Jul 11 - McClatchy-Tribune Regional News - Carol Lawrence The Record, Hackensack, N.J.



It's a tough economic climate out there, especially for the new and the green.

While many small businesses are finding it difficult to turn profits, those selling green products or services face the extra hurdle of introducing something new that typically costs more upfront.

In response, entrepreneurs are changing their business models, switching target customers, or in some cases, putting the company on hold.

"We've adapted accordingly," said Frank Celli, CEO of BioHitech America LLC, about the Allendale company's shift from selling high-volume food waste reduction systems to leasing the machines -- a response to customer preference.

 Selling a new technology that solves a problem differently is one of the hurdles facing newer ventures such as the four-year-old BioHitech, because customers must change their habits to use it.

Celli said businesses that generate high volumes of food waste -- hospitals, supermarkets and hotels -- must be convinced it's better to operate the machine, which converts food scraps into a liquid that can be released into sewerage systems, than to toss the waste into the garbage, eventually adding to the volume in landfills.

Customers pushed to lease the machines rather than buy outright, Celli said. Leasing now makes up 90 percent of the business, he said, as opposed to four years ago, when sales were 100 percent.

For customers in today's economy, it's either "the bottom line or environmental stewardship," Celli said, "and they don't necessarily go hand in hand."

John Mickowski, chief executive officer of Common Ground Recycling Inc. at the Meadowlands Commission Business Accelerator in Lyndhurst, has run into resistance from potential buyers of his tire-cutting equipment, which punches recyclable 2-inch squares out of the rubber.

Tire dealers and recycling plants were interested but not ready to replace old-style tire-grinding machines with his new process, said Mickowski, even though it costs less, uses less energy and produces pieces that burn cleaner and have more uses because of their consistent size and clean edges.

"We haven't gotten traction yet," said Mickowski. "No one wants to be the first, even though the payback is less than a year. It's a very conservative, non-tech industry."

Mickowski said he's shifted strategies to seek state economic development funding and private-sector capital to build his own recycling plant in the hope of attracting customers to buy the equipment.

Adapting his business model has kept Mickowski afloat at the commission's incubator, which assists 16 mostly green-focused start-ups. But two clients have left recently due largely to the economy.

Rob Schucker, owner of former incubator client Eco Earth Design LLC, has put his sustainable landscape and green-roof design service on the back burner for now, he said, after starting the service in mid-2008.

"Our focus was looking at commercial buildings, and because the commercial market was in a real tough spot, building owners and developers were hesitant and reluctant to invest any more than they had to," said Schucker.

Reduced state subsidies to homeowners installing energy-efficient technology have also put the squeeze on start-ups offering the products.

One of those is Renewable Resource Systems LLC in Ramsey, which Steve Tesoriero launched in January 2009. The company performs energy audits of homes, oil-to-gas conversions and solar-heated hot water systems.

Subsidies from New Jersey's Home Performance with Energy Star Program fueled 70 percent of his work, said Tesoriero, who has shifted to pursuing commercial clients and is pushing the solar systems, he said.

"I think commercial entities can justify the cost in financial terms whereas in residential, it's tough," said Tesoriero, although homeowners would see a 25 to 30 percent reduction in energy consumption and see returns on investments in four to five years, he said.

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