Small business owners generally think the only way to boost profits is to increase sales. Energy costs, however, can have a big impact on profit margins. Likewise, energy efficiency can actually lead to higher profits. According to the Small Business Administration (SBA), retail companies alone spend $20 billion on energy each year. A mere 10 percent reduction in energy costs for the average full-line discount retailer can boost net profit margins by as much as 1.55 percent and sales per square foot by $25.
How then can a small business reduce its energy use and start to increase net profit margins? The Missouri Environmental Assistance Center (MOEAC) has created a list of 20 ways that small businesses can start to save, beginning with general tips and leading to more specific action items. Each category of tips has been organized from no-cost/low-cost suggestions to higher cost energy efficiency upgrades.
- Start with an audit. An energy audit is an excellent way to learn about your current energy usage and identify efficiency options. An energy audit may be offered FREE by your utility company. For a listing of professional energy auditors and to locate utilities that offer free or discounted auditing services, visit the Environmental Assistance Center's Energy Efficiency webpage.
- Read your utility bills, and baseline your energy use. Not only do utility billing errors occur more often than businesses imagine, but tracking energy expenses can reveal important trends to help pinpoint how to adjust energy use or upgrade equipment for the most savings. To learn more about baselining energy use, visit ENERGY STAR Portfolio Manager.
- Reduce your peak energy use. Utility companies charge more for energy used during "peak demand" hours, usually 8 a.m. to 5 p.m. If a business uses significant energy during peak demand hours, it is possible to reduce those fees simply by moving some operations to off-peak hours. Equipment controls can also lower peak charges by automatically leveling out start up current usage; shutting down idle equipment; and adjusting temperature, speed or other settings to use less energy. Bonus tip: Check with your local utility to find out what its peak demand hours are.
- Finance improvements with incentives, rebates and low interest loans. Visit the Database of State Incentives for Renewables and Efficiency or the EAC's Incentives Widget to find a number of utility rebates, tax incentives and low-interest loans for financing energy efficiency improvements.
- Tighten your building envelope. Plugging or filling cracks or leaks with caulking and weather stripping is a low-cost way to way to tighten up a building. Typically there are gaps around windows, doors and utility switches/outlets.
- Retrofit your building. Paying to tighten and insulate your building envelope, which includes the walls, windows, outside doors, foundation, floor, roof and skylights, can pay off quickly. ENERGY STAR estimates that tightening a building's envelope can result in 20 percent energy savings.
- Conserve light. Use task lighting instead of overhead lighting, and light only those areas that are needed at the time. Providing the right lighting can save up to 15 percent on your lighting bill.
- Clean your lights bi-annually. Maintenance is vital to lighting efficiency. Light levels decrease over time because of aging lamps and dirt on fixtures, lamps and room surfaces. Together, these factors can reduce total illumination by 50 percent or more, while lights continue drawing full power.
- Install occupancy sensors. Savings can also be achieved by installing occupancy sensors in spaces such as restrooms, storage rooms, conference rooms and private offices.
- Convert to energy efficient lighting. Use T-8 or T-5 tubular fluorescents in overhead fixtures, and save 35 percent on energy use. Replace incandescent bulbs with compact fluorescent bulbs, and save 75 percent of energy for the same light output. Newer CFLs are even dimmable. Bonus tip: Conventional exit signs should be costing you up to $28/year per fixture electricity! Switch to modern Light Emitting Diode (LED) exit signs, which operate for $4/year and last for 10 years.
Heating, ventilation and air conditioning
- Set it back. Install a programmable thermostat. When no one is in the building (typically eight or more hours a day), it can adjust the temperature by 10 to 15 degrees Fahrenheit (cooler in the winter and warmer in the summer) to reduce energy bills by more than 10 percent.
- To shade or not to shade. During winter, keep the draperies and shades on your south-facing windows open during the day to allow the sunlight to enter. Keep them closed at night. During summer, keep the window coverings closed to block the sun's heat.
- Use fans. Installing and using ceiling fans can reduce air conditioning 3 to 5 degrees in the summer. Reverse the direction of the ceiling fans in the winter to push the warm air down.
- Dehumidify. Air conditioners work hard to cool and dehumidify building space. Purchasing an ENERGY STAR dehumidifier can reduce cooling expenses by $20 a year, resulting in $250 of savings for the life of the unit.
- Change your air filters quarterly. A dirty air filter slows down air flow and makes the system work harder to keep you warm or cool.
- Tune up your HVAC annually. Just as tune-ups for your car can improve your gas mileage and increase longevity of the auto, a yearly tune-up of your heating and cooling system can improve efficiency and comfort.
- Upgrade your HVAC. If your HVAC unit is more than 10 years old, it may be costing you up to $200 extra per year in energy costs. Keep that money in the bank by replacing the old unit with an ENERGY STAR qualified unit.
- Conserve water. Install aerators and low-flow devices. Remember wasting hot water wastes energy used to heat the water. Make sure your hot water heater is not set above 120 degrees Fahrenheit. Insulate tank and pipes.
- Turn it off. "Phantom" loads are power that is used keeping equipment in the "ready" mode. Use power strips to completely shut down energy consumption of equipment that is not in use. Bonus tip: Digital equipment (computers, microwaves) uses 75 percent of its energy in standby mode. If it has a "black box" plug, it is using energy even in the OFF mode.
- Purchase Energy Star-qualified products. Typical ENERGY STAR office equipment saves more than 50 percent of power used by other equipment. Bonus tip: Laptops use less power than desktop computers. Ink jet printers use less energy than laser printers.
This story was featured in the April 2012 newsletter