We can create good middle class jobs for 100,000 people in the U.S., address climate change, and cut small businesses’ operational expenses so they are more competitive. All we need to do is one simple thing.
There are 4.5 million incorporated small businesses in the U.S. with fewer than 500 employees, a subsection of the 23 million small businesses in the U.S. that includes sole proprietorships and incorporated businesses.
Small businesses are the backbone of the U.S. economy. They are nimble and adaptable. Owners struggle to juggle production, sales, taxes, environmental regulations, health and safety and a host of other issues to stay in compliance and stay in business.
We should be doing all we can to support their success. Small businesses are the heroes of our economy. They pay taxes that support our schools, roads, police and fire departments. They spend money locally. They give donations of time and money in their communities. They are the first to hire back after a recession.
Small businesses are so busy trying to keep the doors open that sometimes they don’t have time to explore operational efficiency. We need them to be more efficient. Not just a little, a lot more efficient. The hope of a stable future climate rests in part on small businesses becoming significantly more streamlined. Zero net energy, zero net water and zero waste are all goals we know how to achieve. Implementing sustainability projects would happen much faster with someone inside the business to focus singularly on these projects.
Picture one person splitting their time among two small businesses in the same city for three years. Think of how many energy efficiency, water conservation, waste prevention, alternative commuting, and environmentally preferable purchasing projects they could get done in three years.
A federal or state revolving loan fund would pay for their labor. Half of the savings realized from the zero net projects would go back into the revolving loan fund to fund additional sustainability managers. Businesses would keep half of the savings.
Choosing the small businesses
Not every business would qualify to participate. They would need to meet certain thresholds.
I’ve developed the conceptual framework for an algorithm that will determine which small businesses would benefit from having a full-time sustainability manager to shepherd the process to zero net.
Number of employees
This algorithm focuses on incorporated businesses with more than 150 employees. Humans have historically organized in groups of no more than 150 people: military groups, divisions of modern corporations, teams within public schools. This is because humans can recognize and feel part of a cohesive whole within a group of no more than 150. Gore Industries, the company that makes Gore-Tex, creates 150 parking spaces when they start a new division. Once employees start parking on the grass, management knows it’s time to start another division.
Annual revenues per employee
While conducting research on the conditions that support successful sustainability managers at small businesses, I found that over half of the 50 businesses I interviewed had revenues over $100,000 per employee. These companies were in construction, architecture, manufacturing, hospitality, retail, law firms, accounting firms, and consulting. The through-put of materials at these companies is high and their large annual revenues per employee allows them the flexibility to invest in sustainability projects that offer a return on investment.
Annual energy costs
When facility managers consider which sustainability projects to implement, energy conservation and energy efficiency projects usually rise to the top of the list. Energy costs are an expensive line item among all the operational costs of running a building. Energy service companies (ESCOs) identify and finance energy efficiency projects for businesses and government agencies because that is where the most dramatic opportunities are. If a business’s energy costs are high, this is one point in their favor for inclusion in the program.
Annual water costs
Water costs are a much smaller portion of a facility manager’s budget, although rising quickly. California in particular is struggling with a third year of severe drought and water issues are top of mind right now. If a business uses large volumes of water they should be included in this project.
Annual feedstock costs
Manufacturers, construction companies and anyone else with a large throughput of material inputs may have opportunities to find ways to create more output with fewer inputs.
Annual cost of solid waste disposal
Many businesses I have worked with accept a $40,000 or even $80,000 annual waste hauling bill as part of doing business. It doesn’t have to be. Diverting waste materials for recycling or reuse, or better yet preventing them from being generated in the first place can save large sums of money at some small businesses.
Reduced recruiting and training costs
Businesses with high employee turnover could avoid some recruiting and training costs if they could retain their work force for longer periods of time. This is another benefit of having a workforce that feels management cares about them enough to give them a healthy and safe workplace where they are helping build a sustainable future.
Some companies are looking for any advantage over their competition. One company I interviewed manufactured bathroom paper towels and toilet tissue. After their sustainability manager presented their new sustainability plan to the whole company, 50 sales reps sent emails that week asking for a copy of the slide deck so they could present it to their customers and marketing targets. Increased sales is another benefit of greening a business.
Put these factors together and you have the algorithm that guides if a small business should pursue hiring a sustainability manager through this program.
- If there are 150 < x < 500 employees
- If the business has > $100,000 of annual revenues/employee
- annual salary and benefits for a half-time sustainability manager = $ net energy savings + $ net water savings + $ net material input savings + $ solid waste disposal savings + avoided cost of recruitment and training + increased sales
I’m starting outreach to determine which state agencies would be interested in supporting small businesses in California.