What you may not realize is that energy costs often comprise about a third of the average small business’s expenses.
Strategy: Start viewing energy-cost as a regular management discipline, on par with the cost of materials and even health care. You don’t have to become an energy expert, but you should start treating energy-cost management as a business issue.
Here are some steps to take along that path:
-Complete an energy assessment. You can’t fix what you don’t know about, so start by auditing your energy use and its efficiency. Small-business development centers often provide such personalized, on-site assessments free, and they can yield easy savings suggestions.
Example: Recumbent BikeRiders Inc., a small, specialized retailer in Pennsylvania, called on the Pennsylvania Small Business Development Center’s Environmental Management Assistance Program for an energy assessment of its 970-square-foot shop. The audit turned up significant heat loss through the store’s 20-year-old single-pane windows, which were also letting in measurable ultraviolet light that was damaging inventory.
The business owner upgraded the windows and main entrance door to double-paned, low-e windows and added a storm door. Combined, the two upgrades slashed the small company’s energy consumption by 33 percent.
-Negotiate with suppliers. Examine the terms under which you buy energy: your contracts with the gas or electric company. Scrutinize usage and price conditions. You may find terms and conditions that could net you a cheaper or more stable rate, thereby reducing your exposure to often-dramatic price volatility.
-Consider changing production schedules. It costs utility companies a lot more to make a kilowatt of energy for you at 9 a.m. when usage is near its peak, versus 9 p.m. While shifting energy-intensive operations to so-called low-load times is a big consideration, it can help you gain a substantially lower price.
-Build up your computerized systems. Manufacturing companies, especially, can curb costs by strengthening computer-based and automated systems for monitoring production. Once you analyze and detect glitches or irregularities in energy use during production processes, you can address small changes that may make a big difference.
-Start looking at alternative energies. More small companies are seeking out renewable energy and energy-efficient “opportunity” fuels as alternatives to higher-cost, traditional sources.
Example: Eagle Alloys Corp., a small Michigan maker of steel castings, draws on a pipeline from a local landfill, where methane gas created from decaying materials is abundant. The methane replaces the natural gas the company’s foundry used previously.
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