Elements of an Effective Business Plan

Introduction 

All businesses should have a business plan that encompasses the strategy, structure and talent aspects required to be successful, as well as the financial goals.

Remember you must set goals with action plans in order to grow your business.  Therefore, your company’s business plan can be one of your most important business documents – if it is well written with obtainable goals and objectives. A plan that is unrealistic, too simplistic or a monstrosity parked in a binder is useless. In some cases, it might be necessary to have two versions of your business plan.

1. If the plan is to be used to attain funding from financial institutions or investors, its tone will be geared for that type of reader. The business must be described as a well conceived and viable business. Investors want to assess the comprehensiveness of the idea and/or the products and services. They will vet the management team and their experience and the financials will be rigorously reviewed. The business plan must not only be compelling, but thorough and detailed.
2. If the plan is to be used by an entrepreneur/CEO who intends to use the plan as a road map for his or her business, it will be written with the goals of the business in mind. Attention to the objectives of each goal and steps to achieve those goals will be included. Practical financial projections are included and the emphasis is on the requirements for starting and growing a profitable business.

Methodology

 In addition to the Executive Summary (provides a synopsis of the plan) a business plan is made up of five distinct sections; each with important components.

An appendix may be included if there is substantial supporting content to reinforce statements made in the plan.

By following the outline below, a thorough plan can be crafted narrating the purpose of the company, your products and services, how you going to produce,  market and sell your products and services, who and how you will manage the business and how it will be financed and sustain profitability.

Some of these sections will be one or two sentences in length. It is not necessary to have an abundance of words. Brevity with specific content is preferable.  Depending on the type of your business and your point in the organization lifecycle, some of these sections will be more robust than others. A few sections may not be pertinent to your business at all.

It is important to remember that your plan will only be as good and thorough as the information incorporated.

Description of Business

• Company description
  • Legal company name, dba’s, brand names, model names, web domain names, legal form of company, ownership, business location(s), patents, etc.
• Company mission and vision and values
  • Statement of company purpose or objective
  • Long term vision, goals, and business strategies
  • Value statement of the firm
• Market opportunity or concept
  • Description of your industry
    • industry maturity, seasonality affects, economic factors, government regulations, technology advances
  • Industry analysis and trends
    • size and growth of your industry
    • distribution channels
  • Strategic opportunities within the industry
• Stage of development
  • Clear sense of how far along the company is in terms of development, customers, revenue, technology, etc.
  • Overview of products and services
    • Description of all products and services. What need do they fill?How do they save time or money? Why should someone buy?
  • Milestones
    • Outline of milestones achieved to date
    • Future milestones to measure success
  • Community involvement and social responsibility
  • Exit plan / Strategy

Marketing

• Target market
• Thorough understanding of your customers
• Distinct, meaningful characteristics of market segments
• Demographic information
  • Marketing and sales strategy
    • Market size and trends
    • Your company’s message (product, price, promotion and place)
    • Marketing vehicles and tactics 
    • Marketing budget
    • Sales structure and channels (sales personnel and process)
    • Sales projections
  • Competition and market research
    • Competitive assessment
    • Customer perceptions
    • Competitive operational factors
    • Market share distribution
    • Future competitors
  • SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats)
    • Your strategic position (advantages and barriers)
    • Risk analysis

Operations

• Day to day functions of your company
• Facilities
• Production plans
• Supply and distribution
• Order fulfillment
• Customer service
• Research and development
• Financial control
  • Technology plan and budget

Management and Organization

• Histories and capabilities of management team
• Personnel requirements
• Compensations and incentives
• Board of Directors, Advisory Boards and Consultants
• Management style

Finances

• Income Statement
• Cash Flow Projections
• Balance Sheet
• Break-even Analysis
• Sources and uses of funds

Conclusion

The Business plan should be a living document that guides the CEO and management team on a strategic and tactical course for the current fiscal year, not just a document that sits on the shelf and collects dust.  In the course of your business operations, it may be necessary to update assumptions, financial projections, and milestones.

FOUNDATION FOR BUSINESS SUCCESS – STRATEGY, STRUCTURE and TALENT

Successful business leaders know nothing happens without STRATEGY, STRUCTURE and TALENT to support a focused vision and business plan. To create the strategy, it is critical the business starts with the purpose of its existence and moves to evaluating ways it can gain and sustain competitive advantage in both the mid-term and short-term.

STRATEGY

Strategy is a dynamically changing process that deals with brand, pricing, value differentiators, geography, relationships and sales channels. Strategy is not only about what you intend to do, but it is also about pre-deciding what you will not do.

Business strategy is the first leg of the three-legged stool of a successful business.  Developing your own “secret sauce” is about your company being unique, different and creating a niche.  A strategy focused on being the “best” does not create differentiation and set your business apart from the competition.

Remember growing sales is great, but profitable sales are even better. Many times, a business gets fixated on growing sales to the detriment of profits. The key is being sure the sales growth maintains margins that are accretive to profitability.

Another component of strategy is knowledge of your industry and competition.  A business cannot be successful in a vacuum, it must have knowledge of the industry, trends, competitive actions and threats.  Keeping track of the industry pulse is important to understanding your niche and how your “secret sauce” continues to differentiate your business from the competition.

Understanding who your target customers are is extremely important to ensure your messaging, products, features, and value proposition are focused to the proper segment of potential buyers, as no business can be all things to all customers. The strategy must be laser focused and the messaging must be clear and concise.

Leadership is key in developing the strategy of your business.  Many businesses fail because the leadership team either cannot make a decision or makes the wrong decision.  The CEO must be willing to make the decisions, but even more importantly must have the strength to say no.  I participated in Strategic Planning sessions with Dr. Michael Porter at the Harvard Business School early in my career and a key takeaway for me was his emphasis that “The essence of strategy is choosing what not to do”.

Strategy is a journey, not a destination and should be ever evolving, not a document that is prepared and placed on the bookshelf.  Strategy is a living and breathing plan that the leadership team must continually revisit as trends change, new competitors enter the market, new products are introduced and the leadership of the business change.

However, understand that strategy is always evolving, a business must draw a line in the sand annually and develop a three-year strategic plan that drives the business structure (business plan with tactics and goals) and the talent to support success.

