Why Is Improving the Efficiency of Small Businesses So Challenging?

Since Donald Trump’s victory in last month’s presidential election, there has been much speculation about the future of the United States’ progress toward its Paris climate commitments. Many voices have highlighted the expected leadership role of private-sector investment in the continued growth of clean technology markets.

One such opportunity for the private sector is energy-efficiency investments in and by the nation’s small businesses. According to a 2013 report by the Preservation Green Lab, the energy efficiency potential of the 7 million small businesses in U.S. small commercial buildings is enormous: savings of 1.07 quadrillion Btu (British thermal units) of site energy, or more than $30 billion annually. Some small-business types, such as food service providers, have among the highest energy intensities of any building type, and could realize significant increases in their profit margins even with modest increases in their energy efficiency.

Despite the massive potential to both strengthen our small-business community and progress toward our climate commitments, there are significant challenges, both for small-business owners and for efficiency-as-a-service providers, to realize this market opportunity.

Barriers for small-business owners

Small-business owners often do not have the expertise, time, or capital to invest in efficiency measures for their business. Although energy use can account for up to 20 percent of the expenditures of a small business, many business owners do not have the expertise themselves or within their staff to identify and manage energy savings projects. The staff of a small business is typically focused on the core service of the business, and energy efficiency is rarely a priority among competing demands for their time. Finally, small businesses can have slim profit margins and poor cash flow, which makes it difficult to invest in — or finance — costly efficiency upgrades.

Several organizations are working with small businesses to address the knowledge and time barriers.

Read more (Greentech Media)