The world in which businesses operate is rapidly changing. We live in a world of finite resources, faced with global challenges of climate change, terrorism, corruption and pandemics capable of affecting millions of people.
Many of these challenges are complex and interrelated and as a business we need to recognise that we must ensure that our impact on the world around us is positive.
We must work closely with customers, and other key stakeholders to ensure that we can continue to be a successful business in the nearest future.
What is Business?
According to Investopedia, business can be defined as:
- An organization or enterprising entity engaged in commercial, industrial or professional activities.
- Any commercial, industrial or professional activity undertaken by an individual or a group. - A business can be a for-profit entity or a non-profit organization engaged in business activities.
Sustainability of a Business
Sustainability means meeting the current needs of a business in a way that will guarantee its future existence. Business sustainability is not a programme or initiative, it is the way we run the business i.e. how we do business.
For a business to be sustainable it has to be done right and enduring. A sustainable business is that which is well established and managed to stand the test of time and outlive the owners i.e. built to last.
Core Sustainability Themes
· Sustainable Financing
· Appropriate Use of Funds
· Good return on investment
· Responsible management
· Efficient business operations
· High-performance environment
Benefits of a Sustainable Business
· Better employee relations
· Higher productivity
· Greater customer loyalty
· Increased market share
· Improved profitability
Core values are the organisation’s essential and enduring tenets. These are a small set of guiding principles which are never to be compromised for financial gain or short term expediency.
Values are guiding principles that drive the way the company operates at a level that transcends strategic objectives.
Building a sustainable business starts from how we define the core values of the business?
Organisational values can be described as "beliefs and ideas about what kinds of goals members of an organisation should pursue and ideas about the appropriate kinds or standards of behaviour organisational members should use to achieve these goals”.
A model for core values
Vision has two components – core values and envisioned future.
Core values define what the company stands for and why it exists. It provides the glue that holds an organisation together through time.
The envisioned future is what the company aspires to become, to achieve, to create – something that will require considerable change and progress to attain
An Effective Vision
An effective vision must include the core values of the organisation – (a system of guiding principles and tenets) and core purpose -(the most fundamental reason for existence)
How to Create Value
Your approach to building sustainable business should create value for your company. You should be able to recruit the best staff; develop stronger stakeholder relationships; have an engaged and motivated workforce; generate new business/investment opportunities; and manage new types of risk.
It should also provide an excellent opportunity to differentiate your brand from your competitors.
Your primary role is to generate value for your shareholders. To continue fulfilling this role effectively you need to take a long term view of the consequences of your actions.
There is need to lead by example, by building a business that will benefit your shareholders, societies in which we operate, the environment and local economies.
Good Business Planning
· Key Success Factors
· Financial Situation/Needs
· Changes in the Economic Sector
· Threats & Risks
· Key Competitive Capabilities
· Key Competitive Weaknesses
Positioning the Business
Building strong loyalty among customers. There is need to position the business not just as a company but as a partner bringing a high level service to your customers by adding value to them
Business positioning determines whether a company is perceived as credible and trusted service provider.
A Business and Its Beliefs
A sustainable business should be built on a strong corporate culture and a passionate commitment to customer service
· Core values are critical
· Develop a corporate culture
· A passion for excellence
· Recognise competition
· Know that people matter
Business Risk Definition
The possibility that a company will have lower than anticipated profits, or that it will experience a loss rather than a profit.
Business risk is influenced by numerous factors, including sales volume, per-unit price, input costs, competition, overall economic climate and government regulations. A company with a higher business risk should choose a capital structure that has a lower debt ratio to ensure that it can meet its financial obligations at all times. Business Risks Factors
These are factors affecting the achievement of your business objectives.
Which of the following risks are relevant to you?
· Lack of management/business experience
· Economic uncertainties
· Reliance on key staff
· Reliance on a few suppliers
· Reliance on a small customer base
· Bad debts
· Partnership difficulties
· Increased competition
· Failure to meet your business targets
· Inadequate supervision
· lack of budgets/poor budgeting
Make sure you have contingency plans in place for all these issues.
Budgeting in Business
What is a budget?
A budget is a plan for future activities. Budgets help a business to achieve planned objectives. They also help to illustrate the financial responsibilities of the organisation to several groups of people: lenders, suppliers, employees, customers, and the owners.
Using budgets is vital for the planning and control in business.
Budgeting is the process of preparing, compiling and monitoring financial budgets. It creates a framework within which individuals, departments and whole organisation can work.
Golden Rules For Effective Budgets
· Budget continuously
· Budgeting and planning are not just one time event
· Take your time
· Budgets are the key part of planning and require careful thinking
· Involve all those that should be involved
· Be realistic – focus on actual needs
· Look to the future not the past when deciding budget amounts
· Be aware of politics – the size of budgets does not equal its importance in the organization
· Monitor events – priorities and amount may need to be changed in line with events
· Allow flexibility – budgets do not have to be slavishly followed
Common Mistakes to Avoid in Business
· Lack of focus
· Inadequate tracking of activities
· Improper selling
· Poor planning/budgeting
· Too much discounting
· Misunderstanding your customer
· Neglecting customer feedback
· Failure to delegate duties
· Poor technology
· Lack of funds
How To Run Your Business More Effectively
· Stay up-to –date
· Take your customer seriously
· Don’t just set the standard, keep it
· Lead by example
· Stay creative
· Outdo yourself – set higher targets
· Take budgeting seriously
· Manage your cost effectively
· Financial discipline – invest wisely and strategically
· Embark on capital projects without hurting the business operations
· Run the business as a sustainable business
Guide to Building a Sustainable Business
· Strategic Planning
· Measurement, Analysis, and Knowledge Management
· Workforce Focus
· Operations Focus
· Review the overall leadership system
· Align financial and human resources
· Communicate cultural norms
· Encourage and provide resources
· Solidify a culture of organizational excellence
· Identify organizational objectives
· Measure progress
· Coordinate use of assets toward objectives
· Customer Focus
· Build customer engagement and loyalty
· Use the voice of the customer to identify areas for improvement
· Make all process steps something the customer is willing to pay for
Measurement, Analysis & Knowledge Management
Measure and improve
· business results
· overall organizational performance
Monitor and measure process performance
· Manage workforce capability and capacity
· Foster a high-performance environment
· Engage, manage, and develop the workforce
Processes are interrelated, interdependent steps along the path to customer engagement and organizational sustainability
· Generate standard operating procedures
· Set specification and control limits
· Identify explicit corrective actions
· Optimize processes
Monitor functional or operational results with focus on
· Product/Services and process
· Leadership and governance
· Financial and market
It is possible to build a sustainable business where you take into consideration the business risk factors and prepare adequately to mitigate these risks. There is need to position the business in such a way that it is perceived as credible and trusted service provider. It should create value for the stakeholders.
The focus of the business should not just be on achievement of short-term goals, it should include the long-term goals as well. It should not just be on survival but on its future existence.
Remember, the ultimate goal is to have a business that is solid, enduring and built to last.
For more information about our Business Advisory, Consulting and Training services, kindly contact:
Chief Executive Officer,
Amag Nigeria Limited