Get Green for Going Green

This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.

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Whether or not you’re a fervent global warming believer, there are several compelling business reasons why you should become greener. The most compelling? Doing so will put money in your pocket.

Cost Savings

Being more energy efficient will reduce your utility bills. Savings can be significant. Lighting accounts for about 30% of commercial utility costs, so implementing energy-saving fixtures, bulbs, and other cost-saving measures (such as turning off lights and equipment when not in use) can really pay off.

Merely adjusting the thermostat can create savings in heating and cooling your facility. For example, the typical summertime setting is 78 degrees. By raising the thermostat 2 degrees, you can reap a 2% savings on air conditioning reflected in your utility bill. By contrast, a setting of 75 degrees will cost you 3% more.

Check with your utility company to determine what programs may be available to help you. There may be:

• Energy audits (free or low cost) to determine what changes are recommended for cost savings;
• Rebates for switching to energy-saving fluorescent fixtures and bulbs;
• Grants to pay for energy-related improvements;
• Special financing programs to make certain energy improvements.

Figure your utility cost reductions from changing to energy-saving fluorescent bulbs using an online calculator from Sylvania. There’s also an Energy Star calculator (Excel spreadsheet) for changing the bulbs in your exit signs.

Tax Savings

There are some federal tax breaks to reward businesses for going green. A couple to consider:

• A business energy investment tax credit for installing solar-power, photovoltaics, wind power, fuel cells, geothermal heat pumps, and other renewable energy generators;
• A deduction through 2013 for businesses that own their properties just for being energy-efficient.

Keep in mind that capital purchases in 2011 may qualify for 100% bonus depreciation, which means that the entire cost can be deducted up front. For example, if your business buys more energy-efficient air conditioners now to replace old clunkers, the cost can be fully deducted this year. Energy Star now provides ratings for office equipment, such as copiers, printers, and water coolers.

The IRS isn’t the only one to dole out tax breaks for businesses that go green. States may also offer a variety of business-related incentives, including deductions, credits, sales tax savings, property tax reductions, and more. For information about state tax incentives to further your energy-efficiency policy, go to the Database for State Incentives for Renewables & Efficiency (DSIRE).

Check with your tax advisor to learn which breaks may be beneficial to your business.

Marketing Edge

If you incorporate energy-saving practices into your business, you may be able to use this to a marketing advantage. For example, architects, home builders, and contractors that use green practices in the design, construction, and operation of buildings may qualify for certification from the U.S. Green Building Council, called LEED; classification as a green builder or green building owner may be highly attractive to customers.

Other certification resources applicable to small businesses include:

• Green Business Bureau;
• Green Seal;
• Institute for Green Business Certification.

Learn more about green certification and ecolabeling from the SBA.

Final Word

At a time when many small businesses continue to struggle with profitability, going green may offer an important financial edge. Using less electricity, taking advantage of tax breaks, and incorporating green practices into your marketing can contribute to a better bottom line.