STRUCTURE

The structure leg of the three-legged stool does not refer to the legal structure of the business, but rather to the business plan, resources and alignment of tactical goals and objectives to support the business strategy. The annual business plan acts as a roadmap to define the goals and objectives, ensuring they are reasonable and obtainable, assigns responsibility to attain them and sets a timeline for achievement.

As the leadership team begins to craft the business plan, some of the areas for consideration are:

Description of Business

1. Company Mission and Vision Statements
   • Statement of company purpose or objective
   • Long term vision, goals, and business strategies
2. Market opportunity or concept
   • Description of your industry
     • Industry maturity, seasonality affects, economic factors, government regulations, technology advances
     • Industry analysis and trends
       • Size and growth of your industry
       • Distribution channels
       • Strategic opportunities within the industry
3. Stage of development
   • Clear sense of how far along the company is in terms of development, customers, revenue, technology, etc.
4. Overview of products and services
   • Description of all products and services. What need do they fill? How do they save time or money? Why should someone buy?
5. Milestones
   • Outline of milestones achieved to date
   • Future milestones to measure success
6. Community involvement and social responsibility
7. Exit plan / Strategy

Marketing

1.  Target market
   • Thorough understanding of your customers
   • Distinct, meaningful characteristics of market segments
   • Demographic information
2. Marketing and sales strategy
   • Market size and trends
   • Your company’s message (product, price, promotion and place)
   • Marketing vehicles and tactics
   • Marketing budget
   • Sales structure and channels (sales personnel and process)
   • Sales projections
3. Competition and market research
   • Competitive assessment
   • Customer perceptions
   • Competitive operational factors
   • Market share distribution
   • Future competitors
4. SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats)
   • Your strategic position (advantages and barriers)
   • Risk analysis    

Operations

1. Facilities
2. Production plans
3. Supply and distribution
4. Order fulfillment
5. Customer service
6. Research and development – new products
7. Financial controls and information
8. Technology plan and budget

Management and Organization

1. Personnel requirements (Talent)
2. Compensation and incentives to achieve the goals and objectives

Financial

1. Identification of cost savings opportunities
2. Departmental budgets to hold each manager accountable for their spending
3. Capital Investment budget by project with associated paybacks
4. Corporate financial reporting:
   • Income Statement
   • Cash Flow Projections
   • Balance Sheet
   • Break-even Analysis
   • Sources and uses of funds
   • Capital Spending Reporting

Conclusion

The Business Plan should be a living document that guides the CEO and leadership team on a tactical course for the current fiscal year that aligns with the three-year strategic plan.  Once again this is not just a document that sits on the shelf and collects dust!

TALENT

The third leg of the business success stool is talent.  Talent has three components that should work harmoniously together in order for a business to grow and prosper by offering rewarding experience for the people and success for the organization.

The three key components of talent are:

Individuals– Join the team bringing their individual education, experiences, wisdom to provide diversity learning from others and the leaders to grow and contribute to the future success of the business.

Leaders– Offer mentoring and guidance to cultivate and strengthen individuals to build a workforce that supports the strategy giving the business a competitive advantage

Organization– The strategy and structure of the organization influences who is recruited into the business, how they are recruited, what training and job enrichment opportunities are available, how leadership leads and communicates so the team is aligned with goals and objectives.

When building your team do not only look at education and experience but look for passion and a desire to make a difference.  Passion, self-motivation and excitement to make a difference and help each other and the company succeed become contagious and drive the business towards excellence.  Many leaders and hiring managers overlook passion during the recruiting and hiring process.

Great sports teams are not made up of all A players, but usually a mix of A players, B players and C players.  This concept is important for a successful team.  How many times have you seen those sports teams with just a roster of “superstars” fail to win championships? The same principle applies to business as the mix of talent is important to ensure all jobs and responsibilities are performed

However, just like in sports A players typically help raise “the game” of B and C players. This is also true in business as the top performers usually help inspire and motivate the others to perform at a higher level.

Finally, do not underestimate the impact of your company’s culture.  According to Professor James L Heskett of Harvard University who wrote in his latest book The Culture Cycle, effective culture can account for 20-30 percent of the differential in corporate performance when compared with “culturally unremarkable” competitors.

John Coleman’s article in the Harvard Business Review from May 6, 2013 titled Six Components of a Great Corporate Culture said “Each culture is unique and a myriad of factors go into creating one, but I’ve observed at least six common components of great cultures. Isolating those elements can be the first step to building a differentiated culture and a lasting organization.”

The six components listed by John Coleman were:

1. Vision– A great culture starts with a vision or mission statement. These simple turns of phrase guide a company’s values and provide it with purpose. That purpose, in turn, orients every decision employees make. When they are deeply authentic and prominently displayed, good vision statements can even help orient customers, suppliers, and other stakeholders.
2. Values – A company’s values are the core of its culture. While a vision articulates a company’s purpose, values offer a set of guidelines on the behaviors and mindsets needed to achieve that vision.
3. Practices – Of course, values are of little importance unless they are enshrined in a company’s practices. If an organization professes, “people are our greatest asset,” it should also be ready to invest in people in visible ways.
4. People – No company can build a coherent culture without people who either share its core values or possess the willingness and ability to embrace those values. That’s why the greatest firms in the world also have some of the most stringent recruiting policies.
5. Narrative – Any organization has a unique history — a unique story. And the ability to unearth that history and craft it into a narrative is a core element of culture creation.
6. Place – Place shapes culture. Open architecture is more conducive to certain office behaviors, like collaboration. Certain cities and countries have local cultures that may reinforce or contradict the culture a firm is trying to create. Place — whether geography, architecture, or aesthetic design — impacts the values and behaviors of people in a workplace.

CONCLUSION

Understand that nothing happens without STRATEGY, STRUCTURE and TALENT to support a focused vision and business plan to provide the foundation for business success.

Unsecured Business Loans

Businesses need working capital for expansion, inventory, receivables, acquisition, or perhaps a short term cash crunch to meet payroll or another obligation. It is always important for businesses to have “dry powder”, or excess cash availability for those circumstance or emergencies when immediate cash is required.

