Lighting has a direct impact on overhead costs, employee productivity and customers’ moods. Though electricity is not the largest expense on the income statement, it nevertheless has a profound influence on profit margins. If considering new lighting, it is important to weigh the costs against the benefits and make decisions accordingly.
The explicit costs of installing new lighting vary depending on a number of variables. Square footage, existing fixtures and direct or indirect labor are all things to consider. In some instances, outlay costs can be capitalized on the balance sheet and depreciated over a specific number of months.
Lighting is an investment that can deliver favorable returns and is not just an expense line item. Business owners and managers need to look at installation costs from the proper perspective and know that initial cash outflows can be recouped by increased productivity and sales.
Since the economic troubles that started in 2008, many businesses have slashed their budgets and payrolls in an effort to conserve capital and stay afloat. Some businesses delay purchasing new lighting because of the opportunity costs associated with the cash outlay. It is easier to spend money on specific fixed assets or labor and tie the revenues generated back to the general ledger.
There are other ways to optimize these operations; new lighting impacts businesses in a comprehensive manner that is hard to match via purchasing new machinery or hiring employees.
Sustainability and Savings
General Electric is working with auto manufacturers, retailers and schools to enhance energy efficiency with state-of-the-art lighting systems. For a project in cooperation with San Diego State University, it was found that there was a 50% energy improvement in classrooms fitted with new illumination systems.
Business owners throughout the US can experience the same type of improvement by installing newer and more efficient lamps and fixtures. It is important to conserve energy to protect the environment, promote sustainability and save money on utility costs.
According to Phillips, “Increasing light levels from 300 lux to 2000 lux improves productivity by 8%, increases tasks performance by 16% and reduces rejects by 29%.” There are numerous case studies supporting this position making new lighting a practical solution for improving operational productivity and output. In a boutique retail environment, this means better customer service and replenishment of inventory on the store floor. Happy employees and customers translate into higher profit margins.
Phillips notes additional performance benefits of new lighting including:
- Accident reduction and prevention
- Less absenteeism
- Better health and well-being
- Increase in morale
- Nicer mood and ambiance
New lighting systems have the power to optimize store operations and reduce utility costs, which is positive for all stakeholders. For the optimal results, work with a qualified lighting specialist that has a reputation for quality installation and repair services.
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