Sustainability is now making the rounds as a major buzz word. When applied in regard to business operations, sustainability is commonly associated with companies that adopt resource utilization models designed to support the creation and delivery of value to the benefit of a company and its customers, suppliers, and investors while at the same time fostering healthy relationships with society and the Earth environment as a whole.
Sustainability of this sort is a worthy aspiration and objective for any enterprise. However, owners of small or medium-sized businesses who are either considering planned expansion or dealing with the sudden onset of growth would do well to concern themselves with another type of sustainability: sustainable business growth.
Once growth is achieved, attaining and maintaining a sustainable growth rate is the next major challenge facing any business owner. The demands of value creation must be balanced against the supply of finite resources that can be deployed in creation processes.
Sustainable Business Growth Defined
Sustainable business growth is the maximum growth rate achievable via utilization of existing cash flow without increases in leverage or debt. Put another way, if the break-even point at which sales exactly cover expenses is the bottom or floor for growth, then the sustainable growth rate is the ceiling, or the maximum that sales can grow without exhausting cash flow and requiring new sources of financing.
In an ideal world, profits could be grown without need for additional capital investment. In the real world, growth inevitably entails increased output which in turn drives demand for increased input of various types. However, there are companies that manage to steadily ride the tide of growth without getting swept into the whirlpools of gathering debt, growing inefficiency, and receding quality. Let’s take a look at some of the common characteristics associated with this type of business.
A sense of purpose. Companies that achieve sustainable growth are typically driven by a sense of authentic purpose. Everyone in the company from the executive suite to the mailroom knows exactly why the company does what it does. Authentic purpose inspires the following positive attributes:
- Emotional engagement within the company and with customers and partners
- Consistent focus
- Continuous innovation
An authentic sense of purpose and the resulting clarity of vision makes it easier to create the unique selling proposition that identifies a product or service as being different from and better than those of the competition.
A strong brand identity. Brand comprises the emotional link between a company and its customers. This attachment evolves as a developing relationship that keeps consumers loyally returning to the company for products that satisfy their needs. A stable return customer base ensures the consistent cash flow that is a key to a sustainable business model.
Building a strong brand requires narrowing focus to carefully choose a target audience for goods or services. Companies with strong brands have put in the time and effort needed to get to know their customers, then connect with them in ways that inspire them and build confidence in the products and services being offered.
When considering brand development, it is important to realize that delivering a simple, inspirational message will be far more effective than trying to explain every feature, function, or benefit of a product or service. The good news is that today’s online publishing and social media culture make easy to message a customer base even on a bare-bones marketing budget.
A dedication to efficiency. Inefficiency translates to waste – the enemy of sustainability. For most businesses, the easiest way to cut inefficiency is improve resource management and planning strategies. Using tools like this one that help remove sources of waste, error, redundancy, and delay can move a business a giant step toward the attainment of sustainable growth.
Sustainable Growth Sustains Success
Embracing a sustainable business growth model results in reduced risk and enhanced future potential. Applying sound resource management principles, avoiding debt, viewing growth as a long-term process, and eschewing the short-termism widely perceived to be endemic in UK company practice are all strategies for ensuring the sustained success of any enterprise.