If you have been in business more than two years, have annual revenues of at least $100,000 and the business owner has a credit score of 600 or above then an unsecured business loan could be your solution and funded in 10 working days.

The unsecured business loan does not impact your personal credit or require a personal guarantee and the loan amount ranges from $50,000 to $500,000. Terms for the unsecured loan range from 6 months, to 12 months, to 18 months and up to 5 years.

The documentation required for the loan are typical and must be completed in their entirety to ensure a smooth process and include:

1. Completed loan application
2. Most recent 2 years of tax returns
3. Most recent 6 months of business bank statements
4. Copy of your business tax license (including 6 months of returns) and your Federal EIN
5. Articles of Organization
6. Most recent 2 months of utility bills for the business
7. Drivers license with photocopy of both sides including all the corners
8. Social Security card with photocopy of both sides including all the corners

Once all the documentation is submitted for review with the application the loans can usually be closed in 10 working days. However, if any of the information is missing, incomplete or ineligible that will delay the processing and extend the approval time.

For more information or to apply for an unsecured business loan contact keith@midas-financial.com

2 Hidden Hospital Cost Saving Strategies

Reducing Hospital Operating Costs without Impacting Patient Care

Healthcare Financial Management Association – The Case for Greater Cost Control

According to Rich Daly, Healthcare Financial Management Association (HFMA) Senior Editor Hospital and Health Care systems have realized they aren’t going to grow their way out of the margin pressures that they are facing.

The case for greater cost control at hospitals received its latest boost from a recent national survey of hospital executives. The growing urgency comes amid shrinking margins and cash flow.

Cost control eclipsed revenue growth as the top priority among health system CEOs, according to Advisory Board’s  Annual Health Care CEO Survey. The nationwide survey of 146 C-suite executives, conducted between December 2017 and March 2018, found 62 percent “were extremely interested” in cost control.

Similarly, “innovative approaches to expense reduction” was the second-leading priority (56 percent).

“It was certainly eye-opening to see cost control as the new number one issue facing hospital and health system executives because it really confirmed conversations we’ve been having with leaders,” said Rob Lazerow, managing director of Advisory Board Research.

Among the 33 topics about which executives were asked their level of concern, other leading priorities included:

• Exploring diversified, innovative revenue streams (56 percent)
• Boosting outpatient-procedure market share (50 percent)
• Meeting rising consumer demands for service (50 percent)

The recent cost concern findings followed an April report from Moody’s Investors Service that the median operating cash flow margin for 160 not-for-profit and public hospitals in 2017 declined to 8.1 percent, which was below levels recorded during the 2008-09 recession.

Similarly, the American Hospital Association’s  2018 chartbook found the percentage of hospitals with negative total and operating margins had increased by the end of 2016 to recession-era levels.

“Hospital and health system leaders have been facing margin compression—deteriorating or declining margins—for a few years,” Lazerow said, referring to trends since 2015. “Hospital and health system leaders realized they weren’t going to be able to grow their way out of the margin pressures that they are facing right now.”

According to Moody’s, the decline in median operating cash flow margin came amid accelerating expenses and reduced revenue growth, with expense growth in FY17 outpacing revenue growth for the second year in a row.

Moody’s cited an uptick in operating expenses of not-for-profit and public hospitals, with the increase stemming at least partly from the tight labor market.

After a multiyear hiring spree, hospital employment has reached all-time highs—and labor is the largest single component of hospital costs, according to a 2017  Deloitte report based on interviews with 20 health system CEOs. Deloitte estimated that labor expenses make up roughly 50 percent of total operating costs for most hospitals.

Hospital Cost Cutting Strategy #1 – LED Lighting

Rather than cutting staff one of the biggest expenses for a hospital is utility costs and transitioning from traditional to LED lighting may be one of the most overlooked opportunities to significantly improve patient care and reduce operating costs.

Hospitals in the U.S. spend an average of $1.67 on electricity per square foot annually. Some estimates suggest that hospitals spend between 40% – 60% of their total energy budget on lighting alone.

Since hospitals lights are on 24 hours per day and most lighting lifetimes are shorter than advertised.  As a result, LED lighting that has a much longer lifetime and costs less to use can reduce costs significantly in a hospital setting.

If lighting expenses can be reduced by even 10%, that’s a significant savings in energy consumption and savings that can be transferred directly to patient care.

How Can LED Lighting Save Money in a Hospital’s Operational Budget?

LED lighting can reduce the overall cost to your operational budget (OPEX) in several ways:

• LED lighting is approximately 70% more efficient than other forms of lighting such as traditional fluorescent lights and can last up to ten times longer, reducing maintenance hours and improving inventory control.
• LED lights are mercury free and therefore are hazardous free. As a result, they don’t require special handling or disposal fees.

Additional benefits also apply in the operating room.

In 2011, The U.S. Department of Energy, in its LED Surgical Task Lighting study confirmed that, compared with halogen lights, LED lights:

Used less wattage to produce equivalent light levels.

• Cooler to the touch and emitted less heat into the room.
• Promised greater life and a non-catastrophic failure mechanism.

Overall, the study suggested that LEDs “can allow for reductions in a connected load of 50 percent or more, with potential additional energy savings through constant-color dimming and reduced cooling load in the operating room.”

In addition to reducing expenses, modern LED lighting also has a number of benefits for practitioners and patients:

• Properly lit work areas and patient care areas can help reduce stress and errors.
• Bright light that comes closest to natural daylight helps reduce depression.
• A couple of other studies suggest that exposure to light may be linked to length of stay among clinically non-depressed patients. ⁽¹⁾
• Mortality rates are consistently higher in dull rooms.⁽¹⁾
• Patients with better light Incurred 21% less medication costs. ⁽¹⁾
• The Impact of Light on Outcomes in Healthcare Settings

LED Case Study #1 – St. Catherine Hospital | Centura Health – Garden City, Kansas

Background – Project consisted of converting interior and exterior lighting to LED for a 102 bed Joint Commission Accredited regional health center.  The project involved retrofitting a total of 3,186 interior and exterior fixtures consisting of 7,048 lamps.

