January 25, 2010

Measuring Savings [from Going Green]


Hostway Team

By Winmark Business Solutions

Being able to measure the amount of money you save from the green initiatives you adopt is arguably the most important step in the process, because without it you probably wouldn't adopt a green program. You need to be able to know whether your green initiatives are delivering cost savings.

Measuring your savings mostly involves common sense. You measure what you were spending before the changes; then you measure what you're spending now, and you compare the two to see if you saved money. It's not always quite that simple, but that's the gist of it.

The first step, therefore, involves determining your current costs, before you adopt the green initiatives. As explained in How Can I Get Started, making measurements is easiest if you keep your initial steps simple. For example, if you adopt seven or eight green initiatives, you're going to have far more difficulty determining if any one initiative is delivering value than if you adopt one or two initiatives.

Also, in measuring your savings, it's best if you start with metrics that are easily measured. For example, you can probably easily determine your monthly electric costs. On the other hand, adopting an initiative and then measuring whether it improved your employee recruiting efforts would be a far more daunting challenge.

Consequently, start with simple initiatives that involve easily measured metrics. Let's suppose that you start with efforts to reduce your consumption of electricity. A good starting point would be to determine your monthly costs for each of the previous 12 months. Depending upon where you live, your monthly electric costs can vary quite a bit from season to season. You should therefore avoid the trap of determining a monthly average and then comparing it to your first month after adopting your green initiative. You'll get a much more accurate determination if you compare January to January and July to July. If you're trying to reduce electric consumption, you may need a full year after the initiative is implemented to get a true reading of whether the initiative is delivering value.

Other initiatives would, of course, involve different measurements. If your goal, for example, is to reduce waste, you would need to measure the amount of waste you currently produce over a period of time. You would then re-measure the waste you generate after you implement the initiative in order to determine your savings. Similarly, if your goal is to reduce your office supply costs, you would determine your current costs over the previous year and then measure it against your office supply costs under your new green initiative after one year.

For a sample green plan, including suggestions for how to measure the success or failure of that plan, see How Can I Get Started.

About the Author

Winmark Business Solutions (WBS) is a free Web site for small businesses and entrepreneurs containing over 6,000 pages of business-critical information and downloadable tools at www.WBSonline.com. WBS is a division of Winmark Corporation, a multi-brand franchisor with nearly 900 franchise locations in North America. With over 25 years working with small businesses, WBS draws upon years of experience to bring important small business articles, information, tools, forms, checklists, calculators and downloadable forms to the small business owner to help their business grow. WBS contains over 6000 pages of business-critical information all available at www.WBSonline.com.

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