Creating an environment of sustainability in your business

By Kathy-Ann Fletcher

Profit is important. Business must generate revenue otherwise you are just treading water and will drown eventually. In light of this it is surprising that many of our businesses are not enduring profit making ventures.

The way we have been handling business is not sustainable and will cause us to lose our hats and shirts.

We can all name at least one company that went from big and full of promise to the brink of folding. Several of these falls from grace may have been due to a slowdown in the economy or market, but many were due to unsustainable practices that were harsh on company finances causing the implosion.

I believe in learning the lessons taught from others’ mistakes. This way we can grow without the pain that those who went before had to endure.  

What was the error of their actions? I think it can be boiled down to one word – excess. We do too much. We think more better but sometimes our growth handicaps our capacity to successfully adapt to changes in the external environment such as an economic downturn.

We take on more projects and force growth faster than our company is able to handle financially. Therefore, even a positive cash flow can be turned negative at the snap of a finger.

As we expand the business, our costs rise. This is great while there is a positive cash flow. However, a decrease in income is not automatically met with a decline in costs leaving you with a mountain of expenses with less capability to meet these responsibilities. 

But how can we develop more sustainable businesses?

Organic Growth – A smart way to expand your company is to match the persistent demand for your products and services. Therefore your growth will match sales and profits as you use the revenue generated from these sources to expand the operations of your business. While this may mean that growth is slower, the company is not to big too handle changes in the internal and external environment.

Prudent use of resources – This speaks for itself I think. For many years even here in Barbados companies were quite wasteful of their resources and when the hard times come, then it shows how this lavish living ate into profits than can be used to develop the company further or provide insurance for future downturns.

These are two steps we can take to make our businesses more sustainable but this list is not exhaustive. I am sure you can suggest even more. Ultimately, if one by one business developed a greater environment of sustainability, that would extend to the economy and allow it to be more enduring even in a recession.