Outcome – Reduced total annual kWh usage from 1,577,082 to 444,208 kWh – a 77% reduction in kWh and equated to an annual utility savings of over $78,000 with an average increase in foot candles by 15% with a project payback of 3.3 years

Award– ASG Energy working with BCS Performance Solutions was award the 2018 Energy Manager Project of the Year for 2018 for St. Catherine Hospital.

LED Case Study #2 – Hutchinson Regional Medical Center – Hutchinson, Kansas

Background – Project consisted of converting interior lighting to LED for a 199 bed regional health center serving the health needs of over 65,000 residents.  The project involved retrofitting a 164,400 square foot facility with a total of 3,462 interior fixtures consisting of 9,370 lamps.

Outcome – Reduced total annual kWh usage from 1,712,550 to 495,278 kWh – a 71% reduction in kWh and equated to an annual utility savings of over $96,000 with an average increase in foot candles by 21% and an associated project payback of 3.3 years

Hospital Cost Cutting Strategy #2 – Air Conditioning Optimization

Given that air conditioning and air handling systems typically account for 40-60% of a buildings electricity costs, this platform has shown to save 15-40% of cooling energy spend across a variety of implementations. This is what we refer to as “The Next Level of Retro-Commissioning” – beyond what a lot of other existing “retro-commissioning” practices claim to do when it comes to improving energy efficiency in chiller systems.

Dynamic Chiller Optimization is taking retro-commissioning to the next level by incorporating dynamic variables that impact energy utilization and load balancing across the entire cooling eco-system within a facility.  The platform has been designed in order to maximize the results and

DOES NOT:

• Impact the thermostat settings.
• Have any disruption of operations.
• Require any new HVAC equipment.
• Have any upfront capital costs.

Benefits                     

• Cost Reduction 15% – 40%
• Low Payback – Under 3 Years
• Performance Guarantee

Key Features

• Dynamic Chilling Optimization
• Non-Intrusive Implementation
• Remote Monitoring
• Flexible BMS or HMI Interface Integration
• Automated Response System

This “clean-tech solution” is ideally suited toward facilities that have large central cooling systems with a chilled water loop and installed chiller capacity of over 200 tons, as these types of environments can greatly benefit from this optimization. For more information visit https://bit.ly/2SvGq24

Financing Options

CFO’s are always looking for cost saving initiatives, but the hurdle is how to fund them out of current cash flow.  Fortunately, there are many financing options related to green investments and some include no cash outlay and the hospital still incurs a utility savings.  ASG partners offer Energy Service Agreements (“ESA”) that utilize the energy savings to pay for energy upgrades avoiding up front capital investment and keeping the project off the balance sheet.  The monthly ESA payments are fully funded out of the savings created by the energy savings; however, the ASG Energy financing partner only allocates about 80% of the savings to the project payback, the other 20% is retained by the hospital to reduce ongoing operating costs.

Additionally, ASG Energy has partners that also offer traditional leasing, financing and other creative financing alternatives.

Conclusion

Hospital Administrations must think creatively in today’s environment to reduce fixed cost of running a hospital without impacting patient care and safety.  Therefore, implementing the 2 hidden cost savings strategies of LED lighting and Air Conditioning Optimization are proven methods to significantly reduce operating costs and improve the hospital environment.

Do not hesitate in implementing these strategies while Medicare dollars are being cut, insurance companies are applying pressure to reduce costs and procedures and the baby boomers are aging.  Remember do not let capital stop you there are many financing options available, contact ASG Energy immediately.

About ASG Energy LLC

ASG Energy LLC is a comprehensive LED energy solutions provider, with a successful track record of managing energy reduction initiatives and installations for several Fortune 500 companies and hospitals throughout the U.S. ASG utilizes professional project managers and engineers for all our commercial and industrial customers, medical centers and schools to assist our clients in realizing rapid cost savings, as well as, reducing greenhouse gas emissions and improving facility lighting and safety.  For additional information please visit www.asgenergyllc.com or email at info@asgenergyllc.com.

Let us Help You Overcome the Barrier of “Capital”​ for LED Lighting

If you have not converted your existing lighting to LED Lighting, then your lighting is OLD, OUTDATED, WASTING ENERGY and COSTING YOU MONEY EVERY DAY!

If you would like to learn how partnering with ASG Energy will help you significantly reduce energy and monthly costs in 2019 by implementing LED Lighting, we can assist you with the following:

• Budget Planning for Energy Reduction Measures
• Develop ROI Driven Economic Analysis for LED Lighting
• LED Lighting & Photometric Designs
• Exploration of Smart Lighting Controls
• Evaluation of Alternative Capital Allocation & Financing Options

We understand that access to Capital can be a barrier when implementing LED Lighting projects. ASG energy is proud to have financing partnerships with RENEW Energy Partners and Key Equipment Finance an affiliate of KeyCorp (NYSE: KEY). Our partners offer financing alternatives to help complete your project and take advantage of utility company rebates before they expire.

RENEW Energy Partners works with ASG Energy to fully fund and execute energy-efficiency and on-site clean energy projects (such as combined heat and power) for C&I building owners, with no up-front investment from the building owner. RENEW delivers fully funded projects and immediate savings to building owners using an energy services agreement (ESA) for efficiency projects and/or a power purchase agreement (PPA) for on-site generation. On completion of construction, the building owners use the cost savings associated with reduced energy consumption and/or on-site distributed energy generation to make regular payments over a set period of time. The implementation of such projects also provides significant increased resilience and an immediate reduction in carbon emissions.

Because RENEW is delivering energy services and/or heat and power to its customers, payments can be treated as an operating expense and customers have the option for off-balance sheet treatment. Customers free up their capital budgets for other priorities.

With 45 years of experience, Key Equipment Finance total project leases include 100% financing including engineering, development, installation and LED lighting costs with an expediated approval process.

Additionally, Key Equipment Finance offers flexible structures and payment plans for integrated LED lighting, controls and technologies and the ability to take advantage of energy incentives to reduce energy and maintenance costs.

For additional information please visit www.asgenergyllc.com or email at info@asgenergyllc.com.

