Small and medium businesses represent 90 percent of all businesses, and consume 40 percent to 50 percent of the nation’s energy. One in 10 small business owners states that energy is his or her single greatest cost — more than wages, salaries, materials and supplies. Another 25 percent say that energy is their second or third largest business cost. But, often, small businesses struggle to reduce their energy bills through improved efficiency.
Why aren’t more small businesses going green?
For business owners who work around the clock, energy improvement often takes a backseat to other time-sensitive priorities. This constraint is especially difficult to overcome for organizations that don’t have dedicated energy managers on staff.
Many small businesses and startups are also hesitant to invest capital in energy-efficient equipment when the non-efficient versions are working properly, such as a new fryer in a restaurant kitchen or standard office equipment for employees.
Misconceptions about energy-efficient products create more barriers for businesses. Many retail, hospitality and grocery organizations believe that these products aren’t able to create the same desired environment preferred by their customers. Forty years ago, that may have been true. Since then, however, technology has evolved and improved, with an increasing variety of products that often improve the customer experience and employee productivity.
Overcoming these challenges has never been more achievable. A key step in this process is to partner with your local utility — the very same company that sells you energy in the first place. Most utilities have better energy-efficient programs and support for small business than ever before. Yet, only 2 percent of small businesses participate in these programs each year.
The time is now for small businesses to seek ways to reduce their energy costs, and there are four easy strategies to do so:
1. Think of your utility company as a trusted energy advisor.
It’s no surprise that utilities understand how to manage energy, but they are often an undervalued resource. Utilities can make unbiased, comprehensive recommendations by evaluating the top sources of energy consumption and operational considerations for a customer — such as business hours, temperature requirements and supply chain schedules — and help improve how businesses operate. Utilities understand that small businesses have diverse needs, and they can analyze data from their energy meters to develop a unique solution that works for any organization. Data analytics provide significant value for organizations when it comes to managing energy resources. SBAM works with Consumers Energy and DTE Energy to offer members time and money-saving opportunities through SBAM Energy Solutions.
One small business, Shari’s Café & Pies, found that the dipper wells used to clean ice cream scoops were wasting 8 million gallons of water each year with their perpetual flow systems — so the company switched to a new system that instead adds water in regular increments. This shift reduced water usage by an average of 35 percent and reduced natural gas by 15 percent to 20 percent.
2. Tap into utility incentives.
Many businesses are unaware that their utility providers subsidize the cost of implementing energy-efficient technology, which can dramatically increase their return on investment. The average small business that operates around 50 light bulbs can save more than $500 each year simply by switching to LEDs, which also last 25-50 times longer than standard light bulbs. Businesses can work directly with their local energy management contractors or distributors to install the latest high-efficiency products and appliances in their facility.
When Mitchell’s Ice Cream in Ohio partnered with public power COSE for its Energy Assessment Program to conduct an energy audit and identify the most efficient light bulbs, insulation and thermostats, the small business saved thousands and became more sustainable.
3. Review financing options.
For small businesses looking to begin their sustainability journey and cut down on energy costs, green financing options are increasingly available through financial organizations, utility providers and state agencies. It’s now possible to pay loans back through the energy bill, whether it’s a loan for a full efficiency transformation with new smart and connected equipment or just to purchase new lighting.
4. Market the success.
Energy management not only saves money, but also can help bring in more business by appealing to customers that increasingly identify with sustainable businesses and products. Marketing successful initiatives once they’ve been completed will help engage customers that consider a business’s environmental impact in their purchase decisions. A recent international study revealed that one-third of consumers now choose to buy from brands they believe are doing social or environmental good.
Another small business, furniture retailer Haverty’s, benefited from this green trend after it was prominently recognized by the U.S. Department of Energy’s Better Buildings Challenge for LED upgrades that reduced electricity use by over 40 percent and lowered heating loads, which reduced HVAC tonnage by 20 percent. Small businesses that inform their utility company of their energy efficiency achievements can also increase their visibility as a spokesperson for sustainability with the local community.
By embracing energy efficiency, small businesses can significantly save money and improve their customer engagement. New connected technology, from lighting controls to smart thermostats and energy management systems, can cut energy costs and reduce maintenance headaches for years to come. Beyond operational efficiencies and savings, sustainable initiatives help businesses build stronger relationships with environmentally focused customers and create more jobs for a rapidly growing energy management market.
Guest Writer, Mark Henderson, Entrepreneur Magazine