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What Rising Energy Costs Mean For Small Business Leaders

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Now it is a difficult time for small businesses, with many facing steep increases in energy bills: the cost of doing business is on the rise.

“Coupled with rising operational costs, there are additional challenges such as increased competition and a tough economy. It can be hard to stay ahead of the game,” said Yelena Kalyuzhnova, chair of the British Institute of Energy Economics Council, in an interview. Kalyuzhnova, also a professor at Henley Business School, believes, “It’s clear that without energy cost reduction, small businesses will not be able to survive.”

Take British shoppers, for example. Many are today facing restrictions when buying tomatoes, cucumbers, lettuce and peppers at two major supermarkets, The Guardian reported. This is because farmers are reducing their crop planting due to the expensive costs of heating greenhouses needed to grow salad products, resulting in diminished supplies from British farms. Consequently, the UK Government faces a wave of criticism for its inability to safeguard British farmers from the repercussions of soaring energy costs.

The National Farmers’ Union highlighted that, compared to vegetable growers, more royal botanic gardens such as Kew seem to be better protected against increases in energy rates. The Telegraph reported that “Minnette Batters, the organization’s president, said that a government scheme unveiled at the start of the year to help companies cope with their bills does not cover any ‘farming or growing’ businesses.” Batters concluded that “without doubt there would be more empty shelves in supermarkets in the coming months without government support.”

That said, with the UK government scheme not covering any ‘farming or growing’ businesses, food producers may be at risk of falling into debt as they struggle to keep their costs down amidst rising energy prices. This could mean less fresh produce in grocery stores and an increase in food costs, ultimately hitting consumers' pockets.

So, what can small business leaders do today? While it is impossible to predict exact energy costs, some companies are helping employees switch their residential power to renewable energy sources. For example, Biogen and Goldman Sachs are working with Arcadia to help workers convert their homes to wind or solar power. In addition, various solar power incentives and tax credits are available for installing home solar panels. The most significant of these in the US is the federal Investment Tax Credit, which covers up to 30% of a system’s installed price.

Alexa Minerva, Arcadia’s senior director of partnerships, told Time that helping employees make the switch to renewable energy is one of many new categories of employee benefits likely to emerge as remote work becomes more permanent. Brian Essenmacher, EcoFlow’s head of business development for North America, agrees. In an interview, he recommended, “In addition to providing financial relief to remote workers for energy costs, employers can educate workers about new tech options to save money and power their home offices.”

By helping their employees switch to renewable energy sources, small business owners can reduce the impact of rising energy costs on their budgets and help build a more sustainable future. Essenmacher added, “Providing support and education in this regard is an opportunity for leaders to strengthen the company-employee bond by improving their workers’ energy resiliency and overall quality of life.” According to a survey undertaken by Emburse, a provider of workforce and spend optimization solutions, 14% of employees at businesses with ten or fewer employees said their employer helped with their utility bills, compared to only 6% at large businesses. An additional 8% of companies of every size planned to provide support in the future.

But according to Tatiana Mitrova, a research fellow at Columbia University’s Center on Global Energy Policy, energy efficiency is not just switching to renewables. It’s also thinking about how to use energy better. “The key is to understand the behaviors, processes and technology that enable better energy use and make sure people are educated about them,” said Mitrova in an interview.

Mitrova has a point: By providing resources to help their employees reduce their energy costs, small business owners can make a big difference. Not only will this reduce the financial burden of increased energy costs on their employees, but it can also help the environment and bolster employee morale. Ultimately, this is a win-win situation for everyone involved.

Thus, leaders of small businesses should look into ways to support their employees in reducing their energy costs and consider providing resources such as discounted energy-saving products or green tech incentives to help them switch to renewable energy sources. By doing so, they can positively impact their bottom line and create a more sustainable future.

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