How to Profit by Going Green

Most people think sustainability is about preventing global warming and making sure future generations can continue to live healthy, productive lives on our planet. These may be important, but for most of us sustainability is about money. Operating a small business sustainably requires that the business make a profit – otherwise it will not be sustainable and will fail.
Fortunately, there is a lot that small business owners can do to make the earth – or at least Singapore – a better place to live while making their businesses more profitable. Some steps are quick and easy, and some are free but require us to change the way we do things. There are also few things which require an investment, but of course you don’t need to do everything today. This article explores ways which small business owners can increase the profitability of their businesses by jumping on the green bandwagon.
Machines: To remain competitive, we need to update the machines we use regularly, but replacing machines before the end of their useful life is also wasteful and in most cases is not very green. Buying new computers, printers, cash registers, forklifts, trucks or production lines requires investment, and when investing in new machinery it is useful to look at the total cost of ownership as this will increase the long term sustainability of your business. In general, total cost of ownership is dependent upon the following three factors:
• Investment cost: The price you pay to purchase and install new equipment is critically important. If a machine costs more than it can produce for your business then the investment will not be sustainable, no matter how “green” the supplier tells you it is.
• Operating cost: In addition to the investment cost which shows up on your P&L as depreciation, machines have ongoing maintenance and operating costs. Most machines use energy, so energy efficiency is often an important consideration. For example, laptop computers typically cost more than desktop computers, but they use 75% less energy. For a typical laptop the savings could be $15-$20 per computer per year. Printers use not only electricity but also paper and toner, so it makes sense to make sure everything that is printed is actually used. Most businesses find printers which require uses to enter a code at the printer reduce waste significantly as users forget to collect documents they don’t really need.
• Productivity cost: Payroll is the highest single cost for most businesses, and the impact of a new machine on worker productivity is often much greater than the impact on operating costs. Computers are more expensive to purchase and cost more to operate than typewriters, but they have revolutionized office productivity. Laptop computers may damage work/life balance, but in so doing they generally increase productivity. If an employee works one extra hour a week at home on her laptop, she will each have worked 50 additional hours by the end of the year (which is certainly worth much more than $20.) Almost every investment in technology has an impact on employee productivity, and it’s important to factor this impact into your investment decision.
Building: Changing buildings is difficult, expensive and time consuming, so this article assumes that you won’t do it. Fortunately, there is a lot you can do within your current building to increase the sustainability of your business. What you can do will depend greatly on your business, the type of space you occupy and how much control you have over the building systems. The following list covers most of those areas which impact the majority of businesses:
• Water: In most businesses saving water is easy, requires little investment and has a payback of less than six months. For less than $5 you can purchase and install a replacement tap aerator that reduces basin flow by over 50% to 2 litres/minute. Depending on the actual cost of the aerator and how many people use the basin, the investment should entirely pay for itself in four to six months. Unfortunately, in spite of the fact that we live on an island with no water of its own, water is not expensive enough to have a significant impact on the cost of operating most businesses and you are only likely to save $40-$60 per year per tap.

read more