Little businesses sustaining: the way forward
A project or a firm created on a small budget or for a small group of people, using small machines, less power and hired labour, located within a single place and producing few goods is called a small scale industry. In 1987, the United Nations defined sustainable development as development “meeting the needs of the present without compromising the ability of the future”. Now reading these definitions, doesn’t it seem logical for a small scale industry to take up sustainable initiatives? Think about it for a change.
A small scale industry is mainly a low-budget initiative. Non-sustainable methods of production, which mainly use non-renewable energy sources, are slowly getting depleted. As these resources become scarce in supply, there is an obvious surge in the price of these resources. Our low-budget small scale industry which produces its goods for a small, usually localised group of people will end up bearing losses. Their attempt to increase prices will reflect in a drop in demand. They will start to lose out on business and pretty soon end up becoming non-existent. As it happened with traditional Indian cloth weaving industry, a small scale industry which is dying due to globalisation and loss in sales. The high expenses and poor technology are making competition fierce for these dying arts.
Now there needs to be a solution to save these small scale industries from extinction.Well, research says that adopting sustainability practices “can make smaller companies more competitive in supply chains.” As in the case with large scale businesses, Small Scale Industries or Small Scale Enterprises(SMEs) taking a long-term view on managing environmental and social risks can achieve improved growth and cost savings, advance their brand and reputation, strengthen stakeholder relations, and boost their bottom line.
Strategic integration of sustainability will assist SMEs to better anticipate and respond to long-term and effect of resource use while addressing stakeholder expectations. In particular, SMEs that form part of a larger company value chains stand to benefit. Implementing sustainable business practices and demonstrating a passion for sustainability will unlock competitive advantages as larger companies prefer suppliers that observe best practice in harmony with their own sustainability objectives.
In addition to these benefits, SMEs that embrace sustainability in business will have a better understanding of the impact of systemic risk and resource constraints on business operations. Identifying and addressing Identifying and addressing environmental concerns related to products and services can be a differentiator in certain markets while opportunities for business innovation can be realised when environmental and social challenges are seen as opportunities to meet society’s needs.
Reasons for adopting sustainability may vary from company to company, but all have found that emphasising sustainability improves their profitability, generates greater loyalty and commitment from employees, and cements relationships with customers and suppliers. In fact, a recent Lloyds TSB survey found that 70% of SMEs are adopting a sustainable approach in order to secure new business while 54% are becoming sustainable to save money.
Now let’s look into some of the major benefits of sustainable business practices for SMEs:
- Developing a sustainability strategy and adhering to internationally accepted reporting guidelines, such as the Global Reporting Initiative (GRI) G4, will assist SMEs to unlock the benefits of sustainable business practices.
- Strategic Integration of sustainability will assist SMEs to better anticipate and respond to long-term trends and effect of resource use while addressing stakeholder expectations.
- In particular, SMEs that form part of a larger company value chains stand to benefit. Implementing sustainable business practices and demonstrating a passion for sustainability will unlock competitive advantages, as larger companies will prefer suppliers that observe best practices in harmony with their own sustainability objectives.
Rainbow Nightfreight is an example of an SME which has taken to sustainable alternatives. It operates a multi-user nightfreight service that enables it to provide high levels of vehicle capacity usage and minimise the distance of travel on outbound and inbound journeys. Compared to the fleet operations of its larger competitors, this offers an economic alternative, because it can take loads from different customers on every leg of every route, so has fewer empty journeys. This is one of the many examples of how small scale industries are making an attempt to work on what is lacking, particularly budget and man power.
Sustainability initiatives by SMEs will prove to be beneficial to them not just in the short run, but in the long run also. This is because in the long run, as all the factors of production become variable factors, if resources used are sustainable in nature, average cost as a whole will be on a lower side, plus the fact that profits will increase due to the above-mentioned advantages, one of them being a glorified brand image.
Sustainability and sustainable initiatives are the future and a beam of hope for a cleaner and brighter future for succeeding generations to look forward to.