As the US economy recovers from recession, America’s small businesses need to remember that going green often means making green.
Growth rates for green business products and services are rising faster than conventional goods in America’s economy, outpacing the overall economy through the depths of the recession, and creating opportunity for the 88% of US businesses classified as “microbusinesses” with five or fewer employees.
These findings come from “The Big Green Opportunity,” a new survey of 1,300+ businesses conducted in 2012. Respondents said the greener a product, the more likely its sales increase, with 75% reporting an increase in green business from 2008-2011 at a 19% price premium compared to traditional goods. It creates enormous potential for aspiring green entrepreneurs looking for business opportunities.
Consumer Demand Creates Green Business Opportunity
The survey hints at a shift in consumer demand toward sustainability creating “green competition” among businesses, especially those with high environmental footprints. 79% of small businesses – particularly those in the food, personal goods, and construction markets – say offering green goods or services gave their business a competitive advantage.
That competitive advantage is being fueled by massive growth of consumer demand in the green economy. “Green segments today are growing far faster than their overall industries,” said Denise Hamsler of Green America. “The growth we’re seeing today is off the charts.”
Green Building And Renewables Outpaced The Recession
The economic promise of green business is most strongly shown in the construction industry. When America’s housing bubble burst, the recession began – but not when it came to green building. Between 2005-2011, the green building segment grew 1,700% while the overall US construction industry shrank 17%
By the end of 2011, green building represented 38% of the US construction market, up from just 5% in 2005. Profits have followed growth, with green building worth $54 billion in revenue in 2011, and forecast to hit $200 billion in 2016.
Spurred on by the need to save money and green building’s market growth, small businesses have also overwhelmingly opted to invest in small-scale renewables instead of fossil fuel to power their operations and energy efficiency measures to help cut costs.
From 2002-2011, renewable energy consumption (solar photovoltaics, biofuels, geothermal, and wind) grew 456% while non-renewables (oil, natural gas, and coal) fell 3.2% Survey respondents also reported purchasing energy efficient equipment, training staff to conserve energy, and installing efficient lighting were the top three actions they took to produce the fastest return on investment.
Healthy Products, Healthy Profits
While not as massive as green building’s growth, sustainable food and personal goods are also turning healthy profits. The organic food market segment grew 238% from 2002-2011 to hit $29 billion in revenue, while the overall food market only grew 33% during the same period. That may represent just 4.2% of the overall food market, but profits are projected to more than double to $78 billion in 2015.
The same trend was seen, on a smaller scale, in the organic non-food market. Green goods like clothing, personal care, pet food, and household products grew 400% from 2002-2011 while the overall non-food market grew 33% Revenue also jumped, from $439 million to $2.2 billion.
Last but not least, the economic benefits of sustainable products extended to American investments, perhaps a harbinger of success for the growing fossil fuel divestment movement. Assets in socially responsible investing portfolios grew 32% to $2.3 trillion from 2001-2010, and produced a 13.2% return compared to 0.4% for the overall investment market during the recession.
Can Small Businesses Seize The Opportunity?
Add the survey findings up, and small businesses have a compelling case to go green – stronger and more stable sales with higher profits. “Adopting green practices provides even the smallest businesses an opportunity to grow,” said Tammy Halevy of the Association for Enterprise Opportunity. But like all other business opportunities, the window to grow green won’t be open for long.
The survey notes that larger companies are noticing the consumer trend toward sustainability, and small businesses risk ceding this “big green opportunity” to large corporations unless they act fast. If this happens, a top-heavy and exclusive green economy could take hold. Still good for the planet, maybe, but not nearly as good for Main Street America.