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What is the number one thing missed by many CFOs?

CFOs have a lot on their plates and don’t need to be bothered by financial issues that seem petty, but there looms a surprising oversight for many CFOs. What is it you ask? It is your company’s SER.

The SER of a company is a critical point of loss for far too many companies, causing many of those companies with a narrow profit margin to show fiscal losses unnecessarily. Your company’s SER can cost your company millions of wasted dollars due to neglect. And the sad part is that most CFOs don’t even know what SER stands for. Your SER is an internal company index with which the company and its various divisions and/or departments should compete on a steady and on-going basis.

The goal with your SER index score is to reduce it —the lower the better! Your SER, or Sales to Energy Ratio , tells a lot about your company. You cannot compare it to other companies, unless they are truly identical, and, even then, if the locations are not the same, your SERs can differ greatly due to micro-climate conditions, such as being near a large body of water where the temps tend to be steadier annually, versus inland where the micro-climate can vary far more.

Calculating your SER can be as simple or as complex as you need it to be in order to best understand your company’s losses in this area of finances. The general and simplest method to calculate your SER index is simply to calculate your company’s total annual energy expenditures on all types of energy, and then compare the amount of sales it takes to create enough profit, based upon your annual net profit margin, to generate enough cash to pay your annual energy expenses. For most companies it takes a frighteningly large sales figure to pay the energy bills, and only the brave dare to look. The larger your profit margin, the lower your Sales to Energy Ratio will be. But you must understand that if you have huge profit margin percentage and thereby have a low SER, you will, therefore, appear to score better than your industry counterparts. This does not mean that your score is good.

Let’s say that, through wasteful company habits, your company is wasting 20% on energy due to careless energy management, but your margin is peculiarly high; let’s say 60% net profit margin (Oh, if only that were true!) And now let’s picture your nearest competition, who happens to sell the exact same quantity of widgets as you, but in this case, they foolishly sell their widgets with a net profit margin of only 10%. Now, due to their tight net profit margin, they are very careful with their energy consumption and go to great lengths to keep their energy bills at their lowest.

Your own energy-wasting-company will make more money, and hooray for that! But your energy bill should be similar to your competition, and yet, you spend 25% more than your industry counterpart. Ouch!

No problem, right? Not so fast bucko! If your company’s combined energy costs are $500,000.00 per month, then that means that your competitor is only spending about $400,000.00 per month. Leaving you to pay a perplexing additional $100,000.00 for energy—PER MONTH! Sure, you’re making a load of cash due to your company’s stellar widget quality and reputation, allowing you high profit margins; but you’re still throwing away 1.2 million dollars annually. If you don’t want the $1,200,000.00, I’ll give you my address; I recently saw a gorgeous lake house for about half that amount.

Here’s the real painful part of this; due to wasteful habits, your company has been paying too much for energy for the entirety of the company’s existence . That adds up to be a very large amount of wasted money. With that kind of cash, you could hire 10 to 20 additional fulltime people, and pay them well!

So, what’s the fix? Well, that can be pretty easy and costs next to nothing. No, you don’t have to turn down the heat or increase the air conditioning temps... well, a degree or two won’t hurt. The mission is to make smart energy changes that are mostly not noticed. Basically, the comfort and safety levels should not change anywhere within the organization when a good Energy Management Program is in place.

A well-run Energy Management Program will be stealthful and inexpensive and works like the momentum of a flywheel saving the company loads and loads of money. Your Energy Management team, usually made up of existing staff, works consistently to reduce energy consumption. This is not a one-and-done project; you keep trying to reduce your company SER until you no longer can, and then your staff still stays vigilant to find new technologies to implement that can reduce your costs even further.

Sadly, CFO’s are typically not into mechanical or maintenance issues because they come from a different end of the business world—finance, and thus, are typically not privy to the savings that could occur from the maintenance staff and building managers being properly trained in Energy Management. Imagine the response you would get if you sat at a board meeting and told them that for little more than some basic one-time Energy Management Education for staff, costing only a few hundred dollars per key staff member, you reduced the company’s annual energy costs by 1%, thereby saving the company $60,000 annually…

We challenge you to run your SER numbers. Most CFOs can look a few things up on a computer and in about 5 to 10 minutes have their SER calculated. You can be as complex and meticulous as you want in calculating your SER, but don’t fudge the numbers like the politicians like to do; doing so benefits nothing. Regardless of which data points you chose to calculate your SER index with, it must remain the same throughout so that you can see the changes in your index as you progress. Get your staff trained in Energy Management, now, before you throw away another hundred grand!

One of the biggest problems we have found over the years in regard to training people is that they simply do not have time to attend some remotely-located training program for several days. And many businesses cannot afford to have the key staff take off for a few days, nor do they want the expense of paying for travel. So, what we have done is to begin placing our Energy Management Training Courses online.

We have gone through a great deal of work with our team to develop a system that is available 24/7 and allows your staff to pause at any moment, including during a quiz or test, and then pickup exactly where they left off when they have time again, which can be done from anywhere in the world that internet access is available. They don’t need to download any special APP or need any special expensive programs. Just a simple modern browser on almost any device made within the last decade will work. This enables your staff to be able to slip the training in between when they have idle time.

The language used in the courses is stated in as simplest terms as is possible for ease of understanding. Staff will have access to the training material for several months afterward, and they can use the “ASK” button to ask questions from our real-world experienced instructors who have decades of Energy Management Experience. The internet site and the courses are designed with our unique FlexFlow design, allowing one-hand operation on mobile devices , which in turn allows the course to be taken with a sandwich in one hand and a smartphone in the other!

The payback on such courses is typically only a week or two, if that, but it really depends upon the size of your energy bills and your relative waste. Our courses cover all energy types, so the savings are all inclusive across your entire energy consumption spectrum.

Proper Energy Management Training is NOT about wind turbines and solar panels. Sure, we like those too, but they do not reduce your energy consumption, and they’re costly and high maintenance. It is our goal to make this country “greener” through the implementation of proper Energy Management Programs for Commercial and Industrial operations and at the same time save companies money on their energy bills.

I will leave you with this thought:

Did you know that the Greenest Electron is the one that is never used! That’s right, when you put in place a properly run Energy Management Program (EMP) at your company, you have immediate bragging rights about being “Green.” You can’t buy that kind of social advertising! And even the most fickle of environmental activists will applaud your company’s efforts. Now that’s a great ROI!
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