During 2020, many businesses were in survival mode, focusing attention on how to get by during the lockdowns and other restrictions they faced. This left little time for planning and reviewing policy decisions. As things calm down in 2021, you may now be able to strategize and put new plans into motion. In doing so, be sure to take new business terminology into account.
Environmental, Social, and corporate Governance ESG
Environmental, Social, and corporate Governance (ESG) reflects the sustainability and societal impact that the business has. ESG is an important factor in a company’s reputation. And reputation translates into customer support and the ability to attract investors if desired. According to RepTrak, 70-83% of customers will support a business with a high RepTrak score while 89-91% won’t support a brand with a low RepTrak score (a RepTrak score is primarily for large companies; their customers include Coca-Cola, Lego, JPMorgan Chase & Co, and Cisco).
Publicly-traded corporations want transparency in their ESG. There are international standards under consideration. Small businesses won’t be subject to these rules, but can take a lesson from what they mean.
Some ESG things small businesses can do in a very transparent way:
- Show your commitment to environmental concerns (e.g., stop using plastic where possible—no plastic bags or plastic straws).
- Demonstrate how you give back to your community by supporting local activities.
Diversity and Inclusion (D&I)
Companies are legally barred from discriminating on the basis of race, color, religion, sex (including pregnancy and gender identity), national origin, political affiliation, sexual orientation, marital status, disability, genetic information, age, membership in an employee organization, retaliation, parental status, military service, or other non-merit factor. But not doing something (refraining from discriminating) is different from being proactive with respect to Diversity and Inclusion (D&I). This means seeking joint applicants and employing people with differences in these categories of identity. It also extends to diversity in suppliers and factoring in diversity in marketing.
Does this mean quotas? Goals? California, for example, enacted a law in 2018 requiring corporate boards of public companies to have at least one female director by the end of 2019 and one or two (depending on size) by the end of 2021. While small businesses aren’t subject to this law, again it may be valuable to consider representation on boards of directors or advisors for a company of any size.
Enterprise Resource Planning (ERP)
Enterprise Resource Planning (ERP) is an integrated suite of business application tools. Your business entails many routine functions that must be performed daily. These include making entries in accounting systems, invoicing, managing inventory, and monitoring cash flow. If you can make a single entry that can be applied across various tools, you can manage your business tasks in an efficient way. For example, NetSuite offers a one-stop online way to handle procurements, projects, finances, and other business functions in an easy, efficient way. Business-Software.com has a downloadable report of the top 20 ERP software for 2021.
Terminology is constantly changing, and it’s important to keep up with what’s new. In 2017, we ran a blog covering “disruption,” “blockchain,” and other terminology that was new and hot at the time.
Be sure to keep up on new terms and the practices and policies they dictate.