Can you save electricity? Is it worth it?

When summer comes hot, as it usually is in Taiwan, the local electricity company takes advantage of the extra demand by increasing the electricity price. At this time of year, everyone becomes more conscious of the electricity that their family or business use.

In Taiwan, domestic electricity consumption during most of the year is limited (domestically) to lights, occasional heating, refrigerators and floor fans. Entertainment appliances also comprise a part of the local usage patterns: including pcs, hifi and tv.

In our business, it’s a little different, though. Air conditioning, lights and pcs/printers consume most of the power. There is additional power required for the refrigerator and water machine. Other than that, there’s not much else.

In either case, saving electricity is a case of diminishing returns. Initially changing light bulbs to low-watt long lasting equivalents will reduce power consumption by about about 60%. Cleaning and maintaining newer ACs while replacing older ones will also help reduce power consumption somewhat. Perhaps even substituting notebooks for regular desktops will cut power consumption, as the LCDs use less power, and notebooks are typically designed with energy saving features.

Changing habits can also effectively cut power consumption. Again, though, there is a law of diminishing returns. Closing doors to retain cool air, making sure that obvious ‘leaks’ are reduced or eliminated can also help. Turning off ACs when no-one is in the room for more than five minutes, as well as lights, can help save power. Making sure that computers, or at least monitors, are all set to implement power savings, as well as printers and photocopiers.

But, and for a business, it’s a big but. If you wish to work effectively, and run your business effectively, managing your cost structure is a vital part of an effective defense strategy. However, should your energy policy start to affect your business in a negative way, then you really need to make sure that your priorities aren’t missing the point.

A good example we faced: we replaced all the old incandescent bulbs we could find. The result was a little more expensive than we expected, but it did control our bill effectively. Then we started closing the front door of our office to minimize AC loss. A VERY effective strategy to save power, BUT quickly we noticed that customers weren’t really coming into the office anymore. The customers typically waited to pick up their children after class was finished.

So we started to see that we were losing a vital part of our interaction with customers by closing the door. We compromised by limiting the hours for opening the door, so we could achieve some reduction in the waste, but we realized that we couldn’t eliminate that source of waste WITHOUT our business being affected in a negative way. Unfortunately, the layout of our office area is not optimal for us, but we can’t do anything to change that: it’s rented. More importantly, though, came the realization that the more effort we put into saving money, the less effort was expended on maintaining the business.

We could have gone much further in cutting our usage of electricity but it would have a tremendous impact on how managed our business. We might save about 50% or more of our power budget, BUT we might lose a lot more than the 50% we saved!  What is called for is a sensible policy of energy waste reduction, one that encompasses responsible saving, gradual implementation, and education on both the positives and negatives.

July 21st is here… time for a little break!

For those of you who noticed, and amid much apologies for not posting, I’m just letting you all know that Christine and I are taking a much needed break. I’ll be posting a few days’ behind for the next week or so as we won’t have continuously good access to the Internet, and sometimes I just want to chill.

It’s been six months since our winter break, and a tough time for us and our business, but we’re slowly putting things back together and trying to fix the business so it runs better. Right now, we’re concentrating on dropping the business talk as much as possible and getting out of Taipei. Will check in in a few days with news of our trip to Yi-Lan, Su-ao and Ming-chih… hopefully with photos!

drip, drip, drip – wealth accumulation is silent!

Drip, drip, drip! Is that the sound of rainwater dripping from the guttering? Or is that the sound of your wealth dripping gradually into your account?

We’ve owned a number of different assets and asset classes over the last fifteen year: property, a business, stocks, mutual funds, bonds, bank accounts, etc.. and each of them has prospered over that time in the same fashion – Drip, drip, drip!

In Taiwan, house property is measured per ping. A ping is generally the size of a traditional Japanese tatami mat. Since we purchased our house, we’ve seen our house value increase about 50% or more per ping in seven years. In addition, we were fortunate enough to be able to buy an additional car park. More than that, we’ve spent the last seven years paying down our mortgage slowly. All of these have resulted in a net increase in our equity stake in our house to approaching 60% from the initial 20% at outset. But all of this has been achieved quietly, regularly, and opportunely.

Our business, too, rarely has much excitement, though the students making progress and developing mastery of a complex linguistic system is thrillling. As a business, the mechanics are silent: counting the bills, updating the accounts, paying the bills and taxes, figuring out our profit margin (if there is any!), and so on. There is little hype compared to working for an Internet giant, like Google.

Stocks and mutual funds, too, move up and down silently. They pay (usually) dividends that are paid quarterly into your account. There is little fuss, excitement or pzzazz over the payments, profits, or losses. The numbers just sit there mocking you if you are doing badly, teasing you if you are doing well.

Bonds, CDs and bank accounts pay interest in similar ways: you go into the bank, update your passbook, check your account or renew your CD, and suddenly the interest payments are there. Silently. Mechanically.

There are no whooshing sounds, no zaps of lightening, no cheering or clapping: just the sound of footsteps to the banking machine to pay the regular payments, and to take care of the other regular details. It’s the silent wealth effect. It’s a lot less glamorous, less fun, less attention seeking than winning at Las Vegas on the poker table, getting a jackpot at Atlantic City on the slots, or winning the Lottery.

Which would you rather have – the drip, drip, drip or the heavy thunderstorm of wealth building?