CFO’s as ECONOMIC ADVISORS and BUSINESS PARTNERS IMPLEMENT LED LIGHTING TO ACHIEVE PROFITABLE GROWTH

CFO’s who mentor the Finance and Accounting Department to operate as an economic advisor will be a more effective business partner to the CEO and leadership team.  CFO’s who understand the strategy of the business and the relationship to drivers of cost have sometimes found it difficult to determine where and how to implement cost savings beyond the most obvious discretionary spend items.     

There are five ways CFO’s can make cost reduction stick in an organization:

1. Assign accountability at the right level
2. Focus on how to cut, not just how much to cut
3. Understand the cost drivers behind the P&L line items
4. Communicate the link between cost management and the business strategy
5. Understand cost management is a journey, not a destination, and the focus must be ongoing

CFO’s who understand the five principles above initially focus on activities of reducing people, improving systems and processes, implementing lean methodology, and eliminating redundant costs. However, progressive CFO’s are thinking outside of the box and recommending investment in LED lighting solutions.

Why LED lighting? 

• LED lighting provides an immediate reduction of electricity costs as LED consumes at least 75% less energy and lasts 25 times longer than incandescent lighting, according to the US Department of Energy.
• The payback on the LED lighting investment is typically around three years.
• Reduction in facility maintenance costs, as bulbs and lamps have a longer operational life and often have a 10-year warranty.
• Utility companies often offer significant financial incentives for businesses to reduce power consumption by switching to LED lighting.
• LED lighting and controls provide a comfortable and productive visual environment, while effectively monitoring energy consumption by controlling the lighting.Switching LED lighting on/off frequently does not affect their usable life of light emission.
• LED lights are free of toxic chemicals, as most conventional fluorescent bulbs contain mercury.There is no health risk if an LED happens to break due to the fact it is a solid-state object.
• LED lighting can improve security and safety with the efficiency, long-life and weather resilience by keeping the lights on for longer periods of time.

The Ultimate Financial Goal:

The goal of the CEO, CFO and Leadership Team is to increase earnings (EBITDA – Earnings Before Interest, Taxes, Depreciation, and Amortization) which ultimately increases the enterprise value (the price another is willing to pay) for the business.

Investing in LED lighting is a Capital Expenditure (CAPEX), which is excluded from EBITDA, while the electric savings is immediate – as soon as the project is completed – and generates incremental profitability to the business.

LED Income Statement benefits:

1. Tax Reform Legislation– On December 22, 2017, the President signed the Tax Reform legislation. The bill largely takes effect in 2018 and makes significant changes that impact most, if not all taxpayers.  The act increased bonus depreciation and Section 179 expense for business taxpayers.
   2023. Bonus Depreciation– Under the previous tax rules, the bonus depreciation deduction was limited to 50% of eligible new property. The Reform extends and modifies bonus depreciation to allow businesses to immediately deduct 100% of eligible property placed in-service after September 27, 2017, and before January 1, 2023. And, for certain property with longer production periods, the 100% bonus depreciation is extended through December 31, 2023.

Bonus depreciation continues to be available for qualifying property, which is generally property with a depreciable recovery period of 20 years or less. Plus, eligible property is expanded to include used property.

1. Section 179

Section 179 allows a taxpayer to immediately expense the cost of qualifying property—rather than recovering such costs through depreciation deductions. However, the Tax Reform increased the maximum amount a taxpayer could deduct under Section 179 for property placed in-service after December 31, 2017, from $520,000 to $1,000,000. The phase-out threshold is also increased from $2,070,000 to $2,500,000 for property placed in-service after 2017. The phase-out occurs when total Section 179 property placed in-service during a tax year exceeds the threshold amount. At this point, the deduction is reduced dollar-for-dollar by the excess amount. Both the deduction and phase-out limit will be increased for inflation beginning in 2019.

Qualifying property for Section 179 expensing has been expanded under the Tax Reform.  While you can claim a Section 179 deduction for most kinds of property or assets, there are some types of assets that don’t qualify:

• Real property – Buildings, land and land improvements (this includes swimming pools, paved parking areas, docks, bridges and fences)
• Air conditioning and heating equipment
• Property used outside the U.S.
• Property used to furnish lodging
• Property acquired by gift or inheritance, or purchased from related parties
• Any property that isn’t considered to be personal property may not qualify.

Property that does qualify includes:

• Equipment purchased for business use
• Tangible personal property used in business
• Computers and off-the-shelf software
• Office furniture and office equipment
• Business vehicles can also qualify if they have a weight of over 6,000 pounds (other limits may apply).

Whatever you deduct through Section 179, you must use the property or asset at least 50 percent of its life for business purposes. If personal use exceeds the 50 percent cap, you’ll have to depreciate the item instead.

1. Utility and Maintenance Savings– the utility and maintenance savings begin immediately after conversation to LED lighting and reduces expenses and improves profitability on the Income Statement.

Case Study

1. Summary– This January 2018 project consisted of converting the interior lighting to LED across three buildings on this corporate campus totaling 518,000 square feet. The project involved retrofitting just over 8,094 interior fixtures and during this conversion about 50% of the interior fixtures were de-lamped from three 32W lamps to two 12W lamps over a 3 ½ week period.
2. Utility Savings– Reduced total annual kWh, usage went from 2,758,461 to 812,350 kWh – a 71% reduction in kWh.
3. Cost savings

Est. Annual kWh Reduction	1,946,111
Average Effective Utility Rate	$0.073
Est. Annual Utility Savings	$142,661

The annual cost savings went directly to the bottom line improving EBITDA.

1. Financial Impact

1. Findings
   1. The earlier in the year a facility converts to LED lighting the more months they can enjoy the cost savings and improved EBITDA.

If you would like to explore and evaluate the type of savings your business could benefit from LED Lighting, contact ASG Energy at 210-610-0036 or email at info@asgenergyllc.com.

Disclaimer – Any tax advice in this communication is not intended or written by us to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed by any governmental taxing authority or agency, or (ii) promoting, marketing or recommending to another party any matters addressed herein.

