Why diversity, equity and inclusion matters for small businesses


Diversity, equity, and inclusion are important factors in business, but these describe more than esoteric public relations goals. Research shows that together these factors influence both a business’s success and its connection to an audience, and that’s because these terms describe real people. Businesses are all about people—namely, helping people with a product or service of value. That’s why businesses that want to succeed in providing effective services have to be inclusive of a diverse range of people.

Polaroid collage for 99designs’ Bay Made video series, exploring four minority-owned small businesses
The Bay Made video documentary series explores the intersection of design, culture and community

Small businesses are already key drivers of diversity in one sense. They are what keeps the giant homogeneous corporations at bay with unique startup ideas. At the same time, the majority of businesses overall have been slow to adopt diverse or inclusive practices, and there are well-documented reasons for why this can ultimately harm a business. To better understand why, we’re going to walk through how diversity, equity, and inclusion work and the many ways they improve businesses inside and out.

What diversity, equity and inclusion (DEI) really means

Diversity, equity, and inclusion (DEI) are very commonly used terms, and sometimes they are treated as though they are synonymous. In fact, each refers to a specific facet of making a business a more welcoming and successful place for all involved:

  • Diversity: representing multiple demographics of various kinds of people
  • Equity: ensuring that opportunities are accessible for diverse people
  • Inclusion: tailoring the environment and communications to make diverse people feel seen and heard
Inclusive design illustration of diverse women for a woman-owned startup
Design by Fe Melo

While each of these terms has distinct meanings, they do have to work in tandem, which is why they are typically grouped together under the DEI umbrella. For example, diversity is often the first step, but it doesn’t just lead inevitably to the other two. A business has to go a step further to address the fact that people of different backgrounds will have different communication styles and different obstacles to accomplishing their goals—be that using a product or earning a promotion. The point is that these three ideas are more than boxes that can be checked off—they must work together towards tangible action.

An illustration of several diverse people riding a tandem bike
Design by Asael Varas

So who exactly are these diverse people we are talking about?

Diversity is usually based on demographic groupings. Researchers at the Harvard Business Review make a distinction between inherent diversity (factors relating to identity such as race, age, gender identity, sexual orientation, and ability) and acquired diversity (factors that are dependent on life experiences, like educational background and income).

In regards to a business, DEI efforts can be both internal and external. Internal DEI efforts involve making sure that a business’s employees are diverse and are supported through equity and inclusion. Similarly, an external approach assures that a business establishes meaningful relationships with all segments of the consumer base in terms of who it is targeting and how it is speaking to them.

For the sake of ease, we’ll refer largely to “inclusivity” throughout this article, but keep in mind that all three terms are distinct, necessary and work together.

Six benefits of diversity, equity and inclusion for business

Now that we understand what these terms mean, we can talk about their purpose. What does diversity, equity and inclusion actually accomplish for a small business?

1. Authenticity and trustworthiness is evidenced

Diversity and inclusivity signals to both potential employees and customers that they can trust the business to support them. The entire reason people go to a business is to solve a problem, whether that involves a necessary service or job fulfillment. And inclusive efforts are the most straightforward way to demonstrate that a business has the cultural competency to understand that problems are not one-size-fits-all. Customers notice these efforts: a recent study by Microsoft found that over half of racial and gender minorities are more likely to trust inclusive brands.

Illustration of interlocked hands of different skin tones against a blue backdrop with squiggle line drawings
Illustration by Shwin

2. Diverse businesses reach a wider audience

Logic follows that businesses that make an effort to cater to diverse audiences will expand that audience—they are reaching out to more people, after all.

And there is data to support this: according to a report by the Harvard Business Review, diverse companies are 70% more likely to expand their markets. This makes sense, given that 48% of Gen Z are nonwhite, compared to 28% of baby boomers. In this way, inclusivity can also act as a means of future-proofing a business.

3. Inclusive businesses empower the community

People see local businesses as part of their community, which can explain why 76% of customers go out of their way to support them. As such, it is important for a small business to show that they truly are made up of real people from the community through diverse hiring practices. Additionally, many small businesses take an active role in their neighborhoods through donations and sponsorships. In this way, diverse businesses empower the community by both employing and serving the community.

4. Diverse perspectives lead to innovation

One of the biggest disadvantages of listening to the same voices over time is the same stale ideas. Conversely, diverse perspectives will broaden a business’s horizons and lead to greater innovation. This is because people with different backgrounds have different life experiences, and their solutions to problems will naturally be informed by this. As it happens, there is a clear link between inclusivity and good decision-making: a research study by People Management found that 87% of businesses that adopted inclusive efforts in their decision-making processes improved business performance.

3D illustration of colleagues in a board meeting surrounded by icons
Illustration by art_drawer

5. Inclusive businesses gain better talent

Businesses that fail to provide a welcoming environment will naturally have a hard time finding anyone to work for them. In a Glassdoor survey, 76% of job-seekers reported that diverse hiring practices are an important factor in their search.

Of course, diversity does not stop at hiring: a business has to make sustained efforts towards inclusivity and equity. The benefit is that employees are generally happier in inclusive environments: a Deloitte University study found that 83% of millennial participants were more actively engaged in work when they felt included.

