UK small businesses can win with lower eco-impact

The sector's growth plans include sustainability investments to lower costs.
17 January 2022

Britain’s Prime Minister Boris Johnson, reacts as he visits “Small Robot Company” stand, a start up company with plans to re-imagine the way technology is used in agrigulture and farming. Source: AFP

The small businesses sector in the UK has always been the fastest to react to prevailing market conditions compared with medium-sized organizations and large enterprises. The latter duo has the advantage of larger coffers to see themselves through, for example, a widespread pandemic, while the small outfits (less than £10m annual turnover) sail very much more closely to the wind.

Surveys as to attitudes in any sector should always be read with half an eye on the motives of the surveyor. In the case of the recently-released MarketFinance commissioned survey, the subtext is clearly on the company’s desire to sell more loan products to the SMB sector. Nevertheless, the figures published here [behind an email wall] show several noteworthy trends in the responses from the UK’s dominant SME/SMB sector.

The headline figure of 63% of SMEs expecting their company to grow in the next three years is perhaps the least surprising statistic. Many thousands of UK small businesses have simply gone to the wall in the last two years, so, we assume, were unavailable for comment.

Those surviving will almost invariably have seen some terrible results since spring 2020, so the survey’s executive summary of “optimism is tempered by caution” expressed by the remainder is perhaps unsurprising (“pleased still to exist” might be more accurate in some cases). And given the appalling trading experienced by most companies over the last two years, the assumption that better things are around the corner, therefore, is probably optimistically hopeful. After all, surely things can’t get much worse?

Among the growth opportunities seen by the small biz sector, according to the survey, is sustainability, with 81% of respondents saying they have plans to “invest in sustainability,” compared to 34% that see selling overseas as a growth opportunity. The survey’s contents are thin on the detail of what these green investments might comprise, but the reasons behind such an overwhelming desire to increase green-flavored spending are fairly clear: while there’s public demand for companies that act conscientiously, the driving impetus for most must be to reduce costs, and perhaps lower carbon footprint by proxy.

The high power costs the UK economy is experiencing currently must have to play large in many companies’ reckoning at present. Lowering carbon footprints by reduced power consumption means companies can save massively on running costs.

The survey also reflects that many small companies were led by circumstances to sell their products and services online during the COVID outbreaks and that this channel will remain attractive for sellers and buyers alike. Resultingly, digitization is seen by the survey’s respondents as a popular area in which to invest.

However, the levels of those intended investments are not clear, either monetarily or as a proportion of overall projected spending. Elsewhere, the survey states that 51% of total future investment funds will come from current holdings (34%) and “as the business earns” (21%). Given the sorry state of many companies’ balance sheets at present, plus the debt burden many are feeling [paywall] from the less-than-ideal interest rates of tiding-over loans from the UK government, available monies are likely to be small. Therefore, investment in digitization may be fairly safely assumed to be consolidation and improvement, rather than refreshing the IT software and hardware stacks on a large scale.

One area that companies can look to lower costs is repairability. Discarded IT hardware is disastrous ecologically, and buyers have a responsibility to pressure manufacturers to stop building-in obsolescence. In the US, the “right to repair” movement is gaining ground, while Europeans focus more on the ecological impact of their buying choices. But differences in terminology hide what are effectively the same motives: lower costs and lower ecological impact.

The small businesses sector in the UK comprises around half of the country’s employment and half its privately-generated revenue. Speaking as one voice to OEMs with regards issues like IT re-usability, power consumption, expected lifespans, and use of kosher supply chains will have more weight than many large enterprises’ annual procurement choices.

The small business sector needs to cut costs to drive those expected growth figures: with technology now an integral part of every organization, the choices companies make in IT are gaining importance as economics and ecology get inextricably linked in these hard times.