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Sustainability has become a buzz word across various domains but more so in business. Why has this transition happened? It is because people are becoming more and more aware of the environment. Customers prefer purchasing products from companies that conduct frequent tree plantation drives and use paper bags as an alternative to plastic ones.
This article will delve deep into what sustainability means in business and how companies can make a sustainable business plan in the long term.
A sustainable business plan does not cause a drain on the resources and provides constant returns over time. It generates value for shareholders and stakeholders alike. It also considers the environment, government regulations, adheres to transparent reporting standards, and carefully analyzes the present economic conditions. Business fundamentals and not trends form the basis of a sustainable business plan due to which it remains profitable for a reasonably long time
The following are the four reasons that make a sustainable business plan work.
The initial condition for a sustainable business plan is that it should be commercially viable. Unless you don’t have a free-flowing stream of customers, you cannot expect to survive for long. You will drain your resources and come up with nothing. For commercial viability, you need to focus on the following things:
This point thoroughly examines the definition of sustainability. What is sustainability, after all? It means that you are making profits for a reasonably long time. The highs and lows of the market don’t affect you. Your business fundamentals are strong and you can quickly rebound if market forces trap you. But these won’t happen if your business plan depends on temporary factors like pricing and resource availability. If your business plan doesn’t stand on strong fundamentals, you may fly for some time, but you will nosedive and crash.
Sustainable business plans ensure that companies make judicious use of resources. It’s important because resources are available in limited quantities and take months or years to replenish. Also, some resources are inexpensive but harmful to the environment, for example, palm oil. A business will always like to take control of cheap resources to keep its expenses low. But this strategy can backfire in the long term. Customers today take environmental concerns seriously. For example, if you still use plastic bags, the chances are high that you will lose a fair share of your customers.
The majority of businesses operate on the “Take, Make, Waste” model. In this model, businesses take resources from the environment, use them to make a salable product, and dump the waste in the environment (forests, rivers, etc.). This is a linear model and it harms the environment. Customers wouldn’t like to deal with you if you follow this model. On the other hand, the “Borrow, Use, Return” model is a cyclical model that emphasizes borrowing resources from nature, using them for the benefit of the business and consumers, and then returning to nature by conserving it. If your company invests in nature-based solutions, consumers will build a strong and long-lasting relationship with you.
A sustainable strategy determines what and how much of it goes inside as input, and what and how much of it comes out as output. It is a well laid out document that takes into consideration the following attributes:
Once the company has answers to the above questions, it can streamline all business stakeholders’ collective actions, right from employees and the management to the vendors, distributors, suppliers, and the end-customer. It will also help the company decide the goal sheet, measure each individual’s KPIs, and give a clear vision of the company’s future trajectory. Once a sustainable strategy is ready, the company’s management should communicate it to all the relevant stakeholders, both internal and external and try not to drift away from core principles that are a lighthouse to its existence.
Sustainable business plans unite various stakeholders to work as a cohesive unit. It also creates an excellent image in front of customers that helps sell more products. A recent survey revealed that by telling online shoppers that other people were buying eco-friendly products led to a 65% increase in making at least one sustainable purchase.
Since consumer awareness has risen sharply, a higher percentage of your customers will ask about your sustainability initiatives and judge you based on the steps you are taking to conserve the environment. You should invest in building a support team that deals with the doubts your customers have. The more vocal and supportive you are, the better are the chances that they will share the news with their peers.
You should also ask yourself, “what is your end goal? Is it making huge profits or creating a positive impact on the world?” The bigger the company grows, the more considerable impact it can create. Keeping these things in mind, you must give credence to sustainability while drafting your business plan.
Ask yourself the following questions:
Once you have completed preparing the list of the raw materials, consider answering the following questions regarding the manufacturing process.
In the top-down business model that most businesses follow, there is a wide pay gap between the senior management and the laborers who carry out the manufacturing process. While drafting a sustainable business plan, put a strong focus on bringing wage parity between various business stakeholders. Those on the top of the ladder should not be overpaid, while those at the bottom shouldn’t be underpaid.
When you bring sustainability to your business, the cost of your products may rise. As a responsible company, you must let your customers know why they are paying more. According to a survey, 66% of global consumers are willing to pay more for sustainable goods. And with consumers becoming more environmentally conscious, this figure will only rise.
To engage your customers, you can do the following:
It would help if you kept in mind that including sustainability in your business model can be a costly affair in the short-term. But in the long term, you will build substantial brand value and a significant following in the market. If your customers feel that you are doing your best to operate sustainably and taking steps to conserve the environment, they will spread good word-of-mouth that will attract other like-minded people. Thus, giving the much-required impetus to your business.
Are you searching for marketing automation software such as ERP and CRM systems to plan your resources efficiently and better deal with your customers? We can help you. At Sage Software Solutions (P) Ltd., we are home to world-class ERP software and CRM software that will solidify your business tech support fundamentals and enable you to build a customer-centric organization.
Disclaimer: All the information, views and opinions expressed in this blog are those of the authors and their respective web sources and in no way reflect the principles, views or objectives of Sage Software Solutions (P) Ltd.