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Study: Small Businesses May Suffer as Green Economy Grows
Green Technology Featured Articles
June 10, 2013

Study: Small Businesses May Suffer as Green Economy Grows

By Jacqueline Lee
Contributing Writer

A study released by the Association for Enterprise Opportunity, EcoVentures International and Green America warned that when the green economy reaches maturity, small businesses may find themselves on the outside.

Green industries are growing at a rapid pace in the U.S. The numbers that the study compiled for market growth between 2002 and 2011 speak for themselves: organic food, 238 percent; organic non-food, 400 percent; renewable energy, 456 percent; green building, 1,700 percent; and Fair Trade imports, 1,442 percent.


About 88 percent of all businesses in the U.S. have five or fewer employees. These companies are not well-positioned to capitalize on the green economy because they tend to have less market insight and less capital than their large corporate counterparts. Most small businesses can't afford a large sustainability push, and they don't have a large payroll of sustainability experts.

However, the study asserts that small businesses can find niches in the green economy with "laser-like focus on meeting needs of existing customers and attracting new customers willing to pay 'green premiums.'"

Small businesses trying to capitalize on green need more help in certain places where growth is rapid. For example, if regulations are driving green growth, and large corporations are already cashing in, then the barriers to entry can be much higher for smaller players.

First, small businesses have to start by going green themselves. Business operates in a resource-constrained environment, and small companies have to take advantages of the cost savings provided by energy efficiency and other green strategies.

Second, they should fully embrace green. Of the 1,305 businesses studied, the ones with the deepest commitment to green products and services were the ones with the higher profit margins. For these businesses, green products tended to be more profitable than conventional offerings.

For their efforts, small businesses can rely on an increasingly green supplier network. The U.S. has over 160 green certification programs and 35 green industry associations. The infrastructure is in place to allow small businesses to grow.

If small businesses don't take advantage of the green economy while it's young, then they may find themselves pushed aside by the bigger kids. "If that is the case, we could end up with a top-heavy green economy, one that’s better for the planet but economically exclusive," the study concluded.

"The benefits won’t trickle down and small business will suffer. That’s not in anyone’s best interest."




Edited by Alisen Downey


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