The Importance of Proper Power Solutions for Small Businesses
Introduction
Small businesses are increasingly facing challenges with power shortages and blackouts. These interruptions can have a significant impact on their operations and profitability. In this article, we will explore the risks of taking cheap shortcuts for power solutions and the benefits of investing in alternative energy systems.
The Dangers of Cheap Power Solutions
Many small businesses are tempted to cut costs by opting for cheap power solutions. However, these shortcuts can actually end up being more expensive in the long run. Here are some reasons why:
- Pressure drop spikes: Cheap power solutions often fail to provide a stable power supply, leading to pressure drop spikes. These fluctuations can damage equipment and disrupt operations.
- Inadequate power capacity: Companies that opt for cheap solutions may not have sufficient power capacity to meet their needs. This can result in frequent power outages and interruptions, negatively impacting productivity.
- Lack of warranty and support: Cheap equipment and installations are often not backed by warranties or support. When issues arise, businesses are left to deal with them on their own, resulting in additional expenses.
The Rise of Alternative Energy
In the past, alternative energy was considered a luxury that only larger companies could afford. However, the landscape has changed, and now all businesses need to consider alternative energy solutions to ensure uninterrupted operations. According to Eli Michal, the chief executive of fintech lender Payabill, companies that are too large for plug-and-play inverters require additional financing to meet their power requirements.
Payabill was founded to help companies that lack immediate funds to purchase shares from wholesalers. The company sets up the bill with the supplier of goods, allowing businesses to install or resell shares without impacting their cash flow. This approach helps smooth out cash flow and increase long-term profitability.
Michal mentions that ongoing blackouts have created a new demand for Payabill’s trade finance solution. Installers, retailers, and resellers are now making use of Payabill’s services, especially as few small and medium-sized enterprises (SMEs) can afford to install alternative energy systems and pay cash upfront.
The Size of Billing vs. Power Requirements
There is a common misconception that the size of a business’s turnover directly corresponds to the size of the alternative energy system needed. However, this is not always the case. Michal emphasizes that the power requirements of a business may differ regardless of its turnover. For example:
- A business with a turnover of R15 million per year may only need a car inverter.
- A business with a turnover of R3 million per year may require a much larger system due to higher power demands.
This highlights the importance of assessing power requirements accurately and not solely relying on turnover as an indicator.
For businesses with low power requirements, such as home offices, a lithium car inverter from a reputable retailer can be sufficient. However, Michal cautions against using cheaper lead-acid or gel batteries, as they may not last through prolonged power outages.
Moving on to businesses with medium power needs, such as small offices or stores, a 3kVA to 5kVA inverter with lithium batteries and automatic changeover is recommended. This setup ensures a solid seven to eight hours of non-stop work. Additionally, businesses can consider upgrading to solar panels, which offer both tax benefits and electricity savings.
Challenges of Larger Power Needs
When a business’s power needs exceed the medium range, challenges arise. Businesses requiring between 5kVA and 12kVA often try to set up power solutions themselves to cut costs. However, this approach can backfire. Michal warns against using cheap equipment and unqualified installers.
The biggest risk lies in the system where people attempt to save money by using subpar equipment and untrained individuals for installations. This not only compromises the safety and functionality of the power system but also voids any warranty or support. Payabill aims to address this risk by connecting small businesses with competent installers and reliable suppliers to ensure the longevity and effectiveness of their power solutions.
The Benefits of Investing in Proper Power Solutions
While financing alternative backup power may not yield immediate cost savings, it offers several long-term benefits for small businesses:
- Reduced load-shedding anxiety: Having a reliable power supply reduces the anxiety associated with load shedding. Businesses can operate smoothly without the fear of interruptions or equipment damage.
- Optimal staff performance: A stable power supply allows employees to work efficiently and productively. This leads to better output, customer satisfaction, and overall business growth.
- Opportunity for solar panels: Investing in the right inverter initially opens the door to future upgrades, such as solar panels. This can result in increased power capacity, electricity savings, and potential tax benefits.
