Corporate social responsibility (CSR) is often seen as something only done by big businesses, but it has huge benefits for SMEs too. With more 5.4 million SMEs in the UK, the potential impact of collective CSR activities is huge. Here are just some of the benefits CSR can have on your SME:

1.      Enhancing relationships with customers and suppliers

The ability of a company to attract and retain customers is grounded in the ability to offer attractive and relevant products whilst providing excellent customer service.

Attracting and retaining a customer base is a constant process and is key for generating future revenue. Evidence shows that if quality and price are equal, customers will tend to choose the product where CSR is more evident. As consumers become more selective it is important to be sensitive to customer’s needs and expectations.

Trying to anticipate how your business will respond can add a competitive advantage and enhance your businesses reputation.

2.      Community benefits

SMEs in the same business sector are much more likely to co-operate with one another on a CSR initiative than large companies. Community projects can help to solve social problems and enhance the local business environment whilst having a comparable impact to that of larger multi-national companies.

Community sports projects are seriously good PR

Traditional wealth management company, Ramsey Crookall, is an example of an SME taking a multi-faceted approach to their corporate social responsibility initiatives. The company has its roots deeply nested in charitable organisations, with many of its team serving as trustees and directors of various charities.

In addition to making corporate contributions to these charities, the company also encourages its staff to help in the community through voluntary activities. As a result of their active participation in various corporate social responsibility initiatives, the company has earned a great deal of respect from the community.

3.      Improving efficiency

A good CSR strategy can increase the efficiency of your business, both in terms of productivity and operating costs. A positive workplace atmosphere has been proven to increase employee productivity – a strong CSR strategy can help to create a positive working environment and the increase in productivity associated with this can contribute to the reduction in operating costs.

Energy efficiency is an obvious way in which CSR and operating efficiency can be co-ordinated but an impact can also be made through recycling and re-using materials.

4.      Managing risk

CSR can help to mitigate risk. Swire Beverages Ltd., a Coca-Cola bottler in China invests in water conservation measures. Since 2004 it has reduced water use by 39%, saving billions of litres of water in a country where there is a growing water crisis.

By adopting this CSR strategy Swire is mitigating risk – both in terms of the availability of water as a key resource in their business and by going above and beyond what is legally required of it in order to enhance its reputation.

In China, a water shortage has put pressure on consumption

5.      Improving business reputation

SMEs do not brand themselves in the same way as large companies. Whilst the marketing techniques used between businesses differ, reputation remains critically important. A good reputation is key for SMEs in order to attract customers, employees and investors.

A transparent CSR strategy where customers can see ethical behaviour and good stakeholder engagement helps to build the trust and reputation which is crucial to the success of SMEs. It’s important to remember that few business start-ups have the sole intention of making a profit, as was the case with William Lever who started Unilever with the sole intention of providing soap in order to save lives.

CSR is becoming increasingly crucial when trying to attract employees. The 2014 Millennial Impact Report revealed that beyond compensation and benefits, what matters most to millennials when applying for a job, is the company’s work culture and involvement with causes.

6.      Providing access to investment and funding opportunities

Access to capital can be a problem for many SMEs, but a strong CSR strategy can help you to secure investment in order to allow your company to grow. Although most lenders and investors do not currently make decisions based on the CSR of a company the growth in socially responsible investment (SRI) indicates that it may become a more important factor in decision making in the future.

If a company addresses and incorporates CSR into the business plans from an early stage they are more likely to establish a competitive advantage when looking to gain capital. A company which shows no commitment to CSR can be seen as more risky to investors and therefore may be less likely to attract investment.

7.      Generates positive publicity

CSR presents the opportunity for a new type of publicity. As a SME you will no longer have to spend money on expensive advertising campaigns because many CSR activities carried out by businesses are featured in the local press and spread by word of mouth. Not only does this enhance the reputation of your company, it also generates free publicity leaving you money to spend on other aspects of the business.

CSR is great for sorporate communications and can generate goodwill for your brand

8.      Standing out from the competition

Brand differentiation has always been a primary reason for companies to adopt CSR; and in a saturated market CSR can really set you apart from your competitors. Coca- Cola and Pepsi are always looking to steal market share from each other. Both companies have been implementing CSR actions in order to set them apart from their rival.

Both are aiming for net zero water use and both offer bottles made from sustainable materials. Although it is unlikely that either will see strong differentiation benefits due to the large nature of the business, smaller businesses can really benefit.

The Better Business Journey, UK Small Business Consortium found that 88% of consumers said they were more likely to buy from a company that supports and engages in activities to improve society, giving you the potential to create a USP and differentiate your business from competitors.

As SMEs are generally managed by their owners or founders there can be a distinct difference in commitment to CSR when compared to larger companies. A strong commitment to CSR can improve the local community, lead to new business partnerships and improve efficiency in order to reduce costs. Ultimately, all of the benefits of CSR are positive ones, even for SMEs.