Small businesses are deeply impacted by energy use and its costs. Owners, like those who operate shed industry businesses, use a variety of energy sources in operating their businesses, all of which tend to present at least moderate challenges.
These findings and more were shared by the National Federation of Independent Business (NFIB) when it released its new Small Business Energy Survey. The report is based on a nationwide survey of small business owners, providing insight into the types of energy used and how energy costs impact business operations.
The data highlights the complexities that small business owners face when managing cost increases and reliability issues for electricity, which is the most common energy source.
“Small businesses are highly exposed to energy cost increases, have limited flexibility to reduce costs, and experience direct operational and financial impacts as a result,” says Holly Wade, executive director of NFIB’s Research Center. “As owners work to absorb the impact of energy costs into their business, it can often limit their ability to hire, retain talent, and grow.”
KEY FINDINGS
Across all major energy sources, about 80 percent of small business owners reported that energy costs significantly (very or moderately) impact the business.
Small business owners have few good ways to manage increased energy costs. Lower profits (58 percent) and higher prices (52 percent) are the most common ways small business owners are absorbing increased energy prices.
Just 8 percent of small owners reported that their costs had not increased in the last three years. These few owners achieved this outcome in a variety of ways:
- 26 percent reduced overall energy use.
- 23 percent upgraded to more efficient equipment or lighting.
- Only 8 percent switched to less expensive energy sources.
- 38 percent said costs stabilized because the energy prices they paid did not increase.
ENERGY USE AND COST DRIVERS
Energy costs related to heating and cooling are the most common primary energy cost, followed by operating equipment and/or processes, and in third place, vehicles.
All three were the primary source of energy costs for a significant portion of small businesses, illustrating the variety of small business operational realities.
VEHICLES AND TRANSPORTATION COSTS
Two-thirds of small business owners report that energy efficiency is at least somewhat important when replacing vehicles. However, the adoption of electric and hybrid vehicles remains very limited.
In addition to investing in more fuel-efficient vehicles, many owners adjust business operations to curb fuel costs.
Examples of this include utilizing fewer vehicles (or less frequently), rescheduling or changing driving routes, more frequent maintenance, and negotiating with fuel suppliers.
ELECTRICITY AND GRID RELIABILITY
Grid reliability is a significant operational risk for small businesses.
Two-thirds of businesses experienced a power outage in the last year, most often due to equipment failure rather than weather events (55 vs. 15 percent; 28 percent were unsure of the cause).
Small business owners do not believe that local data centers are contributing to higher electricity costs.
Just 5 percent of owners reported that their electricity costs were impacted by nearby data centers, compared to 42 percent of owners saying their costs were not impacted by data centers.
And 53 percent of respondents said they were not sure.
ENERGY MIX AND COST MANAGEMENT
Most small business owners report that they use multiple sources of energy in operating their business, all contributing to high operating costs.
If a small business uses a fuel source, the cost is likely at least a moderate problem for the owner.
Electricity is the most used source, and the source that has the highest percent of users reporting that the cost is at least a moderate problem.
RECYCLING AND SUSTAINABILITY PRACTICES
Recycling is a common practice among most small business owners and is mostly voluntary rather than regulation-driven.
Paper, cardboard, metal, and glass are the primary waste materials that are typically recycled at small businesses.
