Sustainability in modern SMBs

| January 23, 2019

Nowadays, more and more businesses are considering becoming more sustainable and environmentally friendly. It’s no secret that the climate change is having a serious impact on the world. Global warming has caused extreme weather, temperature oscillations and natural disasters, which have become a more common occurrence than ever before.

Today, SMBs and startups, founded mainly by environment conscious millennials, are striving towards making a difference when it comes to green and sustainable business. This newest trend is also encouraging investors to rethink their policy on investing in good businesses. Now, they are focusing on businesses that aren’t just performing well financially but also those which are positively contributing to modern society. Therefore, let’s have a look at sustainability in modern businesses.

More profitable businesses

Going green and becoming more sustainable isn’t just appealing to business owners and investors but to modern consumers as well. In recent years, consumers have added “environmentally-friendly”, “green” and “sustainable” criteria to their list of expectations from businesses.

Companies and businesses that are able to meet that criteria will favour more attention and goodwill from consumers. Moreover, studies have shown that companies across various industries that operate in compliance with Environmental, Social and Governance (ESG) tend to be more profitable than their competition that doesn’t operate ethically.

More interest from investors

As mentioned before, investors, nowadays, are more interested in businesses that are sustainable aside from having good financial performance. What’s interesting is that global socially responsible investments have increased by 25%, thus reaching $23 billion worth of investments.

The fact of the matter is that companies have a greater likelihood of gaining investor support if they provide ESG reporting analysis for their business alongside general business analysis. It seems that the definition of “a good business” for investors is shifting from corporate to sustainable and eco-friendly businesses.

Higher success rate

Sustainable businesses have higher chances of success and more growth potential due to their positive social impact. That being said, consumers are going all out when it comes to sustainable and socially aware brands. In fact, 66% of global consumers are willing to pay more for products or services provided by environmentally-friendly companies.

Moreover, 87% of consumers in the U.S. alone are willing to buy products from companies that will address specific problems consumers are oftentimes faced with. With consumers willing to support sustainable businesses, the chances of success for such companies vastly increases. Not only that, but those companies are more likely to survive on the market for a prolonged time period than other businesses.

Good reputation

Today, a business reputation is as important as its delivery of exceptional products or services, or delivering a seamless customer experience. Many SMBs take years to build their reputation in the online world. However, sustainable businesses favour good reputation from the start, mainly because consumers look kindly upon such businesses.

Such businesses will still have to prove themselves to consumers but they’ll have it easier than other companies for sure. The main reason is that 42% of a company’s reputation is based on how consumers perceive it, and sustainable business look good in the eyes of the consumers.

A growing workforce

Millennials have taken over the work force market and they are the kind of people who want to make a difference in the world. Sustainable SMBs will have more chances of attracting the right kind of employees and top talents due to their social impact and eco-friendliness.

The main reason is that making a social impact is one of the top engagement drivers among employees today. In other words, people looking for employment will more likely choose to work for a sustainable business than other alternatives presented to them.

Sustainability, nowadays, has become an important factor for business success. SMBs should strongly consider adopting a more environmentally aware approach to their business, in order to secure not just their success on the market, but favourable support from investors and consumers alike.

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Keith Coppersmith

Keith Coppersmith is an Adelaide based business consultant with a degree in Media Management. With experience in numerous small businesses and startups, he enjoys giving advice on all things marketing.