Do you want to make a profit or a fortune?
Nothing I mention today is new and has been gained over 50 years working first as a traditional banker, then in industry and now running my own business as a Utilities Specialist.
There are two very important principles which need to be embraced. I hope my article will not be news to you but I fear there will be some that have not looked at their business in this way.
The first principle is you need a fresh pair of eyes to come to look at your business on a regular basis. I do not mean employing consultants — use your best customer, friend or family — as you need to have the things you take for granted but which may be a real problem and costly brought to your attention because they have been disguised by familiarity. When you go to any new business site you will see all the things that could be improved or changed and will ask yourself WHY are they doing this or that and have not changed it, on the second visit you will only see half the things you noticed on the first visit and on the third visit you will not see any of them — it will have become what you take as the norm.
When you see something, if appropriate, ask WHY they do this or that especially as to you it may seem very wasteful or costly. You will also learn but more importantly, demonstrate your interest in their business. However, Do be mindful, it may have been addressed already and the alternatives found to be impractical, too costly or already in hand.
The second principle is:
IF YOU DO NOT MEASURE IT YOU CAN NEITHER CONTROL IT NOR MANAGE OR AVOID IT
and unless you embrace this nothing will change. It applies to people, work practice, equipment and most importantly utilities especially energy.
Let me give you an example. If I said doing X will save £5 a day when using a 7.5tonne fridge bodied vehicle for the most part you may say that is nothing startling. However that vehicle works 365 days a year delivering food, there are a 118 in the fleet — the saving is enough to buy a new lorry each year.
Everything should be measured, time spent doing a job or process, waste, energy use for everything using it and so on — the list is endless. i.e. — electricity use should be monitored closely, especially if two similar machines are in the operation as one may be reaching the end of its working life. Its energy use may be twice the other machine and therefore not costed into a process or article being made. My experience has shown many businesses have a cavalier attitude to energy cost and use. They give its renewal to already hard pressed members of staff when it should be on the CEO’s desk, especially as prices are set to rise by 80% over the next few years, and this increased cost will not be able to be passed onto the customer. Many forget energy is traded on a world market and price is subject to supply and demand on a world basis.
In conclusion most of us have completed a regular journey and been unable to recall the details. You may have walked the shop floor or premises many, many times, but are you seeing what’s actually there, or just what you expect to find?
I suggest you step back from your enterprise, look at it as if it was the first time you had seen it, and ask yourself WHY is/this/that…….?
OTHER THINGS TO THINK ABOUT
Waste = Cash Lost & Thrown Away = Time Wasted & Lost Forever.
Savings are invisible if not recorded or monitored
Negawatt = is the amount of energy saved and costed at the market price. The concept of ‘THE NEGAWATT’ is well known in some areas of industry. This enables a direct comparison between savings and the cost of energy used.
Profit & Loss Account —Identify and show savings as a separate amount after net profit and monitor annually. Old habits creeping back in will create extra costs and may not be noticed until it is too late if not.
Waste — produce, energy, time, examine wastepaper baskets, waste skips —many skips are collected looking full but are only filled to a fraction of its capacity. The exception are builders on fixed price — they know how to fill a skip!
Cleaners are the people who know what is being thrown away or left on at night. Make a point of speaking to the cleaning team.
Visit premises at night when everyone has gone home and, if you have them, visit night staff on a regular basis. You may get a few surprises you had not bargained for.
Backdoor or delivery area if you have one. The staff know more about what is going on in the business than the CEO! They see the state items arrive in, what is returned, what is quietly wasted, and all sorts of other intelligence e.g. about the suppliers’ businesses. Drivers talk quite freely about this most of them having worked both day & night shifts.
Vehicles not kept in good order or clean are not good for your business — if you do not care about what vehicles look like are you going to care about customers?
Vehicle sign writing — the number of businesses who just put a Company name on and nothing else — what a waste. The times I hear “everyone knows what we do”. Who is everyone? I would suggest you are known only by your customers, staff, suppliers and the local area. Even national institutions like BT and British Gas have lots of information on the vehicles and contact numbers. What a waste of an opportunity especially if you delivery nationally or internationally. What it says is “we are big enough that we do not need any more business” and that is always a big mistake. In addition a possible best customer may see your vehicles but will not know what you do so a golden opportunity may be missed. You will never know.
Clothing — Company dress or workwear creates image and gives staff pride in the firm and a sense of belonging
Energy half hourly meters — it is the company’s responsibility to make sure they are recording correctly not the energy supplier. Employ a specialist company not an energy supplier to do this; take photographs of readings recording the exact date, time, local weather conditions.
Energy use should be the responsibility of the CEO and should not be delegated. Energy costs affect the whole profitability of the business.
Energy Contract Renewal.
- Always give notice that you will not be renewing the contract as soon as you get a new one to avoid a possible rollover for another 12 months.
- Advise the current supplier you will be going to the wholesale market on renewal and at renewal time ask the current supplier to quote for 12, 24, 36, 48, 60 months which will keep them honest.Then go to the wholesale market through a broker quoting the prices from the current supplier. Be aware that new energy suppliers will check your credit rating and will refuse your business if it is poor. In addition some may not quote at all as you may not fit into their preferred supply matrix. Always give as much information as possible about your energy requirements — times when needed, how long, what sort of processes use and are involved,and most important, the annual usage.
- Processes — can the period they are in operation be moved to a cheaper period in a day as electricity is bought every half hour and prices vary considerably depending on time of day,what day/month its is, what time of year and the weather. Work with the energy supplier to reduce the costs for both of you.
Renewables — There are at least 30 different things you can consider. It is worth doing an evaluation to see if your site/business is right for them even if you are not going to do anything in the foreseable future.
- Monitor your use initially day and night for two weeks then on a monthly basis.
- In the first two weeks analyse what is being used during the time periods.
- List all items using gas, electricity or bottled gas.
- Analyse what people are doing or not doing during the periods above.
- Ask yourself what is none negotiable in that and Eradicate everything and anything in your work practice which increases energy consumption. Especially night and weekends.
- It is just as important to monitor during the summer as the winter. There are so many other areas under energy where savings can be made. The last thing you look at is the rate charged for energy because the first thing should be you, your staff, your premises and, in some cases, your suppliers for how it is used or wasted.