When it comes to success, the bottom line for any business is, of course, its bottom line. Increasing profits over time is the primary goal for any organisation that hopes to stay afloat, and net margin is a critical metric for success. The higher the net margin, the better the company’s fiscal health and competitive advantage.
There are two ways to improve net margin: bolstering sales, and decreasing overheads and in today’s challenging economy, it’s often easier for companies to focus on achieving the latter. According to Reuters, UK consumer spending is at its lowest point in six years. This, combined with the fact that consumers are increasingly looking for the best deals and strongest promotions, means that companies need to look further than sales to improve their margins.
How industrials can boost profit margins by lowering operational costs
While driving sales is always a core business goal, the current economy is compelling industrials to take a two-tiered approach – namely, increasing sales while at the same time cutting costs. When it comes to net margin, reducing expenses is just as critical to improving profit in the current economy.
One of the simplest yet most effective ways to reduce overheads is by turning attention to the costs you can actually reduce without affecting the quality of output, and that would be – your energy usage. Many industrial companies spend more than 15% of their operating costs on energy, according to TheConversation.com. Those same companies stand to improve their profits by between 2% and 10% each year just by saving energy.
Making changes is relatively easy, as long as you know where to begin. An energy audit can help to identify areas for improvement and change, and the relatively nominal cost of such an audit is well worth the investment: according to Carbontrust.com, a 20% cut in energy costs could offer the same bottom-line benefit as a 5% increase in sales. Statistics like these make it more worthwhile than ever to switch off lights, air-conditioners and computers before leaving the office!
How much money is your organisation losing to energy wastage?
Of course, the issue of energy wastage is somewhat more complex than lights or machinery being left on overnight.
In the United States, it’s reported that health care facilities spend $8.8 billion per year on energy. In fact, studies have suggested that a single hospital bed can use as much energy as several residential buildings if you divide the facility’s total energy consumption by its number of beds.
Energy expenses in the cement industry, meanwhile, account for 20% to 40% of a business’s overheads. And in 2016, one-fifth of the firms surveyed by The Daily Telegraph and YouGov said they spent more than a quarter of a million pounds on energy each year.
Adopting more efficient systems, newer equipment or AI could offer substantial cost savings and improvement to net margin, with no noticeable side effects for the organisation, and no impact on day-to-day operations. There are so many small and not-so-small changes that organisations can make to achieve substantial results – as long as they know where to look.
Maximpact energy audits: how we’ve helped our industrial clients to slash energy usage by up to 50%
In recent years, we’ve brought our sustainability expertise to industries across the globe, helping a wide range of clients to substantially reduce their energy consumption. Not only is this critical for improving profits, but it’s also a vital part of helping businesses move towards a more sustainable future – a requirement mandated by more and more governments around the world.
Our energy audits, carried out by our team of experts, help to identify all the areas in which organisations can effect profitable change. Here is a brief overview of some of the clients we’ve assisted:
See more of our successful case studies here.
Ready to stop wasting energy and beat competition through Energy Efficiency? We can help
Up to 70% of industrial businesses are wasting money through inefficient energy usage. Is your business one of them?
At Maximpact, we have the expertise to help you identify key areas for improvement on energy consumption, helping you to make your business more profitable, more efficient and less wasteful. From energy audits to advice on integrating AI and new, energy-efficient equipment into your business, we can assist in reducing wastage and improving efficiency.
Get in touch with us now via [email protected] and find out how you can start making your business more profitable and sustainable, while bringing it in line with your country’s renewable energy strategies.
