SoMakeit Finance Update
James Bruton
There is no cap on commercial energy bills as there is with domestic energy. Many businesses have seen their energy costs go up 4 or 5 times. Our landlord however currently has a fixed rate with their energy provider at 22p/KWh which will last another year until it needs renegotiating. Their contract however states that prices can rise for ‘non energy-cost related reasons’, so there may be a nominal increase because inflation is high.
Also, If the landlords’ energy company goes out of business then we may find our costs go up substantially when a new one comes along. We have currently averaged around £130/month + VAT on electricity during the last five (summer) months, so a four-fold increase would be bad.
The landlord has agreed to reduce the VAT on our invoice for electricity to 5% from 20% because that is the core cost, even though he doesn’t have to because we’re on a sub-meter and he can bill 20% VAT on all output. We are not VAT registered so we cannot claim VAT back like other businesses, so this represents a saving to us equivalent to one average membership subscription.
The rent however is increasing. The last rent rise we had was in March 2020, from £950/month to £1000/month + VAT. Inflation is high at the moment, so the rent is going up to £1100/month from November. There will also be a rent review each year targeting a 3% rise - this will however be based on inflation at the time.
As of 7th Sep 2022 we have 75 paying members paying a total of £1427 based on the last complete month. This is up three from 72 members last month.
Average rent (including electricity, bins, and VAT) for the last five months is £1396. Note: we do have other outgoings such as web hosting (& the internet connection at some point). Although as above we’ll need to cover an additional £100 rent rise from November.
We’re not in panic mode by any means, but we need to consider unexpected costs such as electricity rising during in the next year, or in one year. We need to forward-plan for a rent increase and electricity price increase in one one year, and cover the rent rise in November this year.
Obviously with winter approaching our energy costs will probably rise. Although we still want to make the space accessible to as many people as we can, all members will need to consider the fair use policy in terms of energy used and their membership subs.
We are ultimately only funded by membership subscriptions, so if any members can afford to raise the subs by 10% to help cover the rent rise then that would be lovely, but this is of course on a voluntary basis.
All members should remember to keep the space clean and tidy so it’s attractive to new members and we can retain the members we have.
James Bruton
Trustee