When you look at your costs and then prioritise these costs you will very quickly understand and appreciate that ‘Energy’ which incorporates all Utilities will aggregate into your 3rd largest expense. When we say utilities, I am combining Gas, Electricity and Water because water can impact on heating costs and electricity costs as well.
As business owners’ considerable amount of focus goes into managing both our buildings and our staff to the extent that we even set-up teams to manage this cost. Energy always gets overlooked and we do not deploy a team to focus on energy or we never put the time and effort into this cost. There is a rule I have learnt very quickly in my career that if a business is spending £1M on their energy you should be considering employing a ‘Energy Manager’ and then every factor of £1M = Additional staff or engaged with a partner.
On my journey within our industry I very seldom see a department set-up, but I have come a across various retail organisations of significant size that have implemented this structure in the business and I know it had made a significant impact on their energy consumption and on their bottom line.
Alternatively, if organisations do not deploy this, they should be engaging with an Energy Expert, to help them, guide them and focus on strategies that will not cost money but will release unwanted costs and drive energy down by using simple techniques that will embrace ‘BEST’ Practices. I’m going to mention a very simple approach that in my eyes all organisations can adopt from a ‘Corner shop to an office block and everything in between’. For me, the important thing here is to have a strategy and focus on monitoring the energy and making a real difference.
Your first step is to start to collect the data, bills meter readings and start assessing the properties. The tools you need to do this is simple and just compiling this data on simple spreadsheets. Then look in your organisation for someone to become the ‘Energy Champion’ this person will be the go-to person regarding energy.
It is also worth pointing out that if you have a combined energy spend of over £1M there could also be ‘Legislation’ and schemes your organisation need to be aware of for example The Streamlined Energy Carbon Reporting (SECR) and The Energy Saving Opportunity Scheme (ESOS). Both schemes are triggered at 250 employees with turnover values. Each legislation will require an ‘Energy Manager’ or ‘Partner’ to provide the Lead in this process.
It really does surprises me that some business owners and finance directors managing costs actually overlook their ‘3rd Largest Expense’ because businesses overall want to get the best value for the money regarding their day to day spend. Energy is seldom challenged – we just PAY the bill…
Businesses probably spend more time on :
- Travel costs
- Staff selection
- Selection of insurance.
- Company vehicles
We are always making time to ensure we get the best deal possible, but energy escapes such scrutiny.
I really believe that by increasing the focus on the energy management that we can align both energy cost and energy usage. By combining all energy costs and focusing in these areas of gas, electricity, heating oil, stand-by generation fuel and water this would clearly aggregate to around about 20% of the business cost and by focusing on this 20% could ensure a possible 80% saving on costs.
As an example, I was invited into an organisation who had been poorly advised on their energy purchasing. On day one we reviewed their bills addressed all billing errors, re-negotiated their agreements and implemented changes with their building management systems. Within the first month of our focus we significantly trimmed back their overall energy costs by an amazing value.
It does not take much to put the 3rd largest cost back into line and going forward the cost to manage the process in the future is very straight forward as long as process are implemented
I have created many strategies for businesses some of which have been jointly designed by the business owners themselves with forward thinking approaches. In each case they have been very successful. In most cases it will fall back on my other saying of ‘We cannot manage what we don’t measure’ I have developed tools to help us manage energy daily and monthly and that is where our focus needs to be placed.
All of our successes have been implemented by working with all parts of the business from the Board to the maintenance team and whether you are a small team and you have an energy spend alignment and savings can be made but more importantly maintained.