Business Management / Culture

Why small businesses should practice CSR

Feb 05, 2020 · 7 min read

Toolkit for download in this article

small business employees volunteer CSR

Corporate Social Responsibility, also known as CSR, isn’t a new concept, but it has gained momentum over the past two decades as for-profit companies increasingly have aligned their brands with relevant social causes, issues and programs.

As marketing professor and author Philip Kotler noted back in 2004: “A good company offers excellent products and services. A great company also offers excellent products and services but also strives to make the world a better place.”

As years pass, more and more large businesses are seemingly no longer content to be known solely for doing well financially, but also for doing right by society. A trend is clear as we enter the 2020s–Modern brands are trying to demonstrate that they genuinely care about people, and the world in general, as much as profits to increase trust and loyalty of consumers, who more than ever want to believe that companies care about the same causes such as inclusion, the environment, etc.– that they do.

Subaru and Apple quickly come to mind as corporations that at least attempt to lead the way in CSR.

Subaru:

Apple:

Pros of CSR

These two global corporations, and thousands of others, realize that today’s buying public, notably led by millennials, appears to prefer spending its money on brands with social consciences. Consider a recent Weber Shandwick/KRC Research study that found nearly one-half of consumers increasingly buy from companies that make them feel good and happy (46%) and that care about their well-being (43%). With those compelling stats in mind, the necessity for brands to stand for consumer ideals has never been so crucial.

Regardless of size, small business owners that serve a local community should consider CSR initiatives, too, as there are benefits including:

  • Higher sales and margins
  • Increased valuation
  • Improved public image
  • Higher employee morale and loyalty
  • Lower employee turnover


Cons of CSR

On the flip side, CSR initiatives can be costly, and the process of tracking ROI can be challenging. Some small business CSR campaigns include making a substantial monetary donation to a cause and/or suspending operations—for an hour or an afternoon or even a full business day—to allow its employees to volunteer for a cause.

Also, promoting CSR initiatives draws added attention to businesses, so it’s wise to be prepared for scrutiny. We seemingly live in a world full of cynics and bullies so small business owners who venture into CSR must be prepared to prove the effort is authentic and not opportunistic. Be ready to defend the sincere intentions of the initiative with facts and figures. Keep in mind that a misguided and/or flawed CSR initiative can potentially do more damage than good to a small business that bites off more than it can chew.

Per the essay, The ABC of Corporate Social Responsibility: “CSR must not be seen as a marketing strategy for increasing sales, or just a mask pretending to be seen as a good enterprise. Those who have tried to cheat their customers giving a socially responsible image as just a marketing trick have been wiped out from their markets. Customers do not forgive when they are cheated, especially with an image which does not correspond to reality.”



For best results, start small

It doesn’t matter what industry you’re in, there are opportunities for small businesses to make the world, or at worst their little corner of it, a better place to live. All you have to do is start looking for them. Set aside time each week, or month, or financial quarter to seek them out.

Experts suggest small business owners looking to contribute socially crawl before trying to walk or run on the very-crowded CSR track. They recommend taking one basic idea and formulating a simple plan to execute that idea to make a subtle difference. In other words, your small local business shouldn’t worry about reversing global warming right away. Again, it’s important to focus on starting small. What social issue in your community matters most to you, the small business owner, and your employees? Whatever the answer, focus on it. You might be surprised to learn just how many other people, including current and potential customers, also are concerned about it.

Here are some CSR suggestions:

  • Create/fund an annual scholarship for a local student
  • Sponsor a local sports team
  • Join the local Chamber of Commerce
  • Give discounts to local military members and first responders

At the very least, small business owners who can’t come up with a simple CSR concept to support should consider ending any business practices that harm its community. For instance, if your business is guilty of producing massive amounts of paper waste, consider beefing up your recycling efforts. Most small businesses could probably identify practices in their day-to-day operations that are considered harmful to the community and/or environment. Eliminating those is a form, albeit a mild one, of practicing CSR.

Small businesses that implement CSR as part of their business should regularly promote their social conscience via the company website, newsletter, social media accounts, etc. Toot your own horn, as they say. If you don’t, why should others? Let’s face it, you’re probably your company’s biggest fan.

Final thought

Giving back to society doesn’t necessarily mean giving away company profits. Practicing CSR often increases the bottom line of a small business. While many small businesses are not able to match the lower prices of chains and larger businesses, they can often gain invaluable customer loyalty by establishing themselves as a positive influence in the community.



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