ECO-FRIENDLY companies have often been accused of making pricey products for niche markets. But with firms such as the smoothie maker Innocent leading the way, and entrepreneurs like Jamie Oliver and Anita Rod-dick on board the bandwagon, there has never been a better time to set up a business that is not only green but also profitable.
Cafedirect, which sells coffee and tea, is Britain’s largest Fairtrade hot-drinks company and has seen the market for its products expand greatly in the past few years. Between 1998 and 2005 the Fairtrade market leapt from £16.7m to £195m, proving that start-ups can turn a profit while helping to guarantee better prices and working conditions for producers in the developing world.
But Fairtrade products are only one area. Entrepreneurs can also find opportunities in green energy, environmentally friendly products and recycling.
Paul Allen, author of Your Ethical Business, believes the possibilities for green business are increasing rapidly. “Fairtrade is just one small part of the world of ethical business. The market is growing 40% a year in the UK and ethical consumerism is now valued at £30 billion,” he said. “It is clear that consumers are shopping with both their heads and their hearts and when given a viable alternative they will buy it.”
Unlike other businesses that have to think only about a single bottom line — profit — environmental businesses have a triple bottom line — people, profit and planet, he said. These added responsibilities make starting a green business more complicated.
One company that has benefited from the demand for environmentally friendly products is Britisheco.com. Founded in 2002 and now run by Andrew Moore, it stocks products for the home and garden, from solar panels to eco-cleaning products. “Britisheco is a one-stop shop for everyone’s environmental needs at affordable prices,” said Moore. “People can save money and help save the planet. The two can go together.”
Part of the reason Moore joined Britisheco was to feel better about the job he was doing. “Some of the jobs I had in the past were selling things but I didn’t feel particularly good about doing it. Britisheco gave me the opportunity to run my own business and feel happy about it too.”
As Moore has discovered, there are particular challenges. He said: “The internet has become a very competitive place and you have to sell in large volumes to make a reasonable living out of it. Many more websites have been appearing as the green message becomes more mainstream.”
Bristisheco’s diversification has helped it to grow, and it is now a specialist in renewable energy, focusing on solar hot-water systems as well as other products. “Our site was crashing a little and our internet provider said that this was because our turnover had increased by 400% in a year,” said Moore.
Green entrepreneurs have established a reputation for being innovative, something that has helped them to find financial backing, one of the biggest challenges for companies that are starting up. The 2006 Global Entrepreneurship Monitor report said one of the main reasons firms failed to get finance was the nature of their business. Green companies know all about this because they focus on goals other than pure profit.
Allen said: “If you pop down to your local bank branch, they may not care when you start talking about your environmental goals because they care only about your financial bottom line. Understanding that at the start can be very important.”
The good news is there are organisations that will take a kinder look at your green business. The Cooperative is the largest ethical high-street bank, with its online sister company Smile. Ecological Building Society also lends money to small-scale eco-friendly firms.
“Some of the social lenders have huge amounts of money and are much more likely to understand what your company is about and what it aims to do,” said Allen.
The other hurdle — higher prices — is also being steadily demolished.
Jonny Goldstone and Tom Pakenham are the founders of Green Tomato Cars, a private taxi firm with a fleet of Toyota Prius hybrid cars. They are eager that green businesses should offer the same level of service as their nongreen counterparts.
“What we wanted to do was something that was environmentally friendly but offered just as high a quality as nongreen options and wasn’t more expensive,” said Goldstone. “If you hire good staff and make sure things run smoothly, you don’t need to charge a premium, you offer a great service and it’s green. The customer doesn’t do anything different. He or she is just booking a taxi that happens to be green.”
Indeed, the guiding principle behind Goldstone and Pakenham’s company is that green needs to be mainstream in order to be a viable alternative.
You do not have to start a green business from scratch, you can change the way you run your present business. You could start to become green by changing the suppliers of your materials or by switching to an energy supplier that uses renewables.
Simply being green won’t turn your company into a success or make you wealthy overnight but this is a growing sector and it offers potential for those who are quick to spot an opportunity.
“This is what consumers want and they genuinely believe in it,” said Allen.
