What does it mean to have a sustainable business?
First, let’s look at what it does for companies. In business, sustainability is resource utilization.
Plus, it’s designed to change the mindset of business owners and the brand’s perception.
Sustainability is now central to the evolution of the company. It needs to support the creation and delivery of value to benefit a company and its customers, suppliers, and investors. Plus, at the same time, foster healthy relationships with society and the Earth environment.
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. Value creation demands must be balanced against the supply of finite resources 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. The sustainable growth rate is the ceiling or the maximum that sales can grow without exhausting cash flow and requiring new financing sources.
In an ideal world, profits could be grown without additional capital investment. In the real world, growth inevitably entails increased output, which drives demand for increased input of various types. However, some companies manage to steadily ride the tide of change without getting swept into the whirlpools of gathering debt, growing inefficiency, and receding quality.
Sustainable Business Traits
Let’s look at some of the common characteristics of this type of business.
A sense of purpose
Companies that achieve sustainable growth are typically driven by a sense of authentic purpose. From the executive suite to the mailroom, everyone in the company 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 make it easier to create a unique selling proposition that identifies a product or service as different from and better than the competition.
A strong brand identity
The brand comprises the emotional link between a company and its customers. This attachment evolves as a developing relationship that keeps consumers loyal 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, connect with them to inspire them, and build confidence in the products and services.
When considering brand development, it is essential 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 it 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. The easiest way to cut inefficiency for most businesses is to improve resource management and planning strategies. Using tools like this helps remove sources of waste, error, redundancy, and delay can move a business a giant step toward attaining 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 as endemic in UK company practice are all strategies for ensuring any enterprise’s sustained success.
What are some of the sustainable industries? See our article on rapidly growing green industries