“Sustainability” has become something of a buzzword in recent years. It gets used so frequently that it’s not always clear exactly what the word means. Whether you’re selling your business or just trying to set yourself apart from competitors, business sustainability is something you definitely want to achieve and communicate. But first, you need to recognize what a sustainable business really is.
In this article, we’re developing clearer definitions of sustainability in all its forms and finding out why they matter when you sell your business.
Environmental Sustainability
Environmental sustainability means your business is kind to the environment and does not take more than it gives back. Reducing your carbon footprint and resource drain is an obvious way to improve sustainability, but true sustainability is all-encompassing. You need to be able to trace the supply chain journey of all the products and materials you use; otherwise, it’s difficult to confirm they are indeed sustainable.
Why It Matters
Lots of businesses have tried to pass their operations off as environmentally friendly and sustainable, only for it to be discovered this isn’t actually true. As business buyers want to take over a company that meets environmental compliance regulations and offers sustainable services to customers, this isn’t something business owners can afford to exaggerate or misrepresent.
Social Sustainability
Social sustainability focuses on people and communities. From offering fair working practices in your local area to championing the rights of workers and local communities all over the world, social sustainability is just as all-encompassing as environmental sustainability. Once again, it comes down to traceability — you need to be able to gain visibility over your entire supply chain and operations.
Why It Matters
Like with environmental sustainability, many businesses in the past have used the badge of fair trade and social sustainability as a selling point. But in more recent years, consumers have become savvy. They want to see regulatory proof of social business sustainability. Gaining this proof through an independent audit can add value to your organization ahead of selling your business.
Financial Sustainability
Financial sustainability is a little different from environmental and social aspects. It is more focused on the long-term viability of a sustainable business — its ability to operate profitably by reducing spending without sacrificing product and service quality.
Why It Matters
Except in very rare circumstances, business buyers aren’t interested in organizations that are not profitable. It’s very difficult to sell a business that’s operating at a loss, unless it’s at a heavily discounted rate. Even if businesses can meet regulatory compliance benchmarks in other areas of sustainability, financial viability is an absolute must if you want to achieve a sale at a fair price.
Hitting All Aspects of Sustainability and Proving This
The bottom line here is proof. When selling your business, you need to be able to prove that you are hitting those all-important environmental, social, and financial sustainability benchmarks. You can achieve this through independent audits and third-party verification. These services cost money, but you will make this investment back when you come to sell.
Here at Batallan Group, we specialize in helping clients maximize value when selling a business. To discover more about proving business sustainability and optimizing business market price, reach out to our team today.