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Protect your profits with aggressive energy management

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in Admins,Leaders & Managers,Management Training,Office Management,Small Business Tax

If you’re like most captains of small businesses, you don’t pay much attention to managing your energy costs. You probably delegate that to an office manager or someone in accounting.

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 management 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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