A Sustainable Investment (Part 2): "Green" Light Your Earth-Friendly Projects

Last month, LowesForPros examined how small business owners can evaluate green practices in their internal operations—replacing fleet with fuel-efficient trucks, buying CFLs and other measures—to ensure that they don’t break the budget.

In this second part of a two-part feature, we turn to the customer sales/marketing side of the green equation: How to break down upfront costs and long-term savings to convince customers that buying into an environmentally friendly project is a revenue saver, not a cost burden.

Be upfront about upfront costs
When it comes to incorporating green into the projects you take on for your customers, associated costs can be fairly significant, with a 10 percent to 30 percent premium on materials, says Brian Bastis, a CPA/partner at Silver Spring, Md.-based Ryan and Wetmore, which specializes in accounting/consulting services for construction-related businesses and other clients. Bastis often advises clients on the cost/benefits of ‘green’ practices and purchases.

“Items such as air circulation systems under raised floors, glare-blocking exterior sun shades, more efficient heating/AC systems and UVA window glazing can take a bite out of a budget,” he says.

His best advice for the initial consultation is to be honest about the potential premium on prices, but remind them that operating and maintaining their building or home will be much less.

Find ways to minimalize the pain
One way to decrease the cost factor is to incorporate the “green factor” into a project in the beginning--at the design stage.

“As with many building projects—such as wiring for a sound system or adding plumbing—it is always more difficult and cost-prohibitive to implement after initial construction,” Bastis says.

You can also save on building costs by taking advantage of what already exists. If a traditional roof can be adapted to solar panels, it would surely be easier to do so than building a brand-new roof.

“Similarly, if a more energy-efficient heating/AC system is at the top of the list, then perhaps you can invest in that upgrade and remain within your budget by recycling certain materials from an existing structure instead of buying all new,” Bastis says.

Try the ‘pay a little bit more now ... or a lot more later’ approach
Green projects may come with a higher pricetag, but, in many cases, they help customers avoid more expensive projects down the road.

“I tell customers that, if they install air handlers and duct work in conditioned spaces, they will double the life of the heating/AC system,” says Michael Mroz, who runs both Michael Robert Construction and an energy-auditing company, Green Energy Improvements, in Scotch Plains, N.J. “Now, it might cost a couple thousand dollars to spray foam the roof rafters with superior insulation. But how much more will it cost to replace the unit and duct work in 15 years? The definition of green building is measured by sustainability.”

Justify the investment
The real key to landing the customer, however, is in the long-term savings. This is when you need to provide timeline-focused spreadsheets to pinpoint the investment value of a green project. And you must factor in more than just operational-cost savings.

“You need to get the customer to look at the entire big picture,” Bastis says. “You need to provide the numbers when it comes to long-term savings on energy efficiency, which translates to lower utility costs and possibly a tax advantage. If it’s a commercial building customer, you can also make the case for ‘soft’ benefits that pay off too. There has been research that shows that tenant quality increases in green properties, therefore increasing a customer’s ability to raise rents. Retail shops that are eco-friendly also often generate more revenue, because buyers linger longer there and spend more.”

Set priorities
And you can convey these projects as those that make better sense to customers by sitting down with them and prioritizing their needs. Tackling each project on an individual basis may be more financially feasible for the customer. “The customer needs to figure out ‘Which green elements mean the most to me?’” Bastis says. “Come up with a list and arrange them in order of top priority. Then make sure the big picture justifies the initial increased costs. Numbers can be hard to refute.”

Check out last month's article: "A Sustainable Investment (Part 1)."