Is the cost of energy hurting your small business?

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Photo courtesy of "Death to Stock"
Photo courtesy of “Death to Stock”

I saw some interesting news from the UK where small business owners are under pressure to cut their energy use. Some of the issues that small businesses have is trying to make old buildings more energy efficient, finding the cheapest and most sustainable ways of heating and lighting buildings, dealing with the many separate sources of energy advice for small businesses from central and local government, lack of transparency from energy suppliers about the most appropriate tariffs, problems with direct debits that over- or under-charge leaving them with huge bills or rebates and a poor idea about support from energy efficiency schemes.

But the upside is that the experts say that many small enterprises could cut their energy bills by 15%. One consultant invited to a seminar on how to cut costs and make small businesses more efficient said that if a small business could reduce energy consumption by 20%, it would be equivalent to a 5% increase in sales. Some sobering news, however, was that if energy prices keep rising at current rates, some small businesses wonder whether they will still be economically viable in 10 years time.

In this country we not only have the threat of continued energy price increases but also reliability of supply. You may know about the many small businesses in the food arena who lose thousands of rands when there are blackouts because the perishable stock goes to waste very quickly. Food businesses such as restaurants have to shut their doors when there are power failures. One small printing company had to move from one location to another area because of the municipality having to fix a faulty substation. Imagine that. That you have to locate your business according to the reliability of a substation. But that’s exactly what this small printing business owner had to do otherwise he would have gone out of business eventually. Diesel generators can assist but how long can you run them for? Diesel is expensive.

Is there really an incentive for a small business to reduce its electricity costs? You might think that reducing electricity costs is a no-brainer but this isn’t always the case. The reason is that some businesses in less price competitive markets can run with a higher overhead and simply pass on the cost to customers. But this is a dangerous game because you may well price yourself out of the market in the longer term. It’s far better to look at energy efficient ways of running your business.

There are about three men things that you can do to reduce your energy in your business. One of the first things is changing behaviour. This simply means switching the lights off when they are not needed, turning off plant or machinery or office equipment when it’s not being used and getting your staff to be more aware of their behaviour which increases energy use. But the problem with changing behaviour is that it’s a never-ending battle. You always have to be reminding people of the need to switch off. This is why energy efficiency consultants say changing behaviour is not sustainable over the long term.

The other way to reduce energy is to introduce new technology. A simple way might be to change your lighting to compact fluorescent lighting, for example. You may also introduce energy efficient appliances and electric motors. Sensors can also be used to switch off lights in rooms that are not been used.

A third major way of reducing energy is total system change. Say you have an old building with antiquated electrical lighting and heating and you change the entire system. This is what I mean by a total system change. The redesign of the system will enable you to reduce energy.

It’s best to start with a simple energy audit to see your major sources of energy consumption, look for energy management opportunities and start monitoring your energy bills. It most certainly will take up more of your time and may cost you because of some new investment but think and work out how much you can save in the long run.

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