The opinions and analyses expressed herein are subject to change at any time, as are statements of financial trends, which are based on current market conditions. Any suggestions contained herein are general, and do not take into account an individual’s or entity’s specific circumstances or applicable governing law, which may vary from jurisdiction to jurisdiction and be subject to change. Any third party information contained herein is from sources believed to be reliable, but which we have not independently verified. Past performance is not indicative of future results. Investments in securities may lose value, and fees, charges, and taxation can have an adverse effect on investment returns..

No warranty or representation, express or implied, is made by ASG Energy, nor does ASG Energy accept any liability with respect to the information and data set forth herein. Distribution hereof does not constitute legal, tax, accounting, investment or other professional advice. Recipients should consult their professional tax advisors prior to acting on the information set forth herein.

ASG Energy and TerraCycle partner on successful large office campus LED lighting retrofit project

BULB CRUSHING BECOMING AN IMPORTANT PART OF RETROFIT PROJECTS

How using a drum-top bulb crusher helps your project proceed efficiently

When a Fortune 500 company in Colorado Springs decided to invest in a lighting retrofit at its corporate campus, management understood the project would not only save them substantially in energy costs but would also score them valuable good-will amongst their customer base.  The only problem was going to be the logistical nightmare the three-week installation schedule caused and the waste it produced.

The company’s facilities at the corporate campus were constructed over the course of a couple of decades, utilizing the most energy-efficient materials and methods of the day and remained well-maintained over the years.  The project would ultimately involve removing 5,500 fluorescent light fixtures, with an average of three lamps per unit.  Primarily made up of linear fluorescent lamps, the average consumption was 32 w per lamp.  Lighting the campus was using a little more than 3 Million kilowatt/hours of electricity a year.

By making the switch to an LED-based lighting system for the entire campus, plus adding some key energy-saving features, such as light harvesting and occupancy sensing controls, the company was going to bring consumption down to about 640,000 kilowatt/hours per year.  The savings in electrical billing alone would pay for the project in less than three years.  That doesn’t even factor in the longer life of the LED lamps over their fluorescent predecessors.  The savings in lamp replacement and the labor associated with that had not even been factored into the project’s intended outcome.

ASG Energy, the contractor retained for the retrofit, understood that the project would require the use of storage space during the installation.  By paying close attention to the footprint of the project’s prep needs, as well as the disposal needs, they were able to provide a reasonably accurate forecast of their space impact during the three-week project.  Working almost exclusively during off-business hours, they managed the use of parking spaces as prep space and demolition space.

Demolition of the fixtures being replaced involved three important phases.  First, the removal of the fluorescent lamps.  ASG Energy understands well the EPA regulations on disposal of fluorescent bulbs.  Because of the presence of mercury in fluorescent lamps, they need to be stored in a fashion that protects against accidental release of the mercury.  That could have meant boxing and carefully storing more than 16,000 bulbs.  Obviously, storing such a large number of bulbs until they’re picked up for disposal is a very inefficient use of space and manpower.  ASG Energy chose to use a BulbEater® by TerraCycle drum-top bulb crushing unit to facilitate the storage of the waste bulbs.  By compacting the bulbs in a drum-top crusher, they captured the dangerous mercury, while consolidating the space impact of the waste.  The BulbEater® unit compacts more than 1,300 bulbs into a single, steel drum.

The next step in the demolition was to remove the ballast units from the fixtures.  Ballasts made before 1980 contain highly toxic PCB and must never be disposed of in general waste.  The Colorado Springs campus was built after 1980, and so the fixtures were non-PCB containing units, but even so, they do contain DEHP.  DEHP has low toxicity in small amounts, say a couple of ballasts from a home, but when disposing of 5,500 it is environmentally responsible to set up a recycling program with a hazardous waste handler.  ASG Energy contracted with the same handler for the ballasts and lamp waste, and were able to dispose of both economically and safely.

Finally, the fixtures themselves are excellent sources of recyclable metals.  ASG Energy had a scrap metal company pick up the fixtures and turn them into valuable aluminum, steel and copper.

By utilizing environmentally sound practices, ASG Energy was able to perform a multi-million-dollar lighting retrofit while causing minimal work disruption to the employees of a Fortune 500 office.  They provided their client with a new, high-efficiency lighting system that improved the work environment while saving a considerable amount of money.  All while disposing of the old equipment in an environmentally conscious way.

About ASG Energy LLC

ASG Energy LLC is a comprehensive LED energy solutions provider, with a successful track record of managing energy reduction initiatives and installations for several Fortune 500 companies throughout the U.S.  ASG Energy’s reach extends nationally to serve its customers and operates out of Denver and Canon City, Colorado as well as San Antonio, Texas. ASG utilizes professional project managers and engineers for all our commercial and industrial customers, medical centers and schools to assist our clients in realizing rapid cost savings, as well as, reducing greenhouse gas emissions and improving facility lighting and safety.  For additional information please visit www.asgenergyllc.comor email at info@asgenergyllc.com

Reasons to Embrace Sustainable Manufacturing

Manufacturing is typically thought of as a business that does not care about the environment, housed inside facilities that are dark and dirty. However, manufacturing has changed dramatically over the past 10 years and embraced sustainable practices. Some larger corporations have added vice presidents of sustainability to their leadership teams.

Sustainability is the creation of products through economically sound processes that minimize the negative impacts on the environment, while conserving energy (lowering costs and improving profitability) and natural resources. Once being thought of as a green manufacturer was a nice talking point, now it has become an expectation of manufacturing to reduce water and energy consumption, while minimizing waste and decreasing dangerous emissions.

