Cut business costs, but don’t unplug the kettle.

By Ellen de Vries

If you run a business, you may have a well-trained eye for recognising where to cut costs without upsetting the balance too much. But our research shows that cutting costs can sometimes go too far, particularly when it comes to turning off the taps on free tea and coffee.

In the last year, many businesses have been forced to cut hours, make redundancies and scrap bonuses. The next step is to start thinking about how to cut costs even further; perhaps by turning the heating down a notch, turning monitors off at night, or looking into more economical suppliers. In fact, many business owners don’t know that one of the most economical ways to cut costs is to reassess their contracts with their energy suppliers.

Unfortunately, last year a spate of companies followed an example set by a budget airline – putting a stop to offering free tea and coffee to staff. According to our research, a surprising 25% of UK companies have cut back on free refreshments over the last year.

“If the company is mean about tea and coffee, what else are they mean about?”

Scrimping on teas and coffees may seem like a small step, but this can have a surprisingly large impact on the overall functioning of the business. One third (32%) of workers say that small perks boost company morale. To have the tea taken away also appears to be a sure way to put a downer on the office atmosphere, and start rumours about the company’s bleak financial future. So when you’re thinking of cutting costs, think twice about how much you’re actually affecting the company culture; removing even the tiniest perks can have a profound effect, and financial consequences.

James Constant, small business expert at uSwitchforbusiness.com, says: “Given the economic climate it makes sense to cut costs. However, it’s also vital that companies send out the right message to loyal staff…there may be a far greater price to be paid in staff morale.”