6. Higher profits come with integrity

Businesses that are not diverse are not sharing their wealth fairly. Unfortunately, there is no shortage of data to show that unemployment is disproportionately higher among persons with disabilities, Black and Latinx, and foreign-born persons. Additionally, men are twice as likely to be hired as women—regardless of who’s doing the hiring. Not only do businesses that hire more diverse employees help turn the tide of these systemic inequalities, they experience higher profits on average. According to research by Bersin by Deloitte, businesses that employ diverse teams earn 2.3 times per employee. And these businesses can be confident that those earnings are supporting traditionally underserved workers.

Three steps businesses can take to become more diverse and inclusive

While there are clear advantages to running a diverse, equitable and inclusive business, the obvious question is: how does a business actually become more inclusive? There is no singular solution for all businesses, but as DEI initiatives have become increasingly standard, a number of general strategies have emerged. The following are steps any business can take to foster a more welcoming environment.

1. Gather feedback from diverse communities

Any advancement towards inclusivity begins by identifying who your business may be excluding—in other words, who may not be accounted for in your hiring, marketing and accessibility practices. The best way to discover this is to hear directly from the communities your business serves.

Customers will leave feedback in the form of reviews, social media comments, forum threads, and direct complaints. While there may be a number of factors behind a negative comment, it is important to read between the lines into how the respondents background might be informing their experience. This is why including demographic indicators on reviews can reveal whether there are any patterns of responses within segments of the population.

illustration of person working at desk on a video call with different people. Pink, purple and teal tones.
Illustration by bmp design

Anonymous surveys are a common way to gather feedback (and sometimes hard truths) respondents might be reluctant to share otherwise. DEI surveys are often organized as statements with agree/disagree scales. Topics that can measure inclusivity include whether employees feel supported at work, whether their opinions are respected and heard, and whether their work is recognized.

Some small businesses may find it difficult to implement these kinds of surveys as few employees means anonymity is hard to guarantee. In this case, these conversations may just need to happen in person. Managers will need to work on interpersonal communication skills to ensure that they are approachable and can listen effectively without resentment. Likewise, all staff should have a neutral outlet besides their direct manager to share honest feedback.

It is also a good idea to hire a professional DEI consultant. While hearing from ordinary community members can be helpful and necessary, it is not really their job to make your business more inclusive. Additionally, specific community advocacy organizations regularly work with businesses on inclusivity.

2. Commit to an action-based plan

A plan for fostering diversity and inclusivity must be organized around concrete goals. Becoming simply “more diverse and inclusive” is too general to be effective. Who do you want to make a better effort to include and why? What are some indicators that will tell you whether or not you are being successful?

Asymmetric gallery of able-bodied people creating a video together and a person with disabilities working on a laptop
Designs by Fe Melo and yokunen

A DEI plan should include specifics on what you are trying to accomplish and what aspects of the business are changing. For example, brand imagery, communications, and even the product itself may need to be adjusted through inclusive design. And because diversity and inclusivity are ongoing commitments, the plan should include regular checkpoints for assessment, feedback, and reevaluation.

While coming up with a DEI strategy may involve the entire business and outside communities, one dedicated person or team should own the implementation of that strategy. This will ensure that DEI initiatives receive continued focus as the responsibility is clearly delegated.

illustration of people organising nuts and bolts against backdrop of spherical patterns
Design by Alona Shlapak

Training programs are also important to account for. Inclusivity is not just a manager-to-employee or a business-to-consumer matter. All staff need to be well versed in their business’s inclusive strategy and need to be mindful of their interactions with each other and with customers.

Many businesses organize a public statement on their plans to adopt new business practices to address the needs of a community. While not always necessary, this can be a great way to demonstrate transparency and show that you are prepared to be held accountable.

3. Learn from the successes of other inclusive businesses

Diversity, equity and inclusion are essentially the processes of bringing people together. That is why businesses that adopt these efforts should not work in isolation. Instead, they can share their stories, reflect on the challenges, successes and failures of various initiatives, and provide resources to other businesses to walk in their footsteps.

The “Bay Made” video series provides one such opportunity. This short documentary series profiles four minority-owned small businesses in the San Francisco Bay Area and illustrates how their diverse perspectives have informed their business practices. Over the course of four episodes, each business owner shares their story, what drives their daily grind as a small business, and the different challenges they have overcome with the help of their community. For these minority-owned businesses, diversity and inclusion are more than corporate jargon: they are a fact of their everyday lives and an intrinsic aspect of who they are as a business.

The Bay Made video documentary series explores the intersection of design, culture and community.

Diversity, equity and inclusion supports small businesses

Ultimately, the best way to become more diverse, equitable and inclusive is through experience. While this must eventually be your own experience, you can start by learning from the experience of other businesses that have been there.

Inclusive illustration of a diverse group of people for a packaging design
Design by VanessaBowman

In this way, diversity and inclusion is part learning and part action. The “Bay Made” video series provides an opportunity to learn how minority owners create businesses that are representative of their own culture while maintaining inclusivity for wider communities. Beyond these videos, your small business can apply what you’ve learned to past mistakes, implement actionable initiatives, gather feedback, and repeat this process for as long as it takes to get it right.

By their very nature, small businesses offer alternatives to large corporations and the generalized audiences that they serve. That’s why small businesses and inclusivity go hand-in-hand: they both champion individuality. Small businesses already receive support from their diverse neighbors, and research makes it clear that small businesses grow by supporting them right back.

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