Sustainable Economics for Savvy Business Leaders
Greg Merritt, vice president, marketing and public affairs, Cree, Inc.
Whether you’re running a business or a household, balancing capital costs with operating expenses is one of the most integral elements of your spending strategy. Yet too often, the product and service choices that we make overlook lifetime analysis for the seductive appeal of low upfront cost. Remember the time you purchased the discount coffeemaker for the office kitchen that didn’t last 6 months?
We’ve all done it.
The lowest cost choice can equate to lower quality – resulting in failures, insufficient performance, shorter lifetime, limited functionality and an array of other compromises to your overall experience. The fluorescent light shown in the video below is a prime example of this.
It’s time to switch to a more value-, performance-, and lifetime- driven model that, at Cree, we like to call sustainable economics. Here are four smart and simple choices that can amplify savings, improve user experience and support sustainable economics for any business exec.:
Identifying energy efficiencies is one of the first places to look for reducing operating costs, particularly since energy represents 30 percent of the typical office building’s costs and is a property’s single largest operating expense. Of that, lighting often accounts for 40 percent of the electricity bill for most businesses. Switching to LEDs can offer up to 60 percent in energy savings. Add wireless controls and you could be doubling the savings!
But why make the switch now when your incandescent bulb or fluorescent lamps are still working? It’s simple really – the longer you wait, the more money you will waste. It’s time to start looking past that comfortable instant gratification of lowest price, and invest in future savings, and uncompromised experience. You will notice the difference with the increased quality of light, lower maintenance costs, longer lifetimes and the payback is much faster than you think.
Evaluate lifecycle costs
To match the light output and lifetime of a Cree® LED downlight, traditional lighting would consume 3,250 kilowatt-hours, and need to be replaced about 25 times, costing over $465. Most LED lighting products are designed to last 50,000 hours, 50 times the life of an incandescent bulb. That’s nearly 12 years in a 24/7 commercial environment, virtually eliminating maintenance costs. You might never change another light again. In fact, if you ran one LED lamp for 6 hours per day every day, it is projected to last for nearly 23 years. That is five presidential elections, time for a home remodeling and two generations.
Does the product or service help improve other processes?
Employee satisfaction and productivity are critical areas in which to invest – offering fiscal and emotional return. In fact, stress costs companies somewhere between $200 and $300 billion each year. While some behaviors take multiple approaches to curb, creating a productive work environment can support improved employee experiences. The World Green Building Council investigated a range of office design factors, from indoor air quality to thermal comfort and daylighting and more – and found that the design of an office has a material impact on the health, wellbeing and productivity of its occupants.
Westcor Land and Title insurance, for example, cited improved productivity after converting unsatisfactory fluorescent office lighting to Cree LED lighting. Employees and managers thank the new technology’s superior color quality and rendering as well as quieter ceilings for a better overall working environment, backed by less maintenance interruptions for fixture replacement.
Consider the cost of waiting.
Many business owners hold out on investing, waiting for that premium interest rate for financing or the next big technology advancement before updating PCs or servers, among other outdated equipment. The question is; does it cost to wait? Sometimes, as a business owner you must look closer at the immediate opportunity right in front of you. If you had the opportunity to buy solutions that enabled a 50 percent operating reduction immediately, would you do it?
Efficient technology like LED lighting has already advanced to the point where waiting for the “next big thing” results in a loss of gains. Additionally, the upfront investment to transition to LED is dramatically lower than one might expect. Payback can be achieved in as little as one year, meaning further gains put money back in your pocket – or allow for investment in other mission-critical business objectives.
Next time you’re faced with this decision; ask yourself if the cost of waiting outweighs the alternative.