Environmental consciousness has become more than just a buzzword, as conversations about the long-term impacts of business decisions and which investments are worthwhile are driving an increase in eco-friendly industries. These trends have created a global ripple effect, spurring the creation of new businesses as well as changes to existing ways of operating.
These sustainable shifts have created an opening for entrepreneurs to succeed and make their own mark in this space. From starting a new enterprise to changing the focus of an existing company, the opportunities are ripe right now for entrepreneurs to earn a living while making a positive environmental impact.
Getting Started with Green Business
You may be wondering, “How do I start a green business? Is being environmentally friendly profitable?”
The first step to answering these questions is to define your business model. Traditional business models list out all the steps in creating and delivering a product or service, including how raw materials will be sourced and additional supply chain considerations.
Green business models build on this concept, focusing on minimizing the company’s environmental impact instead of maximizing profitability. While profitability remains crucial to success, the company is also willing to invest in sustainable factors such as reducing energy consumption and offsetting its carbon footprint.
However, it is not necessary to sacrifice profit altogether. There are actually many financial incentives to operating a green business. Customers are increasingly seeking out eco-friendly options and showing a preference for businesses that prioritize sustainability. That means there could be a large demand for your offering, and you could potentially even charge a premium. Additionally, there are often tax benefits and government subsidies that reward businesses who are making green choices. Finally, while there is generally an upfront investment associated with some choices—such as the cost to install solar panels—these choices may help you reduce costs in the long-term by increase energy savings
Once you’re ready to move forward, you may find you are in need of business financing. While reports do indicate lower success rates for obtaining a bank loan, don’t be discouraged by this trend. There continue to be many financing options for entrepreneurs, as data indicates that the number of businesses utilizing alternative lending—such as business credit cards, crowdfunding, online lenders, factoring, and merchant cash advances—is on the rise.
With proper green business model planning and financial preparation, it can be both feasible and profitable to get a new, eco-focused business off the ground.
Examples of Eco-Friendly Startups
Environmentally friendly business ideas can take many forms, from starting a completely new company to taking an existing service and shifting it to specialize in eco-friendly issues.
Here are a few opportunities to consider:
- Fill a community need with an eco-friendly business. Often it’s not about what you do but how you do it. From housekeeping services to nail salons, many companies can become greener by utilizing eco-friendly business products. This is an opportunity to take a business you already run and transform it in an eco-friendly way.
- Add a green specialization to commonly used services. More people and businesses are interested in going green but may lack the knowledge to effectively do so. Fill this niche by specializing in green topics with your services in common fields such as consulting, practicing law, conducting energy audits, and writing.
- Champion re-usable products. Resources that facilitate the supply chain are a prime place to look for environmental improvements. Create and distribute your own reusable product to take some of the burden off of landfills, or facilitate common business waste needs such as recycling or composting.
- Extend a product’s life cycle. Another way to reduce the amount of waste created is to find a new use for old products. Upcycle furniture, or open a used book store or clothing store.
Make Green Investments with ESG Funds
If starting a new business isn’t currently for you, another way to actively participate in green business is to invest in ESG funds. ESG stands for environmental, social, and governance, and ESG funds are mutual funds—not individual stocks—that are scored by their stated intentions and actions in those categories.
ESG funds offer several potential benefits to investors. First, they provide an opportunity for any individual or company to back ESG-minded companies. And, investing in mutual funds helps mitigate risk, as the performance of each specific company becomes less important than that of the collection. If one company loses value or goes out of business, the other companies in the portfolio will hopefully balance the loss.
Additional Resources for Small Business Owners
Dun & Bradstreet offers educational resources and insights to help small business owners realize their dreams of becoming eco-minded entrepreneurs and growing successful businesses. Explore our website for more small business management tips and inspiration.
The information provided in articles and blog posts are suggestions only and based on best practices. Dun & Bradstreet is not liable for the outcome or results of specific programs or tactics. Please contact an attorney or tax professional if you are in need of legal or tax advice.