Saving Energy

We posted yesterday about cutting expenses that don’t have a negative impact on sales.  Today, we’re going to take a look at some ways to make that happen.  With utility prices going up all over the country, energy saving is definitely a good place to start.  There are any number of ways to save serious money without hurting your selling environment. 

Lighting is a critical part of your store design.  A poorly lighted store makes a poor impression on customers.  If color is an important part of your selling story, the wrong fixtures and bulbs can also hurt your business by distorting colors.  For example, the most common lighting in most stores comes from fluorescent tubes.  The standard for years has been the T12 lamp which uses a magnetic ballast.  The modern equivalent is the T8 lamp with electronic ballast.  According to Energy Star, switching to T8 lamps will produce a savings of about 35%.  An extra bonus is that the electronic ballasts don’t make that annoying humming noise that we’ve always associated with fluorescents.

If you use any incandescent fixtures in your store, a switch to compact fluorescent lamps will also save energy.  CFLs use 75% less electricity to produce the same illumination as a standard incandescent bulb.

Here are some other energy-saving tips from the California Public Utilities Commission:

  • Set programmable thermostats to turn the heat/cooling system on 30 minutes before people arrive and off from 30 to 60 minutes before they leave. 
  • Turn off lights in unused areas that aren’t visible to your customers.  Depending on the circumstances, motion sensing switches in areas of limited use (restrooms, lunch rooms for example) may be a good investment.
  • Dress comfortably for the weather.  Remember that in winter your customers are wearing winter clothes.  If they’re wearing coats, a temperature of 72 degrees is going to be uncomfortably hot for them.  Set the temperature at 68 degrees and wear a sweater.
  • This one may be the most overlooked.  Keep your heating/cooling system in tip-top condition.  Change filters regularly and during cooling season, make sure your condenser coils are clean.  A properly maintained HVAC unit can save up to 5%.
  • Turn off unused equipment at night.  Computers, printers, monitors, and fax machines use electricity even when they’re not in use.
  • Don’t leave exterior doors and window open more than necessary. 
  • While water isn’t as expensive as electricity, the cost can add up.  Fix dripping faucets and constantly-running toilets as soon as possible to save water.

When it’s time to replace HVAC and other major electrical appliances, check with your state government for possible rebates.  Many local governments are offering rebates on Energy Star rated units.  You could get cash back in addition to the money you’ll save on your electric bill.

Finally, here’s something to think about.  You know what your net profit percentage is.  Say it’s 5%.  Then a dollar of additional sales equals five cents of extra profit.  Bur a dollar of reduced expenses equals $1.00 in additional profits.

If you have any ideas that have save you energy, please share them by commenting.

Oh, I almost forgot.  Thanks to         Brad Trnavsky for including our post, Customer Service Is More Important Than Ever,  in this week’s edition of The Carnival of Sales and Management Success.  Check it out.  There are some good posts there this week.

The Bottom Line

Sometimes we make things more complicated than they need to be.  After all, business is really just a series of simple things.  Profitable business is a series of simple things done well, every single day.  I was reminded the other day of one of those simple things that we may forget.

One dollar of expenses saved equals one dollar of bottom-line profit.  One dollar of sales equals a much smaller amount of profit.

Let’s do the math.  Take your net profit for the year.  Divide it by your gross sales.  Most likely you’ll get a single-digit figure.  If you’re really good, you might hit ten or eleven percent.  If we take the high figure that means that for every dollar you sell, you end up with ten or eleven cents profit.

On the other hand, if you find a way to save a dollar on expenses, that dollar is all yours.  That is, as long as you don’t cut something that causes you to lose sales.  For instance, advertising should always be considered an investment rather than an expense.  But, if you can cut energy costs, or cleaning costs, or if you can negotiate a better lease for your store, those dollars saved go right to the bottom line.

"A penny saved is a penny earned" isn’t just something that our mothers told us when we were kids, it should be a mantra for every successful business.

Penny Wise Travel Part 3

From Forbes.com comes the third of four installments on saving money on business travel.  This time the subject is incidental expenses.  Some things are pretty basic, some are more exotic.  For example the writer suggests shipping clothing to yourself via FedEx, rather than carrying a lot of clothes that are going to get wrinkled in transit.  You’ll save money by receiving a package of clean, pressed shirts half way through your trip, rather than having to pay for laundry service at the hotel.

Taking the bus or subway, rather than a taxi, may be a good idea, depending on where you are.  Make sure you check with the local to make sure you’re not venturing off into dangerous territory.  Don’t forget to inquire about the hotel’s car service.  Some will take you to and from your destination at no charge.  It never hurts to ask.

One thing to watch out for is the suggestion to have business cards printed at one of the cheap, on-line web sites.  The prices are great, but many of these "services" subsidize their low prices by selling your information to mass mailers.

More Penny-wise Travel

Here’s part 2 of Forbes.com’s series on budget-wise travel.  This installment focuses on overnight accomodations.  Just like part 1, there is a slide show with 15 tips on curbing lodging expenses. 

Again, there are some good tips that just might save you a few dollars.

Penny-wise travel

From Forbes.com comes the first of a four-part series on saving money when you travel.  The article includes a slide show, "Fifteen Ways to Travel on the Cheap."

It’s interesting reading and could save you some serious money.

Baseball, Hot Dogs, Apple Pie, and CPAs???

Joyce M. Rosenberg writes for the Associated Press that in addition to the normal summertime activities, it’s the time of the year when you should sit down with your accountant, not for a barbecue, but for a mid-year review of your business.

The start of summer is still a few days away, but it’s never too early to look at where you are now and at where you want to be at the end of the year.  Rosenberg writes, "Taxes, cash flow, capital spending and employee benefits are among the many topics that should be discussed."

Estimated tax payments are one of the first areas you should look at.  You don’t want to pay too much because the IRS is a notoriously bad place to invest your money.  On the other hand, pay too little and you’ll be hit with a penalty.  Half way through the year is a good time to review.

The article also discusses investments in capital equipment and employee benefits. 

Mid year is also a good time to look at your inventory.  What’s selling?  What’s not?  Generate some excitement in your store by reducing prices on items that may not be flying off the shelves.  It’s an opportunity to create some additional business and to make room for new merchandise for fall. How about a sidewalk sale? 

While you’re at it, spring cleaning may be in order, even though spring is almost over.  Are your displays fresh and inviting?  Is everything neat and clean?  How’s your signage?  If you use price tags, are they fresh and acccurate? 

If your traffic is off during the summer months, it’s a good time to get those non-selling jobs done and it’s even more important that you turn every shopper into a buyer.