Small businesses are the backbone of the global economy. A recent report published by the World Economic Forum (WEF) found that small businesses create 66% of jobs and support the livelihoods of 2 billion people.
Unfortunately, the WEF report also suggests that many small to medium-sized enterprises (SMEs) struggle to adopt sustainable business practices. This is entirely understandable, as SMEs may not have the time or financial resources necessary to tackle the climate crisis and engage with environmental, social, and governance (ESG) issues.
However, SMEs that want to adopt more sustainable business practices can find support from an unlikely source: Mom-and-pop shops.
The small scale of mom-and-pop shops means they are innately sustainable. Small family-owned businesses bolster the local economy and often source their goods from sustainable suppliers, too. This makes them the perfect case study for any firm looking to revise their ESG policies with sustainability in mind.
The Benefits of SME Sustainability
Sustainability isn’t just good for the planet — it’s good for business, too. Consumers want to buy from brands that take their commitments to ESG seriously and will pay a premium for goods and services that restore the earth rather than deplete it.
Going green can help SMEs win grants and get tax breaks. A number of states offer tax reductions to businesses that are environmentally friendly. The federal government offers a tax break to companies that source 30% of their energy from wind or solar, too. This can cut the company’s utility bills and help small firms reinvest their profits into future projects.
Sustainable mom-and-pop shops benefit from built-in PR and branding, too. Eco-friendly products are growing in demand and publicly adopting sustainable products can help smaller firms stand out from the crowd. This is particularly important today, as the global economic downturn has put pressure on small businesses around the world.
Using Sustainability to Compete
Sustainability can help small brands stand out in crowded business markets. However, becoming more sustainable requires a forward-thinking, tech-savvy approach. Fortunately, mom-and-pop stores today can use a fleet of sustainable tools to future-proof their business like:
- Automation: adapting AI-driven automation technology can reduce waste and emissions, boost businesses’ adaptability, and minimize costly human errors. Automation can spot supply chain inefficiencies and help small businesses target areas of their operation that are responsible for carbon generation.
- Inventory Management: Small businesses may have a hard time manually tracking the stock that comes through their doors. Rather than paying for laborious checks, SMEs can barcode their stock and keep tabs on it using automated programs. This reduces waste and can help with record keeping.
- Customer Engagement Strategies: Sustainability is good for small businesses branding. However, consumers won’t know about the steps the company is taking without a clear marketing strategy. Small businesses can easily personalize their branded content to connect with consumers that authentically care about the environment.
Writing for the Stanford School of Business, Sachin Waikar explains that SMEs who take steps to modernize their business can increase “average sales in the shorter and longer term,” and improve brand awareness. Modernized, sustainable businesses have an “overall positive impact on the local small business economy,” too. This confirms the notion that even the smallest of corner shops should take steps to set sustainability goals and adopt environmentally friendly business practices.
Setting Sustainability Goals
The decision to run a more sustainable business can improve profitability and increase brand awareness. However, simply stating that the business “should be sustainable” will do little to move the needle. Instead, small businesses that want to follow through on sustainability goals can take actions like:
- Set SMART Goals: Good goals should be “Specific”, “Measurable”, “Achievable”, “Relevant”, and “Time-Bound”.
- Avoid Greenwashing: Greenwashing is a deceitful marketing tactic that swindles consumers into believing that a brand is environmentally friendly when, in reality, it is not. Avoid greenwashing by focusing on goals that make a real difference to climate change and the local environment.
- Supply Chain Clean Up: Even small businesses are connected to a weighty supply chain. However, some suppliers have a poor track record when it comes to carbon use and environmental degradation. Opt for local suppliers when possible and check for green certifications.
- Minimize Waste: Mom-and-pop style businesses are innately low-waste. Waste usually constitutes an avoidable cost and is, therefore, minimized in corner shops and small retail stores across the nation. Small businesses can follow suit by tracking the product lifecycle from production and packaging all the way to consumption and end-of-life disposal.
These sustainability-oriented goals won’t just minimize carbon use and environmental harm — they’ll cut costs, too. Small businesses that choose to reduce, reuse, and recycle their products spend less on waste removal and won’t need to keep warehouses of unsellable stock. Similarly, mom-and-pop shops that clean up their supply chain may find more cost-friendly suppliers in their local town or city.
SMEs that set sustainability goals can make the process that much easier by digitizing their business. Mom-and-pop shops may be notorious for being “behind the times”, but the decision to upgrade to digital solutions will pay dividends in the future. SMEs that go digital cut down on paper waste, reduce their energy consumption, and increase the speed of their communications. This can help explain the new “green policy” to relevant stakeholders and improve customer loyalty in the short and long term.
Going green isn’t just for big brands and multinational corporations. The decision to take a more sustainable approach can improve small businesses’ bottom lines and bring more consumers through the front door. Green SMEs are eligible for tax breaks and government grants, too, which can make the transition that much easier.
Small businesses that want to improve sustainable business practices can draw inspiration from mom-and-pop shops. Family-owned firms are inherently waste-averse and have a hands-on approach to everything from supply chain management to recycling and inventory management. This mindset can benefit other SMEs that may have previously overlooked carbon-intensive suppliers or ignored the mountains of plastic waste they produce every day.