There are many independent business owners tied to the kinds of very important investments and long-term commitments that the U. S. auto industry needs. But General Motors’ announcement that it will reduce the number of Buick dealerships by 50% is a timely lesson for businesses of all sizes. Spending now to achieve the Sustainable Development Goals will be costly and difficult, but it will likely pay off in the future.
GM said Wednesday that owners of about a portion of its 2,000 Buick dealerships accepted a buyout offer rather than spend $300,000 to $400,000 to refurbish their dealerships and offer electric cars. GM plans a full transition to electric cars through 2035. We are faced with a difficult choice. Either spend huge sums of money on installing charging stations, retraining staff, and making other changes for EV sales, or abandoning the Buick franchise chain.
The automaker also offered a third option to hesitant dealership owners, allowing them to switch to another GM car brand, though they would presumably remain subject to the same 2035 all-electric transition. Cadillac issued a similar invest-or-buyout choice to its franchise owners in 2020, cutting the size of its dealer network by a third. With that writing on the sidewalls, GM will begin 2024 with 47 percent fewer Buick outlets than it did this year.
Owners or managers of other businesses committed to sustainability overhauls are fortunate compared to their Buick brethren. Greening up most businesses won’t cost hundreds of thousands of dollars and returns on such investments usually arrive quickly amid more customer activity. McKinsey said in a 2022 report on the benefits of going green that “the transition will create massive opportunities to build entirely new businesses.”
Globally, McKinsey has said that just reaching zero-carbon targets for cars set by governments would require “$9. 2 trillion annually until 2050. “Small businesses, whether they’re car dealerships, tech startups, or mom-and-pop restaurants, want to do their part, but they’re also expected to get a consistent increase with returns.
But improving a business for any reason costs money, and upgrade costs go beyond normal operating expenses. Who wouldn’t love moving off the grid by installing renewable solar power tech, or building a new, eco-friendly office? But could the money needed for investments like that cover a dozen new employees, or help capture market share by buying out a competitor?
The secret may lie in not viewing core business activity costs and spending for sustainability as an either/or choice, but instead carefully select the most opportune times to spend on both–especially with some evidence indicating green initiatives directly benefit central activity, too.
As far back as 2019, surveys indicated already 50 percent of the world’s consumers were willing to pay more for goods and services that businesses provide sustainably, with 72 percent reporting they already tailored their choices to the environmental practices of companies.
Sustainability remains a collective social fear in development, but it is now also a business priority internally and in the variety of business-to-business deals. A PNC study from June noted that “84% of consumers say they are more likely to stand firm in front of a logo with its own values. “” when it comes to environmental goals.
These considerations influenced GM’s decision to ask Buick dealers to prepare for EV sales or buy them: In the United States, drivers are buying EVs in greater numbers, a trend consistent over the past five years. years. Sales of new electric cars surpassed one million cars in 2023. This led American automakers to publicly declare that they were transitioning to a sustainable battery-powered vehicle market.
PNC’s study indicates that a proactive sustainability-like strategy can help small business owners overcome the initial pain of spending money to adapt or improve their operations to more environmentally friendly practices. “As customer interest in sustainability grows,” he tells entrepreneurs, “your commitment to sustainable practices as a small business also increases. “
Businesses of all sizes can move in this direction with minor changes, such as upgrading energy options, more environmentally friendly fabrics and suppliers, and shipping and delivery options. Larger redesigns can be achieved through incremental projects that are more financially manageable.
Through this effort, PNC says, sustainability commitments are expected to pay off in terms of a positive reaction from new and existing customers, as well as corporate partners. And contrary to many perceptions, according to the report, the upgrade in question “necessarily means higher costs, lower profits, or lasting adjustments to processes.
“In fact, incorporating sustainability into your small business style has the opposite effect: reduced costs, higher profits, and streamlined processes,” he says. “
It’s proven a tough sell for some of the country’s Buick dealerships, but for most business owners, it’s a much less expensive and faster proposition that will pay off.
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