Traditionally a business is measured in purely financial terms or by its economic performance — a successful business generates sufficient returns from its operations and investments, and one that does not… is not!
While profitability is the primary aim of most small ventures, there is much to be said for considering a “triple bottom line” approach to business.
Through considering the impact of your business on the people you interact with and on the local community and environment, there may be greater longer-term benefits for all parties — including increases in profit.
Think “people, planet and profit”
The term “triple bottom line” refers to a method of measuring not only the economic and financial results of a business, but also its social and environmental impacts. This approach has been adopted by businesses globally, as many have found focussing on areas other than profit can actually result in improved profitability. To phrase it in a slightly more memorable manner: “people, planet and profit”.
A thriving value-driven business should not be solely concerned with the current year’s profit and its statement of financial position. Your financial statements can show a seemingly healthy current year profit, but if your business is not forward-looking or acting in a sustainable manner, then all may not be as well as it seems in the annual accounts.
While small businesses may not need to account for non-financial metrics as those in the public sector might, there are valid reasons to embrace the spirit of the triple bottom line concept.
These include increased employee engagement, improved standing in the local community and the building of a sustainable business model. Over the long-term, this leads to greater earnings!
As a business owner you should look after the interests of the people within the organisation (your employees), while also considering the social impact of your business on those outside it (the community).
Due care for the wellbeing of your employees can improve employee engagement, which ultimately results in a win-win, with improved job satisfaction and potentially greater productivity. Small business owners should aim to promote fair and mutually beneficial business practices, which never exploit or endanger employees. Key considerations include the provision of attractive working conditions, appropriate employee utilisation and working hours, fair salaries and remuneration packages and a level of flexibility in respect of holidays.
Think of the physical and mental wellbeing of your employees — be mindful and look out for early signs of dissatisfaction or stress, and consider providing staff health-checks or inoculations at your business during work hours.
Your business also interacts daily with people outside itself, including suppliers, customers and others in the locality. How can your business find ways to improve its standing by giving back to the community? Worthy ideas might include the sponsorship of local sports teams, healthcare or education charities.
There is compelling evidence to suggest that sustainable environmental practices can be more profitable over the long run. When we think of “sustainability” we often think of pollution and the environment. If you are self-employed or a small business owner, it makes sense to restrict your ecological footprint so your business does no harm to the environment, or at least minimises its impact.
Waste disposal should be carried out in a thoughtful manner and recycling considered where appropriate, such as for printer cartridges. Rethink the use of transport within your business. Being a city-centric operation, my property buying business, AllenWargent, started paying for vehicles only as required by using a car sharing service, which has proven to be remarkably convenient for us and has helped to trim costs to boost the bottom line too!
Another simple change is to buy fair-trade brands of tea and coffee for the office, while making staff aware of what is being done and why. Rather than wasting excess food in the workplace, consider whether you can pass it on to a food rescue charity.
From an operational perspective, appraise the bigger picture of the life cycle of your products and services — are they sustainable? Will they still be needed in years to come, or is the landscape of your sector likely to change?
A short-term approach can damage the long-term health of your business. Sustainable is best!
Traditionally the financial success of your business is measured using conventional accounting measures, which capture the inflows and outflows of cash and other resources from your business to determine a monetary profit value. Naturally a successful small business will always look to maximise its profit — and acting in a sustainable manner can help to maintain profitability as well as trim costs through lower waste, increased employee engagement and performance, and reduced staff turnover.
To maximise long-term profitability, your business should look to optimise its reputation and be known as an ethical business. How else can you provide a worthy contribution and make the community aware of your business? One way is to volunteer some of your time to a local cause or charity, which can be a great win-win.
Thinking of the triple bottom line can improve the health and wellbeing of your staff, your business and the environment. It can also bolster profits through employee engagement and productivity, and improve your standing in the locality. An ethical and sustainable approach to business can generate real long-term economic benefit, both to your company and to the community. Remember: people, planet and profit!