THE BENEFITS OF SUSTAINABLE MANUFACTURING

1.  INCREASE SALES – Sustainable manufacturing will make your business more attractive and marketable as 76 percent of millennials report their prioritization of  the environment. Businesses that ignore sustainable practice could actually harm revenues.  Surveys have found the three out of four millennials are willing to pay more for products and services from brands that are committed to positive social and environment impacts.
2. SAVE ENERGY COSTS – Replacing incandescent bulbs and fluorescent tubes with LED lighting can reduce electricity usage related to lighting up to 80 percent.  Since electricity for lighting usually consists of 35 percent to 40 percent of the typical electrical bill an 80 percent reduction is significant with a 3-year or less payback. Additionally, converting to a renewable energy source, such as wind or solar, can stabilize energy cost with a much longer payback period.
3. INCENTIVES – There are government incentives, tax credits, grants and utility company rebates for businesses to reduce the ultimate cost of investing in sustainable practices.  Most utility companies will provide a free service of an onsite inspection and survey of your facility with recommendations to reduce energy costs. Small and medium size manufacturers may be eligible to receive a free assessment by the Dept. of Energy’s Industrial Assessment Center (“IAC”).  IAC’s have typically identified more than $130,000 in annual savings opportunities for every manufacturer assessed, nearly $50,000 of which is implemented during the first year following the assessment.
4. WORKPLACE MORALE – When employees at all levels are asked to identify and implement green practices it typically spurs collaboration and teamwork. Sustainability usually leads to increased innovation as employees are inspired to pursue research and development of new products.
5. IMPROVED HEALTH + SAFETY – Implementing sustainable practices in manufacturing reduces water and energy usage, minimizes waste and decreases hazardous emissions.  The additional benefits include a decrease in the carbon footprint and improved health and safety of your employees and community.

WHERE TO START IMPLEMENTING SUSTAINABLE PRACTICES

One of the easiest ways to embark on the sustainable manufacturing path with is by converting from incandescent and fluorescent lighting to LED lighting.

WHY LED LIGHTING?

• LED lighting provides an immediate reduction of electricity costs as LED consumes at least 75 percent – 80 percent less energy and lasts 25 times longer than incandescent lighting according to the U.S. Dept. of Energy.
• Reduction in facility maintenance costs as bulbs and lamps have a longer operational life and often have a 10-year warranty.
• Utility companies often offer significant financial incentives for businesses to reduce power consumption by switching to LED lighting
• LED lighting and controls provide a comfortable and productive visual environment while effectively monitoring energy consumption by controlling the lighting.  Switching LED lighting on/off frequently does not affect their usable life of light emission.
• LED lights are free of toxic chemicals as most conventional fluorescent bulbs contain mercury.  There is no health risk if an LED happens to break due to the fact it is a solid-state object.
• LED lighting can improve security and safety with the efficiency, long life and weather resilience by keeping the lights on for longer periods of time.

Keith McAslan is a managing partner of ASG Energy LLC. a Colorado based national full-service company dealing exclusively in LED lighting. The business has a successful track record of managing LED lighting installations for Fortune 500 customers, medical centers and schools that generates cost savings with a payback typically less than three years, reduces greenhouse gasses and improves facility lighting and safety. McAslan has executive leadership experience for over 38 years as a CEO, president, global general manager, and CFO in private, private equity and publicly owned consumer and industrial products businesses. Keith has successfully executed buy, build and sell strategies for private equity firms (Blackstone Group and The Sterling Group) and led turnarounds as a CEO, president, COO and CFO. Keith has completed domestic and international acquisitions with successful integrations and managed global operations. Keith’s experience advising private equity investors and portfolio company management teams as an operating partner has increased enterprise value for the investors. McAslan mantra with organizations he leads is: “If you are not selling or supporting selling you are just overhead.” Connect with Keith: -https://www.linkedin.com/in/keithmcaslan/; http://www.asgenergyllc.com; or keith.mcaslan@asgenergyllc.com

LED Market Projected Size at 71.35 Billion – Global Trends to 2023 March 22, 2018 – by Stefen Marwa

‘Global LED market‘ will expand from 28.89 Billion in 2018 to 71.35 Billion  by the end of 2023 with a CAGR value of 19.80%. While the market size of LED market is considered and forecasted from 2018 to 2023 contemplating 2017 as the base year of the LED research study. Asia-Pacific, North America, Latin America and Europe will be the leading LED markets having positive growth in coming five years of the LED industry. The escalating demand for LED market from huge industries, small startups, and end-user consumers have galvanized the growth of LED industry over past few years.

Motivation of the report is to understand every corner of the global LED market and a basic understanding of the market definition, market potential, challenges, restraints, opportunities, LED market segmentation based on regions, applications, types and major players, and significant current and future LED market trends. Increased demand and consumption of LED market has compelled the sales of LED industry. Other factors such as the development of renewable LED innovations and technologies, introducing a variety of new cost-effective LED products have boosted the expansion in terms of revenue and profit.

Market distribution by Key manufacturers/players:

The list of companies cited in this research report includes General Electric Company, Samsung, Seoul Semiconductors Co Ltd., Toyoda Gosei Co. Ltd, OSRAM Licht AG, Lumileds Holding B.V., American Bright Inc, Nichia Corporation, LEDtronics Inc and International Light Technologies Inc. At the same time, it gathers company profiles, contact information, products supplied and sales region of all the top players of LED industry.

Market distribution by Types:

Different types of LED products include Polymer LED, Ultraviolet LED, Basic LED, High brightness LED and Organic LED. It delivers major upgrowth in upcoming years along with the profit generated.

Market distribution by applications:

Different applications of LED industry include Mobile Device, Backlighting, Signals and Signage, Automotive and General Lighting. Some more applications might get added to the list in coming few years depending upon the exploration and expansion of LED industry.

Enquire about Worldwide LED Market report: http://globalmarketfacts.us/global-led-market/963/#inquiry

Market distribution by geographical regions:

Europe recorded modest surge in the global LED market over past few years but still, retain on the second position while LED Asia-Pacific will hold the better position and is expected to elevate with CAGR of 19.80% with forecast period from 2018 to 2023. Other regions that are convoluted and contribute a better share of LED industry includes North America, Latin America, The Middle East and Africa.

Key acumens of LED report:

1. Company profiles of each LED manufacturer along with revenue, cost, sales volume, capacity, production, growth rate, import/export details, supply-demand ratio, future trends and LED approaches used, price, cost and technological developments are mentioned.

2. Global LED market SWOT analysis to know the strengths, weaknesses, opportunities, and constraints involved in LED market.

4. Past data from 2012 to 2017 and future LED market trends over a forecast period from 2018 to 2023.

5. LED market growth factors that will boost development and profit along with restraining factors that will inhibit its growth.

Reasons for acquisition this LED report:

1. It delivers a complete understanding of global LED market along with its competitive and commercial landscape.

2. Discloses the approaches used while LED manufacturing process, issues confronted along with the solutions to overcome those concerns.

