The circular economy involves reinventing the way in which products are designed, created, used, maintained, and disposed. It helps us to ditch the “take, make, and dispose” culture, and adopt a “make, use, return/recycle” mindset. With a circular economy, companies have to evaluate their product design, material selection, and manufacturing processes to ensure that final products are reusable and waste can be re-engineered. The circular economy system helps society to embrace the culture of access rather than ownership. Why own something when you can access it anytime, any place? And for a fraction of the cost!
everything is interconnected — one human action triggers a vicious cycle of destruction and puts the present and coming generation at risk. A circular economy system is one that rebuilds capital and resources. It is one that ensures that human, natural, social, financial and manufactured resources are reused as many times as possible. In a circular economy, resources are reused, remanufactured, and recycled.
The circular economy system has the potential to boost job creation and reduce unemployment rates worldwide. Many repair and maintenance jobs had disappeared in the past because the culture of repair was not seen as economically viable. Circular economy solutions will also bring about a significant reduction in energy consumption globally by multiplying the productivity of resources. Of the 28 industries studied, it was discovered that all of them could benefit from adopting four out of six circular economy activities — regenerate, loop, exchange, virtualize, share, and optimize, while at least 10 of them could benefit from adopting all six processes.
The circular economy system also promotes local industry and reduces importing or outsourcing of production in many countries that rely heavily on importation. The reduced costs of production will make it more economically viable to produce locally rather than import. The wastes recovered locally will also serve as a local source of material for industries. Fewer inputs are needed, and resources are used sparingly, helping to promote resource security. When goods are recycled and re-engineered, the frequency of manufacturing activities will reduce which will require less energy and fewer resources.
There are many business opportunities in the circular economy system. The system is still new so competition is low while barriers to entry are also low. By reducing competition for raw materials, the circular economy model will force the prices of raw materials down, since there will now be plenty of alternatives. Production costs will be lower, and goods will become cheaper for consumers. Businesses will have better access and communication with their customers, this is made possible because of processes like recycling, sharing and exchanging. Experts have analyzed and concluded that the circular economy is a $1 trillion dollar industry that is expected to grow to $4.5 trillion in the next fifteen years.
Business Ideas for Retailers
Resale: One way to latch on to the circular economy opportunity is to help customers sell off the products that they no longer need, or make it easier for them to do so. The Circular Economy 100 (CE 100) program created a survey to find out what customers think about a buy-back scheme especially for clothes and electronics and: 72% said they would willingly resell their items in the stores where they bought them, if they were offered a convenient buy-back program. 67% said they would resell if they could get a good price. 59% said they would resell their items if there was a simple way to resell them on their own. 57% said they would resell if they thought that reselling the items would benefit their communities or environment. Make money from creating and coordinating a buy back system which could be through creating an app that allows buyers to find sellers. Create resale-themed social events that allow customers to come together for reselling and swapping purposes. These sales events can also be used to promote interactions with customers, launch new products and services, or pass on new information to customers.
Donating: Another pillar of the circular economy system that provides moneymaking opportunities for retailers is donation. Consumers are increasingly embracing the culture of donation because they believe that it helps to prevent environmental pollution. The CE 100 survey revealed that 70% of consumers are willing to participate in a donation scheme that ensures that excess clothing are recycled and not wasted. Another 63% said they would donate their stuff as a solution for keeping clutter out of their homes. many customers revealed that they would donate more if they had access to easier methods for decluttering and delivering the items they want to donate. Marks and Spencer’s (M&S) for instance, partners with a donation service and offers customers a $5 gift card for each donation they make.
Recycling: Innovative recycling plays a great role in the circular economy system. The circular economy system ensures that products are collected at the end of their useful life and fed back into the system.
Maintenance and Repairs: Maintenance and repair services are one of the core aspects of the circular economy system. Retailers can take advantage of this growing industry by starting a repairs and maintenance services within their business niche. No matter what you sell as a retailer, whether it is clothes, wristwatches, shoes, electronic gadgets or even books, there is always room for an additional repairs and maintenance service in your business as an extra revenue stream.
Sharing/Rental Services: Product as a service is another core area of the circular economy. The culture of sharing rather than owning will be largely promoted and businesses built around creation of sharing and rentals will be able to make a lot of profit.
Biodegradable Materials: Biodegradable packing materials are already selling like hotcakes at the moment as many manufacturing companies are embracing the use of eco-friendly materials. However, the demands for these materials are only going to increase as the circular economy system takes over.
Virtualization: The most important reason why people use transportation is to get themselves to their places of work or business. They have to board a bus, drive their vehicles or find any other means of commuting to work besides walking-which is just not the most popular way of commuting now. If people are able to work from home efficiently or take classes at home, they will not need to commute to school work.
Research/Consultancy Services: The circular economy is still in its infantile stage, and there is still a lot of research that needs to be done.
Business Ideas for Manufacturers
Manufacturing Hub: Every manufacturing company wants to build its own factory, but we already know how much damage they can cause to the environment and the threat that they pose to our natural resources. What if there was a way for manufacturers to come together and share factories and equipment instead of building several individually-owned factories? These shared factories will be equipped with tools and machines that use environmental-friendly inputs and processes, and do not negatively impact the environment so much. Manufacturing can also be done simultaneously in order to reduce energy consumption and resource utilization.
Industrial Symbiosis: In the circular economy system, one manufacturer’s waste is another manufacturers input but there must be an easier way for these companies to find each other and do business together. You can easily sell off your own waste to businesses that need them, and help other businesses with waste and residues to find one another.
Circular Subscription Concept: For the circular economy to be effective, goods must have very long, useful lives as a way to reduce production frequency. But at the moment, many of the goods that are being manufactured in the market today are not really designed to fit into long-term usage.
