Five ways NOT to think about energyFriday, 13 April 2012
There are a lot of opinions regarding energy management in all sectors of the economy, and the greenhouse sector is no different. As we make our way through 2012, here are five opinions that should be left behind.
1. Energy management makes no difference to my bottom line.
In some businesses, energy could be a small percentage of total costs. In such cases, it is hard to imagine energy impacting net profits; hard to imagine, but ill-advised to disregard entirely. For example, if your net profit margin is 5%, saving $1 on energy costs is the equivalent of bringing in $20 of additional revenue. Extrapolating, saving $100,000 on energy costs is the same as an additional $2,000,000 in sales. Although energy may seem like a small portion of your costs, the impact on your bottom line is significant.
2. Energy Costs are uncontrollable – I treat energy as a fixed cost.
Not true and not a good strategy if you want to maximize your bottom line. Energy costs are variable; energy cost can be controlled with an integrated sustainable energy program.
3. I’m doing enough already. I can’t do anything more to reduce energy costs.
A dated philosophy in most cases, and one that will make it difficult to compete. Your energy usage and energy pricing constantly fluctuate; only through continuous focus and improvement are companies able to remain competitive in the face of rising energy costs, diminishing resources, foreign competition and smaller margins.
4. What I’ve been doing in the past has worked; therefore it will work in the future.
Let’s put this fallacy into perspective: Do farmers still farm using obsolete, non-mechanical, heavily time-consuming methods? After all, it worked in the past, why wouldn’t they continue to use it? Instead, they use modern techniques because they adapted to new technologies, changing market conditions, and addressed their needs of reducing costs. So why cling to antiquated strategies when it comes to energy programming?
5. I’d rather pay someone else to worry about energy for me; I don’t want to think about it.
It is dangerous to remain uninformed regarding one of your top three operating costs. That’s not to say you have to meticulously follow the constantly-changing energy market independently; referring to an outside consultant can be an effective business strategy. Just make sure you’re constantly informed about a variety of options that are available to you when managing energy, and understand the affects energy has on your business in the short and long term.
David Arkell is president and CEO of 360 Energy.