Recycling can add up in larger profit margin

Waste disposal is one of those costs that businesses take for granted. It's much like your utility expenses. Unless there is a significant increase on the invoice, it just gets signed and paid. Many businesses overlook waste expenses as a significant cost-reduction opportunity.

Take, for example, a company with a 5 percent profit margin. Every dollar saved in overhead expenses is the equivalent of increasing sales by $20 ($1 / .05 = $20). This is the gross sales equivalent.

Try taking a closer look at that invoice this month. Depending on the size of your business, there will be a variety of charges. A larger operation will find three charges: rent on the container, a disposal charge per ton and a charge per "pull." A pull fee is the amount charged each time the container is hauled away. Smaller businesses pay a flat fee for a container with a fixed number of pulls every week.

To determine where you stand, try this simple equation: (rent + total disposal fees) / total number of tons = average cost per ton.

The range of annual total costs across different business categories is surprising, anywhere from $50 per ton to more than $140 per ton. What does that mean to your company? If you are not participating in recycling, doing so could save 40 percent or more on waste disposal. To calculate your potential savings, multiply the costs in your sample month by 40 percent. Divide the result by your company's profit margin to get the gross sales equivalent.

Then ask yourself this question: What amount of effort would my company invest toward increasing sales by this amount? As a cautious investor, your next question is, What do I have to do to generate this kind of reduction?

Make a quick assessment of your waste stream (talk to your employees who handle the trash or put on your overalls and help them out for a couple of hours). Do you have a lot of cardboard? Mixed paper? Glass, tin or aluminum?

Each of these recyclable commodities is cheaper to dispose of through recycling than as trash. Rebates are often available that can actually make waste disposal a profit center.

Call your waste hauler and ask about its recycling services.

As you begin recycling programs, remember to decrease the size of your trash container or its pull frequency. This will create a much larger impact for your efforts.

Monitor your progress. Find a benchmark that is meaningful to you. I like to think about annual savings in terms of salaries. People are a much better investment than trash.

Developing recycling programs for your waste stream is a powerful starting point. Larger savings can be achieved through reducing or reusing waste, but they do require more effort and cooperation within the company. Savings generated through recycling can be used to finance these activities as you move forward.

More and more businesses are finding that there is no conflict between environment and business. Instead, there is a powerful untapped synergy.

Good business, good environmental stewardship, great public relations how can you lose?

(Dalayna Williams is president of Williams & Associates.)