Many of the UK’s 5.5m businesses are run by an owner-manager. So, one person often has to deal with growing sales, managing people and negotiating with suppliers. Unsurprisingly, many tasks are dealt with as quickly as possible due to time constraints, including researching the best telecoms package for the business.
Unfortunately, there are many traps for the unwary business owner, so it is worth spending a little more time to gain both a better deal and peace of mind.
Here, Dave Millett provides some important questions to ask and issues to look out for before you sign a telecoms contract.
Is the supplier part of the Ombudsman scheme?
One of the most essential things and the easiest to check is if the potential supplier has signed up to the Ombudsman scheme. This gives free binding arbitration in the event of a dispute. A list of members can be found here. If the company you are considering is not a member, you have to ask why not?
There is quite a bit of protection for small businesses but many are not aware of it and suppliers rely on that ignorance. For example, auto renewal of phone contracts for small businesses was banned several years ago yet many suppliers still try to get away with it.
Are there hidden costs?
Watch out for being lured by eye grabbing lowest price promise especially for line rentals. What you usually find is that the savings here are more than offset by higher call charges. There can often be hidden charges such as minimum call charges, call set up fees and call durations being rounded up to the nearest minute. All of these will of course inflate your costs.
It is also important to watch out for price rises after the start of the contract. As a small business you should be given notice on any price rise. You should also be given the option to cancel within 30 days. The problem is that many suppliers hide the notification of rises in their bills or on their website. This means that the only way to be sure is to check the bill regularly against the contract and insist on an additional contract clause that says that should you spot a price rise at any time you have the right to cancel. It is perfectly legitimate to ask for this clause to be added before you sign up. If the supplier refuses perhaps that shows what they are intending to do.
Should you sign a long term deal?
Many small businesses sign long term deals to avoid upfront payments – but this can be a false economy. Who knows where the business will be in five or seven years time? Your needs may well change.
For example, if expansion is on the plans it may make sense to pick a solution where you can reserve consecutive numbers from the outset. This looks more professional.
Also always remember that something that appears to be free at the time can have long term cost consequences. To save costs there is great temptation to accept offers of free installation if you sign 3 or 5 year contracts.
This has two downsides, firstly your business may expand and / or you may move the business and you could find yourself facing penalties for cancelling the contract. Secondly you are locking yourself into prices for a long term in an environment where prices usually go down.
Can you rely on just mobile?
Another common mistake for small businesses is think; ‘I will just use my mobile number’. There is plenty of research which shows that most consumers and businesses trust companies with only a mobile number far less than those that appear to have a landline number.
For example one piece of research showed that 30% of people do not trust a mobile only and therefore will not contact the company. This is even higher if your business is offering professional services such as accountancy, financial advice or consultancy. If you only have one mobile you also only have a single voicemail for personal and business calls. It is all about creating the right first impression. It is similar to using a Gmail or Hotmail email address.
The “appear” to have a landline is important as it is now very easy and cost effective to have a landline as an app on your mobile. This can help your company appear bigger than it really is, as well as helping business owners separate their work and personal lives.
Should you use your home phone?
Some small business owners who are keen to save more money are tempted to use their residential services. Should you do this? There is a simple answer to this – don’t do it! Although you may save a small amount of money on the monthly rental, what you are losing is priority if there is a fault. How much revenue would you lose in a day if a potential customer cannot get in touch with you?
In addition if you have your home number as your business phone number this has the disadvantage you don’t know if you aunt is calling or that important new customer. It also means you can’t turn your business off if you want to in the evening or at weekends. There is limited functionality as well for handling a second call and personalising voicemails. Also if you move house you may move to another exchange and not be able to take the number you have been marketing with you.
Weigh up cost vs service for broadband
Good broadband is vital nowadays so the best advice is not to buy just on price. While many people view it as a commodity – in reality there are great variations in contention ratios, network capacity, quality of ‘free’ routers and customer service. Again, it is important to ask what is the cost of a day’s lost internet? To give you one example, we know of a pub that used wifi card machines and chose to go down the residential route. The publican did this because it would save money (a £10 a month saving). However on one fateful day the pub suffered a fault at 4pm on a Friday. It wasn’t fixed until late on Monday meaning they lost almost £6,000 in missed takings over the weekend as they could only take cash.
Be wary of review sites
Obviously review sites can act as a guide but, be aware, not all are as independent as they seem. For example, Trust Pilot are owned by same company that owns Verastar (previously Unicom). They were fined £200,000 by Ofcom for miss-selling. And there are regular instances where people who have left negative feedback on Trustpilot find that it has disappeared later on.
For any small business communicating with customers, partners and suppliers is key. For this reason ensuring you have the right solution for your business at the right price, without any nasty surprises, is worth the time investment. Always ask questions, look carefully at the detail of any deal and check regularly for any changes. That way you can have the right business tools and peace of mind. The old adage if it looks to good to be true then there is probably a catch
Dave Millett has over 35 years’ experience in the Telecoms Industry. He has worked in European Director roles for several global companies.
He now runs Equinox, a leading independent brokerage and consultancy firm.