When you own a small business, you often need to spend money to make money. That doesn't mean that all spending is a good investment. One of the easiest ways to reduce spending that doesn't directly contribute to your business’s bottom line is to cut back on your energy costs. Here are some tips to do so:
1. Get an Energy Assessment for Your Business
With an energy assessment, a utility company or other professional energy auditor will come to your business and asses how you might be able to save energy. This could include identifying inefficient appliances, finding energy leaks, or suggesting other ways to cut back on energy usage. You’ll then need to decide whether or not to make the suggested improvements. To help you decide, you should consider whether your ongoing energy savings will outweigh the cost of implementing the updates. Some states, like Massachusetts, even offer interest-free financing to help businesses make energy-efficient upgrades.
Many companies offer free energy audits, including many energy providers. Although you may think a utility company doesn’t want you to pay less towards energy costs, the opposite is actually true. Removing unnecessary energy demand can save utility companies from having to build and operate additional power plants and substations. In Massachusetts, no-cost energy assessments are offered to businesses through MassSave while small business owners in Rhode Island can request a free assessment through Rhode Island Energy.
2. Negotiate Your Rates
In some cases it may be possible to negotiate your energy rates. In some areas, like Massachusetts and Rhode Island, business owners also have the option of choosing their electric supplier, which could allow them to lock in a lower rate. Both Massachusetts and Rhode Island also allow commercial customers to choose their natural gas supplier, giving them the opportunity to shop around for the most cost-effective option.
3. Check for Variable Energy Rates
Some energy companies offer rates that vary based on the time of day or day of the week. If your hours of operation are somewhat flexible, you may be able to move some of your energy usage into those less expensive time periods. Contact your energy company to see if a variable rate plan is available, or a good fit, for your business.
4. Look for Tax Benefits, Rebates, and Incentives
Many states offer incentives to businesses for upgrading their existing energy systems with more efficient replacements. Massachusetts and Rhode Island offer incentives and potential savings in the form of rebates and discounts to businesses looking to be more energy efficient. To qualify, there is often a requirement to first have your business undergo an energy assessment to identify which types of energy efficiency improvements are recommended.
Tax incentives are also available at both the federal and state level for businesses making qualifying energy-efficient upgrades. Even if you don't qualify for a special tax credit, you still may be able to claim energy efficiency improvements as tax-deductible business expenses. It’s always a good idea to consult with a business tax professional to ensure you understand all of the tax credits and deductions available to you.
For a comprehensive list of potential energy-related incentives for business owners in MA and RI, visit Mass.gov and Energy.RI.gov.
5. Be Mindful of Your Energy Use
It may sound like common sense, but shutting off lights, adjusting thermostats, and unplugging electronics when they’re not being used can help take a dent out of your business’s energy bills. Consider whether you really need to leave the lights on from open until close, or whether you can install motion sensor lights or a smart thermostat at your business.
Employees can also be a source of wasteful energy. People often have different energy habits at work than they do at home because their employer is paying the utility bill. Because of this, they may be more apt to leave things like computers and machinery on or plugged in overnight instead of turning them off at the end of each work day. If your business is open for eight hours a day, that's an extra 16 hours of energy use daily that you could be saving. Speak with your employees about saving energy, and consider implementing an official plan or policy to bolster smart energy use. Having employees get in the habit of watching their energy consumption can help save your business more money than you may realize.
“Going green” and becoming more energy efficient has become a large focus of businesses in recent years. Although the push for sustainable businesses is sometimes led by consumer concern or government regulation, it’s important to remember that a commitment to energy efficiency can save your business money as well. Small changes can add up over time – helping your cash flow as well as the environment. If you’re interested in learning more about financing energy-efficient upgrades for your business, contact BankFive today!