Small Business 101: Profitable Sustainability

Sustainability is one of those “of the moment” catchphrases that tends to mean radically different things to different people. To old school environmental warriors, sustainability is watered down environmentalism for wimps; for many pro-business types, the concept is an insidious “fifth column” of environmental activism. My take on the idea is somewhat different; as someone who grew up with National Geographic and Carl Sagan as guides, but matured as an adult in the business school of hard knocks, sustainability is environmentalism all grown up.

The basic idea of sustainability applies to businesses at every level; handle operations, marketing, and human resources in a manner which ensures the greatest sustainable benefit to your business, your customers, and your community. To all businesses, the simple approach involves looking at everything you do over the long term. The challenge for small businesses, in the minds of many, is the scale of short term costs relative to the business. In reality the fear of the costs relating to sustainability has almost no basis in fact; it is change that small business owners really fear, change in a model that has served them well.

Making sustainability work in a small business boils down to setting big goals and taking small steps. The first concept that owners and managers can address is the efficiency of their operation. The simple truth is that you are paying for raw materials, energy, paper, and water; any waste coming from operations represents wasted money. Asking your employees to set simple goals or come up with ideas for saving electricity and water, or reusing and/or reselling leftover materials from your process is a great way to generate savings. When you save money on expenses, you are making your business sustainable.

Make a commitment to working on those little steps in your business, and you will improve the environment while reducing your costs. Set a broad goal of being a zero emitter, and you will open up huge opportunities for your small business. Their are nearly limitless opportunities for a business to address, in a cost-effective manner, all of the sources of emissions (waste). Most of the opportunities represent scaled up ideas from the simple steps listed above, but gray-water recycling and solar panels with smart-boxes represent modest capital investments that will payoff over time.

Perhaps the greatest opportunity for businesses thinking about sustainability comes in the area of human resources. Employees typically represent one of the two most costly parts of business ownership (the other being facility cost). Finding and training talent is difficult and expensive, while constant turnover also blunts any long term brand-building or sustainability projects you might be engaged in. When projecting wages and benefits, it is advisable to consider two concepts; compensation is less important than how the employee feels about their place in the firm, and the level of compensation is always considered in the context of its growth and security. People making high salaries who don’t feel valued or believe that their job is at risk always limit the long term potential of the firm. Allowing your staff to feel a sense of ownership and participation in your business may run counter to why you struck out on your own, but it guarantees better talent and participation in firm goals. Making your long term plans visible to your people, and ensuring that they are a part of those plans, are critical components of sustainable profitability.

This is the last of the RM’s four part series on small business. The posts available are Cash Budget, Inventory Management, and Identity Crisis. Please feel free to post any questions or comments below the posts, and good luck in all your endeavors!