Can a Greener Company Increase Profits?
Posted by Resource Nation on November 27, 2013 in Business Financing, Business Start Up Advice, Small Business Efficiency [ 0 Comments ]
Many brands are engaging in making contributions to social and environmental welfare, and the added visibility has improved reputation. The tricky part for many businesses is knowing whether or not their customers get the message and are willing to pay a premium for products or services that are deemed environmentally friendly.
One reason businesses should adopt more environmentally sustainable practices is to reduce overhead costs. The government affiliated Energy Star program said most commercial buildings waste an average of 30 percent of the energy they use. One of the easiest ways to boost efficiency is through lighting systems. Small-business owners can reduce the amount of money they spend by 75 percent by utilizing compact fluorescent bulbs. Not only do these require less money to operate, but they last 10 times longer than standard incandescent light fixtures. Another lighting tip is installing occupancy sensors in low-traffic rooms. Energy Star indicated these can save business owners between 15 and 30 percent on electricity expenses.
Making Changes that Customers Can See
The Small Business Association highlighted California-based Stanford’s Restaurant as a prime example of a small business that has embraced several ecologically friendly initiatives to lower overhead costs. In addition to transitioning to energy efficient lighting and water systems, the company focused on reducing how much it spends on garbage disposal. While the restaurant recycles 100 percent of its materials, it also donates all of its used oil, which is then converted into biofuel. This step saves Stanford’s $50 per month in disposal fees. The business has reduced how much garbage it produces, which lowers the amount of money it spends to get rid of it. As a result of its efforts, the company received multiple awards from the community.
Meanwhile, by changing policies to reduce the weight of paper in its ATM receipts, Bank of America saved $500,000 per year. How did they do it? According to the Natural Resources Defense Council, the bank reduced the base weight of the paper in ATMs from 20 pounds to 15 pounds, which in turn decreased transportation and handling costs. This is a message that brands can send to their customers. By saving so much money in overhead costs meant for ATMs, the bank could likely redistribute the resources to services that customers need most or those which are often neglected. At the same time, businesses need to be clearer in their messaging to their customers.
Research from Ipsos Open Thinking Exchange, an organization that supports innovation in technology and research, found the number of customers willing to pay more for environmentally sustainable products to be around 38 percent. However, the same survey reflects a large segment of the population that shows concern over the ecological efforts of businesses. In fact, 52 percent of more than 18,500 consumers from around the world care about what steps companies take in helping the environment. Businesses can make internal changes to their approach to eco-friendly initiatives.
But How Do You Communicate this to Your Customers?
You certainly don’t have to be heavy-handed in showing consumers how amazing your green strategy is. Alternatively, you can take a more nuanced route by offering a contest for your customers. For example, you could see which customers can rack up the distance using transportation that doesn’t depend on fossil fuels – like walking or riding a bike – to get to work. Or your business could hold a recycling drive for old computer parts and other electronics. Once a company gets its customers involved, it’s easier to tie the project back into the eco-friendly habits the business supports.
Instead of being a detriment to your business model, sustainability initiatives are a way to keep a company competitive. A growing list of organizations are integrating green practices, and consumers are becoming even more aware of which businesses support them.