How to Save More Energy (And Money)

Date: May 15, 2014

Related Content: Playbook Energy Own

Strategies for achieving maximum energy savings with minimum investment.

  • High energy costs are a critical concern for small business owners
  • Making energy-efficient upgrades can cost anywhere between nothing and hundreds of thousands of dollars

It takes a lot of energy to run a small business. It takes energy to find customers and manage employees. It takes energy to innovate, compete and survive. Sometimes, it even takes energy just to get up in the morning.

But physical and emotional energy aren’t the only kinds of energy small business owners expend. They also use electrical, chemical and thermal energy in spades, according to the U.S. Environmental Protection Agency’s ENERGY STAR program, which says small business owners in the United States spend more than $60 billion a year on their utility bills. And with electricity and natural gas prices expected to increase by approximately 2 percent and 12 percent, respectively, this year alone, according to the U.S. Energy Information Administration, those expenses are going to grow.

Given the high costs of energy, it should come as no surprise that small business owners are big fans of energy efficiency. NFIB’s most recent Small Business Problems & Priorities report found that 17 percent of business owners find electricity costs to be a critical problem; other energy costs, including the cost of natural gas, propane, gasoline, diesel and fuel oil, are the third most serious problem for small business owners, with 35 percent saying the problem is critical.

“Everything you can do to decrease the number of dimes you send out the door helps your profit margin. For some businesses, that’s an opportunity to stay in the black,” says Andrea Nocito, a sustainability consultant and owner of EcoStrategies, a firm in San Antonio that helps small businesses lower their operating costs via energy efficiency.

Even small investments can make large impacts. “Energy efficiency is typically the quickest and easiest way to make an environmental difference in your business, and it is also the most cost effective,” Nocito says. “It gives the biggest bang for your buck.” 

MyBusiness spoke with three small business owners who have found major energy savings with relatively modest investments ranging from $7,000 on energy-efficient upgrades to $125,000 on solar arrays. The results, they say, have infused their businesses not only with extra cash, but also extra conscience.

Set Energy Reduction Goals

Tom Bowman, owner and chairman of Bowman Design Group in Signal Hill, Calif., identifies as an entrepreneur, not an environmentalist. Yet his passion for the planet is so obvious that his peers have called him “the closet climatologist.”

Bowman, whose eight-person firm designs, plans and produces exhibits for trade shows, museums and aquariums, earned that moniker in 2004 when his business was commissioned to work on a climate change project for the Marian Koshland Science Museum in Washington, D.C. In 2007, when his company was working on a climate change project for the Birch Aquarium in La Jolla, Calif., Bowman says he had a “moment of awakening.” “I was working with some of the foremost climate scientists in the world,” he says. “I thought, ‘Knowing what I know, I can’t go on doing things the way I’ve always done them.’”

In 2008, he set ambitious goals for his company: a 10 percent reduction in greenhouse gases by 2010, a 20 percent reduction by 2013 and an 80 percent reduction by 2020. 

To achieve his goals, Bowman intended to install solar panels and a cool roof at his office, a 2,000-square-foot commercially zoned residence near Long Beach, Calif. Unfortunately, he only had $10,000 to spend; the solar panels would have cost $90,000 and the roof $40,000.

“We couldn’t afford it,” says Bowman, who felt like he’d failed before he’d even begun. But Bowman could afford a new car, so he traded in the company’s SUV for a Toyota Prius. He also instructed his staff to purchase energyefficient options when old pieces of equipment needed to be replaced.

As if by serendipity, the lease on the company’s copier expired shortly thereafter. Bowman replaced it with an ENERGY STAR-rated multi-function model, which allowed the business to decommission its laser printers, fax machine and scanner, using one machine to do the work of several. When the office’s air conditioner broke, he replaced it with the most energy-efficient model he could afford.

Meanwhile, Bowman’s local utility company, Southern California Edison, relamped his office for free with energy-efficient compact fluorescent light (CFL) bulbs that it has since replaced with LEDs—which last two to four times longer than CFLs and 25 to 35 times longer than standard incandescent bulbs. The utility company also alerted Bowman about a large power drain from his computers, so he plugged them into power strips that could be turned off at night. 

Excluding his Prius, Bowman spent $7,000 on energy-efficient upgrades, which within two years had reduced his emissions by 65 percent, his electric bill by 40 percent and his gasoline costs by 59 percent. And that doesn’t include related costs such as car insurance, equipment maintenance, paper and toner, all of which have decreased. “Every year, we’re saving $9,000 in aggregated costs,” Bowman says.

In addition, employees who live far from work now come into the office just once a week. That reduces the office’s net demand for energy, as employees who telecommute aren’t using computers, making copies or turning on lights.

Bowman Design Group’s sustainable business practices also have helped it attract and retain clients who admire its efforts. “It’s given us a new stature and loyalty among our clients that we didn’t have before,” Bowman says.

