“Sustainability,” “global warming,” “green buildings,” “high energy prices,” “air quality,” “green house gases,”—these are phrases that are becoming more common in our daily lexicon.
We hear them constantly in the news and even in casual conversation. Yet how many small bus-iness owners connect these terms with profits? The fact is, there is a direct connection to the bottom line. The common thread in these phrases is the core resource we all need for our lives and our businesses—energy. Investing in technologies to use that energy more efficiently in business operations is similar to investing in more advertising to increase sales. They both effect the bottom line. Take this example from the Environmental Protection Agency’s guidebook, Putting Energy Into Profits – Energy Star Guide for Small Businesses.
“The manager of a small restaurant in St. Louis installed new lights and roof insulation. The total project cost $600 and saved approximately the same amount in a year. The business’ overall profit margin was five percent profit against revenue. Because energy cost savings went straight to the bottom line, the measures contributed $600 to the business’ pretax profit after the first year ended. The savings were worth the equivalent of $12,000 in additional sales. For the manager, cost reductions of $600 were easier to achieve than increasing sales by $12,000.”
To get a rough idea of what your business might be able to add to the bottom line, you need to look at your total energy costs for a year. The EPA, the U.S. Department of Energy and other organizations that track energy data agree that a rough estimate of 30% is an achievable potential savings in many small businesses. So, if you believe that it is worth recouping 30% of your annual energy costs, you need to look into ways to cut energy waste.
But wait, you sell donuts. What do you know about energy efficiency? Actually, there is an abundance of help and resources to help you do this. Depending on the complexity of your operation, you may be able to do it yourself, or you may need a professional. Either way, start with some self-education.
A good first step is to look into the resources available through EPA’s Small Business ENERGY STAR® program. The ENERGY STAR® label is best known to most people in relation to appliances and office equipment. The fact is, ENERGY STAR® is much more comprehensive. Their guide book, Putting Energy Into Profits – Energy Star Guide for Small Businesses is filled with easy to understand advice on how to proceed. You can download it for free at www.energystar.gov. You may even want to consider becoming a Small Business Energy Star partner. Another aid on EPA’s website is an “energy intensity” calculator that will help you compare your current energy use per square foot with typical businesses like yours. You will need to know the square footage of your building and have 12 months of energy bills.
Another important resource is your own energy utility company. Most of Kansas City’s utility companies have programs to help their customers save money with energy efficiency. These programs range from online energy savings estimators, to incentive programs that may give rebates to you for installing more efficient lighting, heating/cooling equipment, water heating and more. Most of these programs can be found on the company’s website or by calling their customer service departments. Some programs may also help you find an energy auditor, if you need one, and may even help pay for an energy audit.
Of course, making these improvements will cost something. Depending on how much you decide to do, it could be enough to require financing. There is help with that too. The Small Business Authority’s 7(a) Loan Guaranty Program is a flexible loan pro-gram that can be used to purchase ENERGY STAR and other energy-efficient equipment and lighting fixtures, or to retrofit an existing facility so that it is more energy efficient.
There is a connection between the bottom line and a healthy environment, and we can all make that connection with a little effort.
Bob Housh is Executive Director, Metropolitan Energy Center.
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