The Majority of Small Businesses are Going Greener

For the first time since Office Depot has had environmental questions in its Small Business Index, over half of Small Businesses (SMBs) in America are committed to going greener. According to the March results of the Small Business Index, 51 percent of SMBs plan to be more environmentally conscious in 2016, versus 34 percent in 2013, a 50 percent growth in interest within just two years. This could be seen as an indicator of a real tipping point in the environmental sustainability movement.

In 2013, and again in 2016, the main motivator for small businesses to go greener was concern for the environment. The second main motivator was saving money. By contrast, for SMBs not planning to go green, the main challenge remains perceived cost. As I explored in an earlier blog post, the surprising economics of sustainability, there is a strange dichotomy between those who want to go greener to save money, and those who don't want to go greener because they worry about higher costs. In this year's survey, 24 percent of SMBs indicated cost as the main barrier, compared to 23 percent in the 2013 survey - persistently making it a perceived challenge.

We wanted to see if there was a way to distinguish SMBs who believe green initiatives save money and those who believe it is more costly. Perhaps we found an answer: size. Smaller SMBs - those with one to five employees - prioritize environmental initiatives less than their larger counterparts. Small SMBs are less likely to have eco-conscious initiatives and are less likely to purchase green products. The main reason they cite is the cost.

This finding may not be surprising: the smallest SMBs tend to have smaller budgets and may not have funds to invest in green initiatives. According to the 2016 SMB Index, SMBs with one to five employees spent an average of $123 on greener products in the last 90 days, in contrast to large SMBs (50-99 employees) that spent an average of $1,150 in the same time frame. That higher spend is partly due to simply having more employees, but it is also driven by the larger SMBs being willing to invest in green efforts that result in payback over time.

So, the challenge for those trying to accelerate momentum on environmental sustainability is, "What will it take to ensure all SMBs, including the smallest, make the leap and go greener?"

Here's an idea: only focus on green efforts that save money right away. Here are a few examples: remanufactured toner cartridges cost less because they are made of reused components (see this video about the process), and many recycled office products such as file folders or cardboard boxes are often less expensive than their original counterparts; encouraging employees to avoid waste; championing behavioral changes among employees that save energy and related utility costs. In addition, asking employees to find ways to monetize products that have reached the end of their life cycle can help stretch funds by saving a few extra dollars. For example, Office Depot and other retailers offer rewards for empty ink and toner cartridges, and resources like Optoro allow small business retailers and wholesalers to easily resell unwanted inventory.

Once a small SMB has exhausted all the greener products and initiative ideas that save money right away, a good strategy is to take some of the savings and invest in green initiatives that pay back over time. For SMBs that pay their own energy bills, perhaps the best idea right now is to retrofit lighting with LED lamps and tubes. While this takes an investment upfront, the payback is often less than one year, and many utilities currently offer rebates that bring the cost of the bulbs much lower, in some cases almost free. The rebates won't last however, and the quicker the retrofit is done, the quicker the bottom-line savings. Here's a video showing how one furniture store saved over $250,000 in five years by being an early adopter of LED technology.

Lastly, SMBs can save by buying for durability or extendibility rather than one-time use. This not only saves money and time, it can reduce waste in a significant way. Buying cheap or disposable items may seem fiscally responsible, but if you're buying them repeatedly, you're draining cash. Buying servers that meet you current needs but that aren't scalable for future growth means sunk investments. Smart SMBs can avoid this by making investments in more durable products such as modular furniture, or rechargeable batteries and cloud-based technologies that support growth.

But, it is not only about money for small SMBs. The 2016 Office Depot Index showed that these smallest companies also care the most about environmental sustainability. SMBs with one to five employees are 18 percent more likely than larger SMBs to mark concern for the environment as their chief motivation for adopting green initiatives. And, larger SMBs are 14 percent more likely to focus on the side benefits of going green - such as profit and promotion as strong motivators. As such, despite perceived costs that hold them back, smaller SMBs genuinely want to be greener out of an authentic belief that it's better to be green.

By starting with cost-saving ideas only, small SMBs can take a stepping-stone based approach to going greener. And if those stepping stones allow savings that enable investment in growth, perhaps going greener can become a path to long-term economic sustainability, as well as environmental.