How Will Climate Change Affect My Business?
Smart entrepreneurs keep one eye on what’s happening inside their business and one eye on the outside world. Knowing what’s out there helps you react to potential threats or take advantage of any opportunities. Increasingly, business owners are fixing their sights on climate change. It’s not just about the environment, it can impact your bottom line too. Sharpen your vision on this issue by learning how climate change might affect your small business.
Increasing your thermostat a couple of degrees doesn’t make a big impact on your house. But it does make a difference to our global home where the average temperature has increased 2 degrees during the 20th century. That’s a big change given the earth’s average temperature today is only 5 to 9 degrees warmer than it was during the ice age.
NASA reports small changes in temperature correspond to enormous changes in the environment. Like your business, the earth operates best during stable times. When the rate of change accelerates, it causes disruptions like these identified by NASA scientists:
Stronger Weather Patterns
One impact of global climate change is stronger and more frequent violent weather events like hurricanes, tornados and flood-producing rainfall. Storms like these can result in significant property damage to your business. You may have to shut down the business until repairs can be made and utilities are restored. There’s also the potential for property insurance rates to rise in response to the increasing risk.
Keep in mind, your customers are also effected by these events. Rather than frequenting your business, they may be more focused on putting their own house in order first. While temporary, that loss of business can negatively impact your cash flow—especially if violent weather occurs more frequently.
Abnormal Heat Waves
Another consequence of climate change is periods of abnormally higher heat lasting days to weeks, particularly in the Southwest. These warmer temps may disrupt your supply chain, particularly if you depend on agriculture-based materials.
You may not be able to source material from suppliers in drought areas or locations with crops that can no longer tolerate the increased heat. Even if you are able to source materials, they may come at a higher cost. Some businesses may seek other suppliers or offer products that use more accessible materials.
If you’re a tourist-based business, these heat waves may reduce the number of people visiting your area. Or the demand may shift to cooler vacation sites.
Continued Temperature Rise
Fueled by the increase in heat-trapping greenhouse gases, global temperatures are expected to continue rising. The extent of the increase will vary depending on where you live in the U.S. Here’s a breakdown by region.
Increased temperatures are likely to influence several economic factors. For example, energy costs may rise, increasing your operating costs. In addition, consumer demand for colder-weather products like coats or heaters may decrease.
What Can You Do Now?
Start by increasing your environmental IQ. Consider how changes in the environment affect your business. For example, could your supply sources be compromised by rising climate changes? Which of your products or services might be impacted by changes in consumer demand? Are increasing energy costs eating into your operating budget?
SmallBizTrends.com offers six ways small businesses can fight climate change. Some are a simple as changing to LED light bulbs that consume 75% less energy than traditional lighting.
Remember, climate change can also represent opportunities. Some consumers may be more willing to shop at businesses that engage in climate-friendly practices, like offering recycled packaging. Or, businesses might reduce their operating costs by using more energy-efficient equipment or renewable energy sources like solar.
Climate change is likely to be in the sights of small business owners for the foreseeable future. That’s why it makes sense to learn more about it and incorporate it into your business planning.