Overrated Small Business: 'Green' Businesses

Premium prices prevent eco-friendly businesses from taking off.

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"Going green" is the latest buzz term for business success. Media attention on the effects of climate change and other environmental problems has set off a wave of consumer products focused on making the consumer feel like he or she is making a difference. You can buy diapers that won't end up in landfills, ride environmentally friendly skateboards, or listen to radio stations that promote green tips.

So, should you run out and start selling greener versions of already existing products? Not unless you can deal with some real competition. You're going to have to persuade customers to pay a premium for the same product when they can get a better deal elsewhere. Some say it's not so clear that as many consumers are willing to put environmental consciousness ahead of their wallets as you might think. "The evidence seems to be that a lot of consumers talk the talk but don't walk the walk," says Michael Morris, a professor of entrepreneurship at Syracuse University. That's not to say that there's not a big market for products and services that will save people energy. But when it comes to being nice to the Earth simply for the sake of it, there's a different shade of green that seems to matter more.

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