By Nellie Lide
Dr. Karel J. Samsom, a specialist in environmental and sustainable entrepreneurship and author of Spirit of Entrepreneurship told Entrepreneur magazine that green business is “… a highly underrated opportunity for small business.”
What are the opportunities for small businesses that want to “go green”? Every industry, every hobby, every action can have a shade of green. Broadly, green means either improving the planet or improving its people or both. Any process, product or service that saves natural resources or re-uses these resources is considered green. Any effort to help people live healthier lives is green. The green umbrella also includes the growing field of social entrepreneurship — a business which sets out to solve a social problem while at the same time making money.
Are people really buying green? The answer is yes — although many green businesses find it helps to sell quality and price first, and green bona fides second.
Some 63 million American consumers are classified as LOHAS (those with “lifestyles of health and sustainability.”) According to the Natural Marketing Institute, this means that they “have a profound sense of environmental and social responsibility … these consumers are also the most likely of the segments to buy environmentally and socially responsible products.” These are the customers who, according to Fast Company magazine, “… have proven themselves willing to spend up to an astounding 20% premium on clean, green products ….”
Add to that another 38% of consumers who “are less resolute in their LOHAS attitudes, though still show moderate levels of related concern and select LOHAS behaviors (such as recycling, among others), and you have an incredible consumer base which at the very least open to green ideas and products.
So where are the best opportunities for entrepreneurs? Here are four:
1. Organic Products — We’ve all read about the exploding organics industry – there are organic cosmetics, toiletries, vodka, pasta, tea, waffles, peanut butter – but there is still tons of room for growth here particularly since, as Andrew Zolli wrote in Fast Company, “With two huge generations dominating American society — the baby boomers, who created the first draft of contemporary environmentalism, and the millennials, the most globally connected cohort in history — principles of conscious consumption will come to dominate the brandscape.”
About 75% of shoppers buy organic products at least occasionally, up from 55% in 2000; 23% buy them at least once a week. (Supermarket News, 8/27/07, subscription required)
Organics are here to stay – Goldman Sacks snalyst Steven T. Kron said, “We believe that the recent surge that organic foods have experienced is not transient, but rather a sustainable shift in food consumption with ramifacations up and down the food chain.” (Associated Press, 7/13/07)
U.S. organic food and beverage sales totaled nearly $17 billion in 2006, representing 3 percent of all retail sales of food, up from 2.5 percent in 2005 and 1.9 percent in 2003. So though organic retail sales have grown between 20% and 24% each year since 1990, that’s still only 3% of the category.
One example of an organic company is Eco Lips, which makes organic lip balm. From Entrepreneur magazine: Placed “anyplace that has a cash register,” the product, which is made using solar energy, is an easy sell to consumers who not only want to buy green, but also want a quality product. “It’s so inexpensive, and it’s a gateway organic product — people will try Eco Lips and maybe have such a good experience that they’ll want to try organic orange juice or organic cotton sheets,” says [Eco Lips co-founder Steve] Shriver.
2. Trash — Thar’s gold in them there rubbish hills. According to the EPA, Americans generated some 245.7 million tons of garbage in 2005 (latest figures available.) That’s 4.54 pounds of trash per person per day. Here are some of the things we throw away:
- Americans currently dispose of 128 million cell phones a year, only 1% of which are diverted from landfills. This does not include the 2 million tons of used electronics we also discard annually.
- A typical baby goes through around 5000 disposables during its diaper days; across the U.S., this adds up to an astonishing 20 billion each year, enough to cover a football field with a three-mile high pile.
- Each year, 3.5 billion wire hangers end up in U.S. landfills. (Reader’s Digest, June, 2007) Americans throw away 2.5 million plastic bottles every hour. (Illiinois Times, March 8, 2007)
You get the picture. If you can figure out new uses for a specific garbage item, you’ve got yourself a business. Terracycle makes plant food from worm poop and packages it in recycled soda bottles. One company, EVCO Research in
Atlanta, Georgia uses scrap plastic beverage and water bottles to make water repellent coatings for cardboard boxes used for shipping fruit and meats. Chicago Cargo Bike and Trailer Co. makes bike trailers out of reclaimed materials. ReCellular, Inc. collects, recycles and resells cell phones. They process around 300,000 phones a month – which still leaves over 120 million phones in the trash.
3. Government — including Federal, State, County, and City levels. How are governments an opportunity for small business? Three ways:
- Find out what your local government is doing re “green” – and craft a service to meet their needs. A good place to start is The SustainLane Government Knowledge Base where, according to Shirl Kennedy at Resource Shelf, “You can read full documents submitted by urban planners and sustainability managers from across the country. Find out what cities, counties, and states are doing to improve their carbon footprints, quality of life and resource efficiency. Find the latest programs in urban ecology.”
- Create a service or a product that helps other local businesses comply with environmental regulation/laws/ordinances that apply to them. For instance, San Francisco recently banned plastic bags. Can you supply a biodegradable or recycled or reusable alternative to retailers?
- Take advantage of government grants and loans encouraging green practices. From the Wall Street Journal: “The government is also giving small businesses a spur to go green. Just as large companies receive government breaks for environmental-friendliness, the Department of Agriculture offers a Small Business Innovation Research Program that offers awards of $80,000 to $250,000 for using certain environmentally friendly practices in selling or processing wares. The Environmental Protection Agency gives grants to small businesses involved in environmental industries and initiatives. On a state level, New York awards funds to small businesses that are involved in projects such as pollution prevention and recycling.”
RubberForm Recycled Products LLC, in New York, recycles old rubber, such as tires, and turns it into new products. The owners use federal, state and local funds (and private investments) to launch their business last year.
4. The Green Lifestyle — As I said earlier, just about anything we do in our regular lives can be transformed or altered into a green state. So if you examine your own life, you might come up with something you do everyday that could use a green element. Do you use a lot of paper — how about making recycled paper? It’s only left to your imagination. Here are some of the small businesses created around the green lifestyle that may spur your thinking:
- Green Singles — find your perfect match in the environmental, vegetarian, or animal rights community.
- Vivavi — eco-friendly furniture and home design.
- Stay at a green hotel.
- Save your money at a green bank — ShoreBank Pacific is the first commercial bank in the United States with a commitment to environmentally sustainable community development.
- Working Assets Funding Service issues a “socially responsible credit card.”
- Build and live in a green home
- Memorial Ecosystems – Bury your loved one in a green cemetery. From their website: “Our main focus is to develop multi-functional memorial nature preserves that we create with the cooperation and assistance of non-profit organizations. Through becoming members of the preserve during life, and choosing burial in the preserve after, our clients leave a permanent legacy for their families, their communities and the natural world. We are committed to being the leaders in environmentally and socially responsible death care.”