For most start-up businesses, energy is usually not a first-class concern. It is a relatively small part of their expenses, especially compared to salaries and materials. But, for successful businesses, that can and must change.
The costs of electricity, natural gas and fuel have already risen last year, as supply did not keep pace with post-epidemic demand. Prices then skyrocketed to record levels, exaggerated by Russia’s attack on Ukraine.
While most EU and UK countries have worked to soften the blow of high prices For residential customersMuch less protect business.
Even before the war, Bank of America analysts had predicted that European businesses would see theirs Electricity costs are rising by 70 percent In 2022, and fuel prices will double.
An increase in such costs should attract the attention of management. Relatively new and fast-growing companies are accustomed to making adjustments to their business models on a daily basis, and finding better energy options must now be on the agenda.
“Companies do not think about their energy properly, and it can be very volatile,” says Andrew Winston, a sustainability consultant and co-author of Net Positives: How brave companies thrive by giving more than they take. “If it’s a business with low profits, the energy goes straight to the bottom line.”
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The first step should be cost cuts. Vicky Parker, head of PwC’s UK power and services division, says: “Many short-term businesses will face a substantially higher energy contract this year; it is vital that they focus on examining the structure and timing of their existing energy engagement strategy sooner rather than later. All actions are moderated. “
However, there are better and worse ways to deal with these problems. This is not the time to invest in a coal power plant because it looks cheap.
Unlike more established companies, start-ups have the opportunity to apply good practices as they grow, rather than re-innovate. They can insist on proper insulation, efficient lighting and renewable energy for their facilities and invest in electric vehicles for transportation.
“Maybe it also means being more productive – can they do what they do with less?” Offers Brian Walsh, Head of Wind Ventures, which invests in startups with a special focus on energy, retail and mobility.
If done right, cuts in energy costs will also allow executives to meet the demand for carbon release. When investors and clients come under pressure to reduce their carbon footprint, companies that can show that they have taken steps to reduce emissions will benefit greatly.
The rise of Flexible work It has also given new and growing businesses more flexibility in terms of energy costs than they had before the plague. Instead of paying for a move to a larger office, which will also cost more heating and cooling, managers can encourage more employees to work from home. Similarly, they can help employees reduce their travel costs by asking them to travel less frequently.
“As the future of work changes, it isolates start-ups to some extent how and when they pay for people’s transportation,” says Alex Lazaro, venture capitalist at Cathay Innovation. “Working remotely gives you more flexibility to manage the burden.”
And Parker from PwC argues that companies now have more practice in dealing with uncertainty. “Over the past two years, many businesses have become more agile in responding to challenges – from supply chain issues and changes to work patterns during Covid, to a greater focus of investors, consumers and workers on environmental, social and governance issues.” She says.
While high oil and electricity prices are an obstacle for most businesses, they are also creating new opportunities. Green energy companies have already benefited from the rising enthusiasm Environmental, social and government driven investmentsAnd the high energy prices today will make it easier for them to make a profit.
There is also a huge need for analytics companies that use data and artificial intelligence to help companies understand where they are wasting energy and how to stop it.
Do not be surprised when both groups appear in large numbers in the next big one Ranking of the fastest growing companies.
Start-ups should never let a good energy crisis go to waste Source link Start-ups should never let a good energy crisis go to waste