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How to go green and stay cost-competitive

December 09, 2008 13:23 IST

The perception that it costs an arm and a leg to 'go green' keeps plenty of small businesses (and customers) from even trying--let alone in a recession.

Sure, many eco-friendly improvements do require some initial capital. But they also can yield significant cost savings--and drive revenues--in the long run. According to a recent study of 1,146 Americans across the country by Ketchum, a Manhattan-based public relations firm, and Braun Research, a public opinion research firm based in Princeton, N.J., nearly half of all respondents said they make some effort to buy green products.

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"The perception is that going green is for rich guys, but it's actually all about saving money and resources," says Charlie Szoradi, chief executive of efficiency consultancy GreenandSave in Wayne, Pa. Nor do green-related savings necessarily take years to kick in, he adds.

Joe Nelesen buys that line. Last June, Nelesen, owner of a Culver's restaurant franchise in Appleton, Wis., started using leftover vegetable oil to fuel his Ford Excursion and two tractor mowers he uses at his other business, a golf course in the nearby town of Chilton.

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A machine made by Fryer To Fuel converts the oil into 40 gallons of fuel per week. Nelesen paid $8,000 for the converter but plans to make it up fast. He estimates he saves about $400 per week on diesel fuel and $100 per week in grease-removal costs at the restaurant.

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Think hard enough and you can green just about any business. For nine years, Jan Russell and Mike Dreisbach ran The Savage River Lodge in Frostburg, Md., on eco-friendly principles. They used recycled rubber to insulate their 18 log cabins and collected rain water in barrels to feed the plants. Not green enough, they thought. Last year, they began burning wood for heat to replace their propane-based system. One winter's worth of savings, net of wood-cutting and-hauling costs: $14,000.

For a slightly more high-tech energy-saving solution, check out Ken Jackman, owner of New World Stoneworks, an Uxbridge, Mass.-based maker of custom stone chimneys, fireplaces, outdoor kitchens and building exteriors. Jackman developed a patented system that uses water from his water-jet stone-cutting machine to heat his entire 10,000-square-foot facility.

The machine uses 520,000 gallons of water per year (enough to wash about 1,000 loads of laundry). The water has to be very hot to cut the stone; at a high enough temperature, the propane heating system shuts off and, via a nifty heat exchanger, the facility runs on steam heat. Development costs ran to $8,000, but Jackman earned that back in just 10 months. (Better yet, water-jet cutting in itself is a cost-saver versus hand-cutting, he says.)

In 2005, with a $62,000 rebate from New Jersey's On-site Renewable Energy Program and a $23,000 bank loan, Robert Burke installed 58 solar panels to help power his new car wash, Wayne Auto Spa in Wayne, N.J. The panels generate only 10 per cent of his annual energy needs, but every little bit helps when your business inhales 135,000 kilowatt hours per year (a typical house needs just 9,000). Burke also recycles wash-water runoff and uses biodegradable soaps. And at $12 a wash (in line with his competitors), eco-minded customers are taking notice.

Going green can fatten the top line, too. Grossman Marketing Group, a $30-million (sales), fourth-generation maker of marketing materials like stationary, envelopes and brochures in Somerville, Mass., spends an extra $3,000 to $4,000 every year to ease the strain on the nation's energy grid. In 2006, the company started purchasing (through an energy broker) renewable-energy "credits" from two California wind farms, which in turn use that money to pump an equivalent amount of energy back into the grid (kind of like cutting a tree down and watching it sprout up somewhere else).

Adding 5 per cent to its energy bill doesn't save Grossman money, but it does attract eco-friendly customers, including Google and Green Mountain Coffee. Result: Envelope sales--which represent 45 per cent of Grossman's top line--grew 20 per cent in 2007.

Want to go green but not sure how? Give your public utility a call. Last December, Christine Saunders contacted the city of Anaheim, Calif.'s public utility for advice on helping her business, a flower shop called The Spiraled Stem, become more eco-friendly.

The city's economic development director determined that Saunders could retrofit lighting, tune up her air-conditioning system and install a programmable thermostat to adjust the temperature at designated times to save energy. The total cost of equipment and services was $1,300, most of which the city covered.

Result: "My largest corporate customer has purchased $27,000 worth of flowers from me year to date," says Saunders. "Prior to working with me, they weren't buying any flowers at all because of the perception that they aren't eco-friendly, but I was able to educate them."

Melanie Lindner, Forbes
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