Picture a typical business in the environmental sector, and what are the traits that come to mind?
While descriptors like “innovative” or “fast-growing” are certainly applicable, what about “small to medium-sized”? Canada’s small and medium-sized businesses, commonly referred to as SMEs, are an essential part of the environmental sector.
Here are three reasons why:
Reason 1: Prevalence
In the overall Canadian economy, SMEs accounted for 54.3% of the GDP produced by the business sector in 2005, according to Statistics Canada
. This high proportion of SMEs is even more pronounced in the environmental sector, where there is a notable prevalence of particularly small businesses.
Based on ECO Canada’s 2010 Profile of Canadian Environmental Employment
, 47% of environmental employees work in establishments with less than 20 employees or are self-employed. Only 10% of environmental workers are employed at larger businesses with over 500 workers.
Reason 2: Innovation
Not only do SMEs represent the bulk of businesses in the environmental sector, they also serve as strong sources of technological innovation. Smaller organizations have the added virtue of being more flexible, and thus capable of developing novel technological solutions in response to changes in market demand.
This capacity to adapt effectively and come up with creative solutions to meet client and market needs is apparent in a recent observation from a SME. According to Matrix Solutions:
“At Matrix we believe that we must meet and often exceed our client’s needs and those needs vary between clients and projects. One of the keys to our success at Matrix has been our ability to evolve to meet the needs of our multiple and diverse clients by such means as the implementation and improvement of functional systems, a structure that minimizes bureaucracy, our internal training program and a focus on hiring local. Our ability to adapt to our customer/client needs is why Matrix, a medium-sized enterprise, is a thriving and important component of the environmental sector.”
Reason 3: Economic “Shock-Absorption”
The same flexibility that allows SMEs to be innovative also enables them to weather fluctuations in the economy. ECO Canada’s 2010 Profile of Canadian Environmental Employment notes how smaller businesses are better able to react quickly to changing economic situations without overcompensating. This means that the workforce size of smaller enterprises does not fluctuate as much as that of larger companies.
In addition, the same study found that small businesses actually maintained more positive views of their future growth following the economic downturn in 2008-2009. Based on the report’s findings, environmental employers with less than 20 employees were more than twice as likely to expect to increase the size of their environmental workforce as compared to large employers with more than 1,000 employees.
Consequently, there are a variety of compelling reasons for why SMEs are integral to the environmental sector. The remarkable prevalence, innovative capacity, and flexibility of small to medium-sized businesses make them integral to the success of environmental industries in particular, and the overall Canadian economy as a whole.
What's your perspective? Are there any additional reasons you can think of?