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Does Going Green Have An Roi

Feb 14, 2011

Sustainability is not an initiative limited to large corporations. While larger corporations seem to have the most green potential and certainly claim the most bragging rights, green small-to-medium businesses (SMBs) can gain an upper hand by ensuring they have substance, measures and awareness behind their efforts.

More than 95% of all U.S. companies are SMBs; that’s 2.7 million companies with fewer than 1,000 employees and just 15,000 large corporations. The potential benefits globally – where there are more than 14 million SMBs – are immense.

A survey by online payroll firm SurePayroll found three out of four small business owners have embraced green initiatives, from recycling to telecommuting, regardless of their ROI (return on investment).

Of businesses that consider themselves green, the majority (71 percent) said they choose to implement green practices simply because they want to be environmentally conscious, while the rest choose to do so to save money. Out of all the green businesses, half noticed an ROI of around 5 percent to 10 percent, while the other half have yet to see one.

Going green has evolved from a lifestyle customer preference to a nationwide movement, and intelligent companies are taking note. Whether looking to cut costs during tough economic times or building platforms for future success, sustainable practices built into a company’s culture can lead to an enhanced bottom-line and a cleaner environment.

"Being green is no longer simply a consumer demand," said Zack Shubkagel, vice president brand experience for Willoughby Design, a leader in sustainable design and practices. "It’s a corporate expectation as well. Wal-Mart is working to raise the bar with its sustainability standards and packaging scorecard. The effects of these kinds of programs will be far reaching. Companies must look at how they can innovate business practices both internally and externally to become more efficient and profitable in the long run, while meeting the standards being set by consumers and companies like Wal-Mart."

One of my clients: Alpharetta, GA based Metcam, Inc., is a manufacturer of fabricated metal products. The company has been a green leader for the last decade and has won numerous awards for its initiatives including the Governors Award for Pollution Prevention. Metcam's green programs include facility and equipment upgrades – such as high efficiency lighting, roof insulation and covering, more efficient HVAC systems, and finishing system improvements that control pollution and waste. The ROI of these green initiatives is becoming clearer all the time. Energy costs are down 30 – 40%, while the workplace environment is much improved. Metcam is gaining attention from large prospective customers for whom a green supply chain has become a key vendor requirement. The company recently qualified for the ISO 14001 Environmental Standards award – which is almost unprecedented amongst small "metal benders", and will be sure to attract the attention of new customers in the green and alternative energy field.

Willoughby Design recommends several steps to creating a more sustainable brand and culture.

  1.  Start InternallyEducate your employees to understand why sustainability can help the company.
  2. Energy Audit – Establish a benchmark environmental impact and learn where you can start making improvements to save money.
  3. Champion – Identify an internal leader research and develop green practices
  4. Take some Small Steps – use filtered tap water instead of bottles, place recycling bins, separate paper.
  5. Green your Products and Processes – how much could you save by changing your light bulbs? What new markets will open up with green credentials?
  6. Communicate your Initiatives – not only will you gain credit as a green leader, but you will attract the attention of new customers and markets.
More from David…

About the Author

David has over two and a half decades of business experience and is a proven financial management expert.   Working in Europe and the USA, David has served as Divisional CFO at a number of Fortune 500 corporations: including Reuters, Marsh & McClennan, Zurich Insurance and ADP as well as numerous small and mid size companies. As part owner of a small software company, he was heavily involved in the marketing efforts and ultimate sale of the company. As CFO with a national PEO firm he dealt with the credit and financial issues facing hundreds of small business clients. David also spent 5 years in Bermuda managing off shore insurance companies. 
 
A B2B CFO® since 2004, David will quickly identify and present your key metrics to assist in business decisions, and work with you to develop intelligent reports and budgets, help you forecast cash flow and negotiate and restructure your bank debt, while motivating and mentoring staff to help them achieve a high level of performance and professional growth. David's strengths lie in his experience as a hands-on accounting, financial, and operations manager, as well as his knowledge of big picture issues like strategy, financing, growth and turnaround. 

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