terms options until a bigger line is installed. Others may only really be suitable for smaller businesses – but don’t automatically take the Openreach controlled option. There are alternatives, and they are often just as suitable, if not more so, and cheaper.
Saving through productivity
Most of what has been discussed above is based on the cost of the telecoms connections. However, it is also worth looking at productivity costs. Saving money on an internet connection by installing a slower connection may save you a few quid per month which may be appealing for startups on the face of it. However, if it means your staff cannot work effectively, you are losing money on productivity. Sometimes cheaper isn’t better.
For entrepreneurs with a startup or an established business it’s a good idea to ask an expert to help you. They know the market and will be able to suggest the best deals that are currently available.
ABOUT THE AUTHOR
Gary Young is Director of independent telecoms brokerage Equinox. Gary works with companies, charities and other organisations to help them choose the right telecoms packages for their needs and thereby reduce their costs. He is particularly knowledgeable on the integration of IT and telecoms in business.