Three quarters of the Millennial generation, a highly educated, tech savvy cohort who account for approximately a third of retail sales, say that they are willing to pay extra for sustainable offerings.
According to a recent report, 71% of respondents to a World Economic Forum survey say they want brands to act in an environmentally friendly and ethical way and 61% want to connect with a cause or social issue.
It is evident that people are beginning to demand that their products and services are developed and delivered with a reduced negative impact on society and the environment.
By 2025, Millennials are expected to make up 75% of the workforce, which creates an opportunity for businesses to tap into the new generation’s attitudes and help shape company culture, rather than resisting new ideas and approaches.
If smaller companies need an incentive, look no further than a Sodexo survey shows that 47% of people aged 16 to 24 believe SMEs are the right size company to work for - 5% more than those over the age of 40.
If you can operate your company in a way that is more helpful to society and the environment, then you are aligning with a growing consumer trend, while also establishing your business as the ideal place to work, thus helping you to compete for what is becoming a smaller talent pool.
As a small business accountant and consultant who has worked with over 10,000 clients, the team at Accounts and Legal have the experience and expertise to help your business adapt to the fast-moving business environment of today and get a step ahead of your competitors.
Only 15.5% of SMEs doubt that their customers are interested in environmentally positive business practices. If you look at multinationals, they are already paying attention and changing their Merger & Acquisition strategies in recognition of the new reality.
If corporate giants like Unilever, Danone and Johnson SEC start prioritising investment in companies pursuing a positive impact agenda, then the direction of the business environment is quite clear.
There are solid commercial reasons for companies to adopt ethical practices, but, as with anything new, the challenges need to be acknowledged.
The requirement to re-evaluate how you do business, audit supply chains and listen to opinions from employees and elsewhere can be time-consuming, particularly when the majority of SMEs feel all their efforts should be concentrated on building sales and scaling up.
The perceived cost of implementing change is the biggest hurdle, with 41% of CEOs at SMEs believing adopting ethical business practices will be too expensive.
Fewer (17.5%), are concerned about how they measure the impact of such practices – but measurement should matter and is actually key to convincing financial controllers and investors that your business is taking the right steps.
On the other hand, 88% of respondents to a survey of SME CEOs believe it is important to incorporate an ethical dimension into everything they do as a brand – and a similar percentage stress the importance of consumers seeing them act in this way.
In addition, nearly a third see no barriers at all to embracing ethical business practices.
Small and medium-sized enterprises, start-ups, scale-ups and all sizes in between, are the backbone of the UK economy.
SME contributions to the UK economy across the top 10 UK cities (ranked by population) are forecast to hit £217 billion by 2020 and businesses in this bracket are a catalyst for dynamism and innovation.
The combined annual turnover of SMEs in 2016 was £1.8 trillion - 47% of all private sector turnover in the UK and those companies capable of going the distance would be destined to become the business titans of tomorrow, in normal circumstances.
However, there are challenges today that did not impact the aspiring businesses of times gone by. SMEs are operating in a fast-changing societal and cultural environment, surrounded by a landscape of flat economic growth.
Futurists and analysts observe that the capitalist-consumer model familiar to the Western world for decades is in a period of upheaval; many studies suggest that people are transitioning from identifying themselves chiefly as consumers to creating a sense of self based on more than owned possessions.
We’ve already dived into the concept of the “Experience Economy” and there is good evidence to suggest this trend of post-consumerism, doing-over-having is become more and more apparent as younger generations enter their adult years.
The signs point to SMEs needing a new framework on which to base business strategy if they are to stay relevant and prosper – one that takes these societal changes into account.
SMEs can become hubs of innovation attracting talent based on their understanding of how people are changing what they truly value.
Findings suggest that businesses realise a sea change is underway and they have a role to play – seizing that role and setting goals, other than profit and growth, should create a stable foundation for growth.
What’s to gain? Everything, including success in a world where so many traditional consumer models are failing.
Companies willing to explore and create a new framework based on sustainability are aligning themselves with consumers of the present, and even more so, of the future.