VIGGA is an organization that promotes the sharing of clothes by using high quality materials to make them. The clothes are designed in a specific way so that they can be passed down from one sibling to the other without fading or having any form of wear and tear. Parents are required to subscribe monthly to get a fresh supply of clothes — a $20 subscription gets them 20 items of clothing in the size of their oldest child who can now pass it down to the younger siblings. In cases where a child doesn’t have younger siblings to pass clothes on to, the clothes are replaced when they get too small and the old ones are collected, refurbished and professionally washed and taken care of so that they can be delivered to another child. Experts have explained that this circular method of clothes subscription can reduce textile waste by more than 70%. This is an example of how a subscription system can work for manufacturers in the circular economy.
Biodegradable Materials: The biodegradable packaging products industry is currently worth more than $300 million dollars, and this is an industry that is expected to explode when the circular economy system takes over. There is still a lot of room for manufacturers to research and develop safe materials that can be made into biodegradable packaging.
Apply Circular Economy Processes to Your Business
There are six circular economy processes, six pillars of the circular economy system. Joining the circular economy revolution starts with finding out ways to apply these processes to your business. The six processes are:
Loop: This involves feeding back waste products into the production system. This could be your own company’s system or you could sell the waste to another organization who would use it as raw materials.
Exchange: Encourage and develop a culture of exchange amongst your consumers. Rather than have them buy the latest model of your product every year, leaving the old models to rot at home and pile up in landfills, you can develop an exchange system that allows customers to bring in their old items in exchange for some significant discounts when they want to acquire newer models.As a business, you should also build a culture of exchange where you can encourage suppliers of equipment, tools and parts to allow you to exchange old ones for new ones rather than purchase new ones every time.
Virtualize: Businesses don’t have to be conducted under the same roof anymore. It is now possible for employees to work from home, which will save the company a lot of overhead costs. It will also save the environment because the use of transportation will significantly reduce. Look into your business and see if there are any processes that can be virtualized. You don’t necessarily need an accountant as you can hire a virtual accountant instead. You can get virtual assistants, virtual secretaries, and freelancers to handle most jobs these days. You should only hire full-time, on-site employees when it is impractical to virtualize or use freelancers.
Share: Your business should also build a culture of sharing and borrowing. Consider renting equipment and sharing with other companies instead of owning everything.
Optimize: Optimize every single resource available to your business. Don’t neglect or overlook anything — you should always think of multiple ways to use all resources. If your business uses water, think of ways to recycle and treat your wastewater so that it can be put into other use that will help to cut down the amount of freshwater your business is covertly using.
Regenerate: The sixth and most important process of the circular economy system is regeneration. It may not be possible to refurbish and convert all old products into new ones, but there may be some components or parts that you can use as raw materials in making new products.
Explore New Business Opportunities: The question is —
what opportunities and ideas lie within your business and industry that you can explore?
How can you turn your wastes into money?
What environmental challenges can you solve in exchange for profits?
Redesign Your Products and System: Only products that are designed for long-term use will be able to compete in the circular economy market as consumers will start shifting towards purchasing goods that are designed for long-term use.
Are your products and packaging materials designed to last a long time?
Are they biodegradable?
Embrace Energy-Saving Equipment: You should consider doing an energy audit of your company, and eliminating all the systems, equipment, and processes that are wasteful so that you can replace them with more efficient ones.
Update Your Company’s Core Values: This should be included in the company culture and your organization’s core values so that it reflects in all decision-making processes.
Train Your Employees: Waste prevention should become part of company culture, both employees and managers should be proactive in looking for ways to make the company fit in, profit more, and thrive in the circular economy.
Identify Organizations That You Can Form a Symbiotic Relationship With: In the circular economy, collaboration will become more important than competition. You should start making a list of companies that you can form a symbiotic relationship with.
Which companies have what you need?
Which companies need your waste as raw materials?
Some of them may reject your proposal now but when the circular economy revolution begins, many of them will remember you, and will be interested in forming a symbiotic relationship with you.
Rent or Share, Don’t Own: Businesses can also save money when they rent equipment rather than buying it, or share with other companies instead of owning. The next time you want to upgrade your company’s tools and equipment, be sure that there are no alternatives for sharing or renting before you opt for ownership.
Sell Your Wastes: Remember that waste will become almost nonexistent in the circular economy so look into all of your systems and processes — all of those things you identify as waste; you should do extensive research to see if there are businesses that can pay you for them. Basically, turn your waste into a source of income for your business.
Build a Closer Relationship with your Consumers/Customers: The easier your access is to them and the more they like and trust your brand, the easier it will be to access whatever inputs they can contribute to your business and to the circular economy system.
Create Your Action Plan and Milestones: When you have identified the role your business will play to make the circular economy work, how it will affect your business, and how you can profit from it, you will have to create an action plan and integrate it with your business plan.
Financial Challenges: Don’t wait until it becomes a trend or until your old system becomes archaic to start making the necessary changes and improvements. Starting now when many organizations haven’t even caught up to the trend yet will save you a lot of money in the future and will save your business from disruptions or complications further down the line.
Research: As with any revolution, there will be a lot of learning and relearning involved. If your business is in an industry with a lot of major players, then you might not have to worry about much.
Technical Skills and Know-How: There could be a need to conduct several training programmes for your employees, to educate them about the circular economy and equip them to be able to use the new methods, equipment and policies that your company and other organizations will be using in the circular economy. These programmes may cost your business a lot of money.
Legal Challenges: Businesses will now depend on one another a lot more than we’ve seen in the past which leaves room for many legal loopholes.
Quality Control Issues: Using waste products from another organization as raw materials for your products, takes quality control challenges to a whole new level.