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Why DEI Still Matters for Small Businesses and Startups DEI shouldn't be just a buzzword.

By Murali Nethi

Key Takeaways

  • If you prioritize DEI and focus even a little each month on improvements, your business will be on the right track to attracting and keeping talent and customers for the long run.
  • Diverse perspectives produce more creative products, services and methods.
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Opinions expressed by Entrepreneur contributors are their own.

All businesses want to succeed, but there is something many of them may not realize can support their growth. They say diversity is our strength as a society and encourages new ideas and perspectives. Well, I am here to tell you that the same things — diversity, equity and inclusion — can give businesses an edge. Some small company owners may think focusing on making sure their business and culture are unbiased, fair and welcoming to all types of people is just about being politically correct. Let's see how centering on these values — what I will call DEI for short — can truly help startups and smaller companies be stronger and more profitable over the long run.

Related: Prioritize DEI and Crush Your ROI Goals — How Inclusive and Authentic Marketing Drive Business Growth

Attracting top talent is getting more competitive

One big reason why DEI is important for small businesses is because attracting top talent is constantly becoming more competitive. Nowadays, when people, especially the younger generation, are looking for jobs, they do not just look at pay and benefits. They also want to work for companies whose values match their own. Top candidates may leave a small business or startup to work for organizations that value DEI; hence, the latter risk losing out on excellent applicants. As smaller businesses look to expand, having an inclusive culture and a diverse team can help them attract the most incredible talent available.

A better reflection of your customer base

Having a more diverse workforce can help you better understand and service a broad consumer base, which further motivates startups to focus on DEI. It will be more difficult for employees to relate to and address customers' demands from different backgrounds if they all have similar experiences. On the other hand, a diverse team of employees from various backgrounds may offer insightful advice on connecting with and pleasing clients from all backgrounds. More satisfied customers and growth prospects will follow from this.

Related: The Burden of Breaking Barriers is Pushing Black Leaders to Breaking Point. This DEI Expert Reveals Where We Are Going Wrong.

Improved creativity and innovation

Research repeatedly shows that having a varied group of people with different viewpoints, experiences and backgrounds fosters greater creativity and more creative problem-solving. A workplace where all views are heard can help spark innovative solutions that may not originate from a homogeneous group. This is beneficial for smaller companies and startups that are attempting to remain dynamic and come up with fresh ideas. Diverse perspectives produce more creative products, services and methods, essential for any expanding business.

Setting the right example for others

Even if your small business is just starting now, you can set the right example when it comes to DEI from the beginning. While some established companies may find it hard to change their culture, new startups can build inclusion into their foundations. Leading with strong DEI practices from day one allows you to attract like-minded customers, partners and investors who want to support companies demonstrating fairness and equality. It also prepares you to be a responsible community member and role model for positive change as your company succeeds.

Related: 4 Ways Inclusive Leaders Can Respond to the Weaponizing of DEI

Legal and regulatory compliance

Focusing on DEI for small businesses is also essential simply for legal and regulatory compliance reasons. As anti-discrimination laws and regulations continue to strengthen over time, companies of all sizes must ensure equitable policies and an inclusive culture. This reduces the risks of unfair treatment claims that can damage brands or result in lawsuits. Having defined DEI best practices and annual training shows that even a young company is operating ethically and by the law from the start.

Some practical ways small companies can improve DEI:

  1. Commit from the top. The CEO and other top leaders must fully support and champion DEI from day one. They will need to communicate to all employees that promoting diversity and inclusiveness is a core value of the company. Leaders must provide the motivation and resources for DEI efforts to take root within the organization truly. When managers demonstrate their investment in these issues through their words and actions, it will encourage everyone else to get on board.
  2. Support employee resource groups. Employee resource groups (ERGs) allow workers with shared backgrounds or life experiences to connect, raise awareness on issues impacting their communities, and advise company leaders. Small teams can sponsor one or two ERGs made up of volunteers. This allows employees to lead in promoting inclusion from peer to peer while getting necessary support and visibility from high levels.
  3. Audit hiring and promotion practices. To address potential biases or inequities, small businesses must examine how they hire, develop and promote workers. Companies can review applicants and leadership demographics over the past few years. Do these numbers properly represent the diverse pools of talented individuals in their industry and community? Are there patterns indicating unfair barriers that held some groups back from equal opportunities? By reflecting on hiring metrics, businesses gain insight into whether implicit prejudices need addressing to establish a more just system open to all.
My advice would be to analyze how balanced and welcoming your business is, look for low-cost ways to enhance fairness and continue working on DEI as your operation expands. If you prioritize DEI and focus even a little each month on improvements, your business will be on the right track to attracting and keeping talent and customers for the long run.
Murali Nethi

Entrepreneur Leadership Network® Contributor

CEO & Founder

Murali K. Nethi is the founder and CEO of SnapBlooms, a flower-delivery marketplace. His 24-plus-year background in enterprise architecture and IT allows him to explore business solutions in the retail industry.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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