Merchant Advance Blog

Blog Article: Chills and Bills: Managing Utilities Costs

It’s only the first official day of winter, but for many Canadians it feels like the deep freeze has been turned on for a while now… especially small business owners looking to keep their business cozy without burning their operating budget on utilities costs.

thermostat and human hand

Even in Merchant’s hometown of Vancouver, the chilly weather has taken many by surprise, including small business owners. For anyone with a retail location, the costs of keeping the physical space you work in heated, lit, and otherwise functional – including such critical functions as refrigeration for perishable goods, and uptime for computer systems – can go up significantly during periods of more extreme weather. Hydro bills and other utilities costs are becoming one of the most significant operating expenses for businesses in Ontario, where Premier Wynne recently apologized for the steep rise in electricity costs.

The same kinds of investments in structural and equipment improvements that one might make in their home – such as improved insulation, efficient lighting such as LEDs, and so forth – can make a huge difference for the amount of expenses that need to be diverted to keeping your business habitable. However, to make energy efficiency a business goal, it helps to look at the numbers around your utilities in the same way you would assess any other item on your balance sheet.

Consider the following: survey data shows that the average North American household uses around 11,700 kWh (kilowatt-hours) of energy each year. Compare that to a small business, whose consumption might be 15,000 kWh at the very least, and might range upwards of 20,000 kWh per year. Take a look at your most recent hydro bill: what’s the rate per kilowatt hour? Compare this to the square footage of your space to get a new picture of the efficiency of your utilities plan. This will give you a better picture of the value of any changes you may want to implement.

Businesses across Canada will be affected by energy rates at different levels: unfortunately, Ontarians experience the highest rates in the country despite also being home to the largest number of small and medium enterprises.

Whether your business is highly seasonal or has a stable cash flow volume throughout the year, utilities costs can be predicted to some extent and integrated into your financial plan. Improvements to efficiency will show their worth by decreasing the swing from high-cost periods to lower cost ones, and are definitely worth considering when you’re planning changes or upgrades to your business for the new year.

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