A Sustainable Investment: Part 1

While “going green” is an admirable pursuit for business owners, it’s not advisable if it’s more expensive than it’s worth. Buying a fuel-efficient truck can cost more than a traditional vehicle, for example, but will you keep the truck running long enough to recoup costs?

And in marketing your business as green to your customers, you may invest heavily in establishing a solar-panel installation niche. But can you justify the price to prospects by demonstrating cost savings over time?

More than ever, business decisions are leading to the bottom-line impact. Environmentally friendly practices for those in the building industry veer in two different directions: Owners who seek to incorporate green practices to cut internal operational costs, such as shrinking wasteful practices in the office; and businesses that seek to promote green projects to customers as a marketing tool.

Before exploring either direction, you need a sense of the cost/benefit equation. In a two-part feature, LowesForPros will breakdown both cases. This month, two experts weigh in on how to go green while avoiding the red when it comes to internal operational costs.

Quantify the outcome
The first step is sitting down with calculators, spreadsheets and other financial tools to come up with a strong sense of the capital investment vs. the reduction in operating costs. For example, you’ll need to weigh the price to install solar panels or buy a hybrid fleet vehicle vs. the amount saved in lowered energy bills. There are also soft benefits to consider.

“Green practices can result in less absenteeism, better employee recruitment and retention, and increased productivity,” says Brian Bastis, a CPA/partner at Silver Spring, Md.-based Ryan and Wetmore, which specializes in accounting and consulting services for construction-related businesses and other clients. Bastis often advises clients on the cost/benefits of green practices, purchases and marketing.

Tax advantages should be considered as well. The IRS lists which hybrid vehicles qualify for credits. There are also energy credits for ENERGY STAR acquisitions such as water heaters.

“Ultimately, the owner needs to determine whether the big picture justifies the increased costs,” Bastis says. “In addition to taxes and employee benefits, for example, there are more and more insurance companies that are offering rate discounts for green building practices.”

Find the right resources
Online tools can help you determine whether the investment is worth it. Redemtech, for example, offers a free online assessment to help companies measure how much they can save by acquiring green IT purchases for the office, such as energy-efficient computers. The Department of Energy provides software for calculating whether your commercial-building energy savings efforts can meet federal tax incentive requirements. It can also provide calculations for energy savings of equipment such as new refrigeration and air-conditioning systems.

Little changes go a long way
Consider painting your roof white, for instance, as a way to help keep your home office cooler.

“White rooftops are great for reflecting solar radiation and can cut AC costs by 20 percent,” says Alegre Ramos, a Valley Village, Calif.-based green design expert. “It’s inexpensive, easy to do and will also extend the life of the roof itself.”

Ramos also advises small business owners to consider ways to introduce more natural lighting in an office in order to cut down on energy costs for light and heating/AC and increase productivity. He suggests making use of recycled materials as well, such as insulation made from recycled cellulose that can be blown-in to walls in both existing and new construction. Both methods are very cost-effective ways to go green with proven results.

“I have a 1,300-square-foot building,” he says, “and I only spend $65 a month in utilities because it’s so energy-efficient.”

Check back next month for “A Sustainable Investment: Part two”