3. Understands LED market designs and planning used by top players and industry experts to contemplate better area in the LED market.

4. Analyzes past, present and future LED market tendencies and viewpoints.

5. To understand the inanimate expansion of LED top players.

6. To enhance long-term relationships between the LED participants and raw material distributors.

Private Equity Secret: LED Lighting Improves Profitability Explore and evaluate the potential savings your business could benefit from LED lighting

Private Equity firms typically acquire portfolio companies with a strategy to grow them organically and with acquisitions, while finding synergies in the cost structure to reduce expenses and improve profitability.  Their goal is to increase EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) which increases enterprise value (the price another is willing to pay for the business). 

Besides the normal synergy activities of reducing people, improving systems and processes, implementing lean methodology and eliminating redundant costs, private equity firms are investing in LED lighting.

Why LED lighting? 

• LED lighting provides an immediate reduction of electricity costs as LED consume at least 75% less energy and last 25 times longer that incandescent lighting according to the US Department of Energy.
• Reduction in facility maintenance costs as bulbs and lamps have a longer operational life and often have a 10-year warranty.
• Utility companies often offer significant financial incentives for businesses to reduce power consumption by switching to LED lighting
• LED lighting and controls provide a comfortable and productive visual environment while effectively monitoring energy consumption by controlling the lighting. Switching LED lighting on/off frequently does not affect their usable life of light emission.
• LED lights are free of toxic chemicals as most conventional fluorescent bulbs contain mercury. There is no health risk if an LED happens to break due to the fact it is a solid-state object.
• LED lighting can improve security and safety with the efficiency, long life and weather resilience by keeping the lights on for longer periods of time.

 

LED Income Statement benefits:

1. Tax Reform Legislation – On December 22, 2017, the President signed the Tax Reform legislation. The bill largely takes effect in 2018 and makes significant changes that impact most, if not all taxpayers.  The act increased bonus depreciation and Section 179 expense for business taxpayers.
   2023. Bonus Depreciation – Under the previous tax rules, the bonus depreciation deduction was limited to 50% of eligible new property. The Reform extends and modifies bonus depreciation to allow businesses to immediately deduct 100% of eligible property placed in-service after September 27, 2017, and before January 1, 2023. And, for certain property with longer production periods, the 100% bonus depreciation is extended through December 31, 2023.

Bonus depreciation continues to be available for qualifying property, which is generally property with a depreciable recovery period of 20 years or less. Plus, eligible property is expanded to include used property.

1. Section 179

Section 179 allows a taxpayer to immediately expense the cost of qualifying property—rather than recovering such costs through depreciation deductions. However, the Tax Reform increased the maximum amount a taxpayer could deduct under Section 179 for property placed in-service after December 31, 2017, from $520,000 to $1,000,000. The phase-out threshold is also increased from $2,070,000 to $2,500,000 for property placed in-service after 2017. The phase-out occurs when total Section 179 property placed in-service during a tax year exceeds the threshold amount. At this point, the deduction is reduced dollar-for-dollar by the excess amount. Both the deduction and phase-out limit will be increased for inflation beginning in 2019.

Qualifying property for Section 179 expensing has been expanded under the Tax Reform.  While you can claim a Section 179 deduction for most kinds of property or assets, there are some types of assets that don’t qualify:

• Real property – Buildings, land and land improvements (this includes swimming pools, paved parking areas, docks, bridges and fences)
• Air conditioning and heating equipment
• Property used outside the U.S.
• Property used to furnish lodging
• Property acquired by gift or inheritance, or purchased from related parties
• Any property that isn’t considered to be personal property may not qualify.

 

Property that does qualify includes:

• Equipment purchased for business use
• Tangible personal property used in business
• Computers and off-the-shelf software
• Office furniture and office equipment
• Business vehicles can also qualify if they have a weight of over 6,000 pounds (other limits may apply).

 

Whatever you deduct through Section 179, you must use the property or asset at least 50 percent of its life for business purposes. If personal use exceeds the 50 percent cap, you’ll have to depreciate the item instead.

1. Utility and Maintenance Savings – the utility and maintenance savings begin immediately after conversation to LED lighting and reduces expenses and improves profitability on the Income Statement.

Case Study

1. Summary – This January 2018 project consisted of converting the interior lighting to LED across three buildings on this corporate campus totaling 518,000 square feet.  The project involved retrofitting just over 8,094 interior fixtures and during this conversion, about 50% of the interior fixtures were de-lamped from three 32W lamps to two 12W lamps over a 3 ½ week period.
2. Utility Savings – reduced total annual kWh usage went from 2,758,461 to 812,350 kWh – a 71% reduction in kWh
3. Cost savings

Est. Annual kWh Reduction	1,946,111
Average Effective Utility Rate	$0.073
Est. Annual Utility Savings	$142,661

The annual cost savings went directly to the bottom line improving EBITDA

1. Financial Impact

1. Findings
   1. The earlier in the year a facility converts to LED lighting the more months they can enjoy the cost savings and improved EBITDA

If you would like to explore and evaluate the type of savings your business could benefit from LED Lighting, contact ASG Energy at 210-610-0036 or email at info@asgenergyllc.com.

Disclaimer – Any tax advice in this communication is not intended or written by us to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed by any governmental taxing authority or agency, or (ii) promoting, marketing or recommending to another party any matters addressed herein.

The opinions and analyses expressed herein are subject to change at any time, as are statements of financial market trends, which are based on current market conditions. Any suggestions contained herein are general, and do not take into account an individual’s or entity’s specific circumstances or applicable governing law, which may vary from jurisdiction to jurisdiction and be subject to change. Any third party information contained herein is from sources believed to be reliable, but which we have not independently verified. Past performance is not indicative of future results. Investments in securities may lose value, and fees, charges, and taxation can have an adverse effect on investment returns. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.

No warranty or representation, express or implied, is made by ASG Energy, nor does ASG Energy accept any liability with respect to the information and data set forth herein. Distribution hereof does not constitute legal, tax, accounting, investment or other professional advice. Recipients should consult their professional advisors prior to acting on the information set forth herein.