Closing Thoughts
As small businesses face ongoing challenges with power shortages and blackouts, it is crucial to prioritize proper power solutions. Taking cheap shortcuts may seem tempting at first, but they can prove to be costly in the long run. Payabill provides a valuable service by connecting small businesses with competent installers and suppliers, offering trade finance solutions to bridge the financial gap.
By investing in alternative energy systems and partnering with reliable providers, small businesses can ensure uninterrupted operations, reduced anxiety, and improved staff performance. It’s time to prioritize power solutions that support long-term growth and stability.
Summary
In summary, small businesses are advised against taking cheap shortcuts for power solutions, as they can lead to pressure drop spikes and increased expenses. Payabill, a fintech lender, offers trade finance solutions to help businesses finance alternative energy systems. The size of a business’s turnover does not always indicate the size of the power system needed. It is important to accurately assess power requirements to avoid inadequate solutions. Larger businesses often face challenges when their power needs exceed the medium range, requiring professional installers and reliable equipment. Investing in proper power solutions offers several benefits, including reduced load-shedding anxiety and optimal staff performance. By prioritizing quality power solutions, small businesses can ensure uninterrupted operations and long-term growth.
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Small businesses have been warned not to take cheap shortcuts for power as pressure drop spikes once again. These cheap shortcuts can turn out to be more expensive.
Before, only companies that could afford it turned to alternative energy, but now all companies need an alternative to continue operating. Also, companies that are too large for the plug-and-play inverter option have higher power requirements that need additional financing, says Eli Michal, chief executive of fintech lender Payabill.
Payabill was founded to help companies that today do not have the funds to buy shares from wholesalers to help them pay immediately. “We set up the bill with the supplier of goods without taking money out of a company’s cash flow. The company then installs or resells shares and has extended terms to pay us. It allows companies to smooth out their cash flow and earn more profit in the long run.”
Michal says the ongoing blackouts have created new demand for the company with two new markets: installers, retailers and resellers making use of Payabill’s trade finance solution with loans up to R1 million and SMEs as they Few can afford to install alternative energy and pay cash for a completely professionally installed system.
READ ALSO: Cost of rolling blackouts exceeds R1.2 trillion, small businesses suffer the most
The size of the billing does not always need the size of the power
Payabill Asset Financing fills this gap by paying the installer on behalf of an SME, giving them time to pay the expense.
Michal says the size of the business turnover doesn’t have much to do with the size of the alternative energy system needed. “You could have a business with a turnover of R15 million per year that only needs a car inverter or you could have a business with a turnover of R3 million that needs a much larger setup due to its power requirements.”
Those with low power requirements, such as a home office, probably won’t need professional installers and can simply purchase a lithium car inverter from a retailer that is appropriate for stage 6.
The cost varies between R10,000 and R20,000 for 750-1500 watts for a plug-and-play solution. However, Michal cautions against lead-acid or gel batteries, which are cheaper than lithium batteries, but won’t last through stage 6 load shedding.
Those with medium power needs typically include a small office environment, with three to five employees, or a small store that requires power to run basic items like lights and laptops. They need a solid seven to eight hours of non-stop work and need a 3kVA to 5kVA inverter with lithium batteries and automatic changeover at a cost of R30,000 to R80,000. They can upgrade to solar on time, which would offer a tax benefit and electricity saving. .
READ ALSO: An opportunity for solar providers to boost small businesses
Increased business energy needs
Michal says that problems start when the energy needs of companies are greater than this. “They need between 5 kVA and 12 kVA and they think they can set up a power solution themselves. Things start to get complicated, because the owners or managers find an investor at half the price everyone else is charging.
“But it has no warranty and the owner finds a friend who is not an electrician who starts tinkering with the distribution board. It never ends well. We will not fund this approach. We find that the biggest risk in the system right now is where people are trying to cut costs by using cheap equipment and unqualified installers.”
This is where Payabill can connect SMBs with competent installers and solid suppliers. Michal says that financing alternative backup power doesn’t show immediate cost savings, but it does reduce load-shedding anxiety and allows staff to perform optimally.
“If a business buys the right inverter, it could eventually upgrade to solar panels that will give them more power and generate savings and a tax benefit. Most companies operate during the day when the sun is shining so they can get the most out of their solar panels.”
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