On average, overhead accounts for 51% of sales for service businesses; that’s a hefty expense, especially for small or growing businesses. Increasing sales is the immediate thought to lower this percentage, but, for service businesses, making direct efforts to lower overhead may be a better solution. Let’s look at an example: EnergyLink recently worked with Faber & Brand, a law firm in Columbia, MO, to accomplish this goal.
For service businesses like Faber & Brand, it can be difficult to increase sales without substantially increasing expenses, such as advertising, so they decided to go a different route: lowering overhead by reducing their utilities expenses
In collaboration with EnergyLink, Faber and Brand was able to accomplish this; it was done through installing the following energy improvements:
Now, Faber and Brand $18,000 a year on utilities, with total projected savings of $787,895 over the next 20 years. That doesn’t include the tax credits, utility rebates, and the ability to use MACRS depreciation schedules either. The project will be paying for itself in 5 years, which, for the size of the project is an excellent investment turnaround. Also, Faber & Brand will be giving back to the community by reducing the stress their business places on the grid.
Every business is different, but most service businesses have one thing in common: high overhead costs. Companies could try to increase profitability be simply trying to increase sales, but that isn’t always easy for small or growing businesses.
A more viable, short term solution could be for service businesses to could get creative like Faber & Brand did to decrease expenses. Utilities expenses have so much potential to be lowered, and there are great financial incentives for doing so.
Or schedule a free consultation with EnergyLink to discuss how your service business could see similar results.