Consider Solar Power

When William Morrow and Kent Ozkum bought Whitmore Farm in 2003, they knew they wanted to power their business with solar energy. But it would have taken them 30 years to recoup their costs, and by then they’d need to replace the system.

“The return on investment did not make sense at that time,” says Morrow, owner and manager of the Emmitsburg, Md., meat farm.

So, Morrow and Ozkum did without—until energy costs on the farm demanded that they take another look. Morrow says farms like his are especially energy-intensive, requiring seasonal heating for animals, incubators for hatching eggs, and walk-in refrigerators and freezers for storing packaged meat. “As our farm business grew, our energy use also grew. It got to the point where it was a concern, and we wanted to see what we could do about it.”

So eight years later, Morrow once again began researching solar energy—this time with different results. “The price of photovoltaic cells had come down, and [state and federal governments] had ramped up their incentive programs … it turned out to be a six-year return on investment for a 30-year system. We felt that was an excellent bargain.”

In spring 2012, Morrow and Ozkum had a 28-kilowatt solar array installed on the roof of their 150-year-old barn. Although the upfront investment was approximately $125,000, their supplier—Standard Solar of Rockville, Md.—helped them find and apply for government subsidies, including state and federal tax credits that covered 60 percent of the system’s cost. Helping even further was the U.S. Department of Agriculture’s Rural Energy for America Program, which turned the federal tax credits into cash.

“Since farms notoriously operate on very low margins, the USDA developed a program for agricultural businesses where it will give you the cash equivalent for federal tax credits,” Morrow says. “They’re basically buying my tax credit, which is huge for small farm businesses, since there are many years you don’t have any profits to offset with tax credits.”

The solar array system, which provides 50 percent of the property’s electricity, has cut the farm’s $2,500 electric bill in half. Morrow and Ozkum realize additional savings by driving an electric vehicle for personal use—powered by their solar array—and diesel-powered vehicles for industrial use. “Diesel costs more per gallon, but the vehicles get more miles per gallon,” Morrow says.

Morrow acknowledges that his choices won’t work for everyone. “Solar has a 30-year life expectancy. That’s a really long view for a small business,” he says. “But if you’re optimistic and you think your business is going to be around for a while, it’s an easy decision.”

Use the Cloud

In pursuit of energy savings, most companies fixate on physical assets like their offices, equipment and vehicles. But Web designer Bill Hipsher says companies should also focus on their digital assets.

In 1998, Hipsher created the website under the parent company Omaha Web Ventures, which he sold several years later to a group of local investors in Omaha, Neb. In 2004, those investors took the site national as, the flagship website of US Storage Search Inc., which operates a network of online self-storage directories advertising storage locations across the United States. Its digital presence requires substantial server space, which in turn demands frequent software updates and constant IT support—both of which cost money.

In fact, when Hipsher rejoined US Storage Search in 2007 as its director of business development, the company’s IT costs had climbed to more than $25,000 a month. In response, he gradually began moving the company’s operations to the cloud. Instead of hosting websites on the company’s own servers, for instance, he moved them to Rackspace, a cloud-based Web hosting company. And he chose inContact, a provider of cloud-based contact center software, to power its 24/7 call center. He also replaced the company’s email server with Google’s suite of cloud-based business services, Google Apps, which includes email, file storage and document sharing. 

All of the company’s data is now stored in the cloud, says Hipsher, who left US Storage Search in 2012 to co-found the Internet marketing company B2 Interactive, which presently operates and manages US Storage Search under a licensing deal with its owners. “By taking the money we were spending on cost centers, like IT, and moving it to profit centers, such as Web developers and salespeople, we felt we could see a better return on our investment,” he says.

The goal was cutting IT costs. A pleasant side effect, however, was reduced energy costs. Without onsite servers consuming energy 24/7, US Storage Search saw a noticeable decrease in its utility bills. When’s parent company grew after launching in 1998, Hipsher says he had an 800-square-foot server room and a $4,000-per-month electric bill at its peak. When US Storage Search launched in 2004, it had a 100-square-foot storage room and a $2,300-per-month electric bill. Today, B2 Interactive has no server room and pays just $700 per month for electricity.

Related Content: Playbook | Energy | Own

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Energy Expectations

According to the U.S. Energy Information Administration, the price of oil—including crude oil, gasoline, diesel and heating oil—is expected to fall in 2014 and 2015, while the prices of natural gas and electricity are expected to go up. MyBusiness asked NFIB Chief Economist Dr. Bill Dunkelberg what it means for small business.

MyBusiness: What is the outlook for energy costs going forward?

Dunkelberg: Energy costs are going to be relatively high. Governments of all sizes are short on revenue and have deficits, and they’re looking for ways to tax. A number of states have already proposed raising the gasoline tax.

MyBusiness: Can small business owners expect any relief?

Dunkelberg: Your only salvation will be if, for supply reasons, you see the price of the raw material go down. If the price of oil falls, you could actually see the price of a gallon of gas fall, even if taxes go up.

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