The Pros and Cons to Being a Green Business
This is a guest post by Stefan Doering.
Recently I’ve met with a couple of green businesses, at opposite ends of the spectrum.
The first one is a manufacturing company making all-natural chemical cleaning products for commercial use. For the past several years they have had an annual sales growth of over 100%. This year it looks like they will far surpass that number.
They drive a delivery van fueled for free from their restaurant customer’s grease that is filtered into bio fuel, which saves their customers from having to pay to send it to a landfill.
The other company just closed their doors after about five years. They were a local green retail store here in Brooklyn. They offered all-natural products for the home in a general store setting. Giftware, baby products, housewares and so on. As a service to the community, they collected used batteries for recycling. The last time I went in to speak with one of the owners, there were piles of used batteries around and not too much inventory. She was exhausted and seemed almost resigned to the fact she would not make it.
And I’ve seen that look before. In me. Twelve years earlier when I tried and failed at a similar concept in a much larger scale.
After having been working in and with green businesses for over 20 years, this is what I see as their pros and cons:
Pros of Being Green:
- Green is Hot—Is it a fad or is it here to stay? The answer is “yes”. It is a fad and it will stay. Mostly because it must stay. These days everyone wants to be seen as being green. If you have something that people need that is superior to non-green alternatives, you can do well in certain situations.
- Solid Business Opportunities—if you have a product or service in the energy, clean tech or green tech sectors, or are dealing with everyday challenges people face AND are competitive in your product/service, you are in a good place.
- Marketability Factor—since the media is still hot for green, businesses can definitely find unique ways to milk this one. Just make sure you do it authentically, otherwise you risk getting busted for greenwashing—claiming you are greener than you really are.
- Easier to Compete—as long as your product is just as good as or better than non-green alternatives out there you’re in good shape. Even if you cannot compete on price, there are solid strategies to position your product/service to be quite desirable.
- Strong Feel Good Component—if your product / service really makes a difference for the planet and society, you can certainly leverage this in your branding and marketing. People like knowing what they purchase is going to help more than just themselves, with everything else being relatively equal.
- More Stable—businesses that build not only a profitable business but one that integrates the social and environmental components that surround it, usually do better than their “non-green” competitors. See Sustainability a Better Brand of Business? by Gary Langenwalter.
Cons to Being Green
- Green is Hot… Right Now—those green businesses that market, position and brand themselves as “green” as the main message will struggle when the green wave subsides. Knowing how to stay hot without relying on “green” as the key differentiator is crucial.
- Keeping Up—since green business is here to stay (not to be confused with the “buzz” or fad of being green), keeping ahead of the competition in new green technologies and strategies can be quite challenging at times. For example, it is so ‘90’s to say, “We’re green because we use recycled paper and soy based inks in our materials….”
- Complex Business Model—it’s hard enough to focus on one bottom line: profits. Try focusing on three! True green businesses not only focus on being profitable, they also take responsibility of the impact their business has on people and the planet (known as the triple-bottom-line or the three p’s.)
- Juggling Hats¬—most green business owners I know are traditional business people OR environmentalists, but rarely both. To thrive as a green business owner, you must be great at both!
- Play By the Same Rules… For Now—many green business owners expect people will come flocking to their product or service because of how green it is. They usually are in for a rude awakening. If it does not compete on the traditional business components of: functionality, quality, fashion, and/or price it will not succeed. Guaranteed. This may change, but not yet.
And while we’re light-years ahead from where we were 20 years ago, the green business model is quite new and we’re still ironing out the kinks. Green businesses, just like traditional businesses, must still pay rent, make payroll, figure out marketing and branding strategies and so on. But there is one major difference. When a green business is done really well, you will see the positive social and environmental impact it has… while making a solid profit. And when that happens, it really doesn’t get any better than that.
Stefan Doering is Owner of BEST Coaches, Inc. and has worked with hundreds of green businesses as well as teaches green entrepreneurism for various NYC programs and at Columbia University’s Center for Environmental Research and Conservation.
Gaia Shine photo: Flavio Takemoto at sxc.hu