Wellness Brings Sustainability to Business

I hear the word sustainable daily. I hear it in the food community. I hear it in the environmental community. I have heard it more and more in the business community. The reasons that sustainability is so important is something that crosses lines and has brought many groups together to focus on similar and combined efforts.

In other words, sustainability is important. The fact that so many of us hear about it, talk about and take action to improve it is proof that sustainability is something that we all care about. There are many ways to view sustainability, but there is no way to deny its importance.

Before we get too far down this road of philosophical discussion and comparisons between the various areas that sustainability comes into play, let's define it.

Sustainability is:

1. The capacity to endure

2. The long-term maintenance of responsibility

3. The responsible management of resources and resource use

4. Managing impact

These definitions are clearly different, but they all touch on similar things. They talk about capacity, management, maintenance, resources and impact. These five words are what I think of when I think about sustainability. They are all important and you can't succeed in any area without most if not all of these things. If even one is lacking, there will be severe consequences.

That is why sustainability is such a big topic in so many areas of our lives. If we don't practice it, we see big problems. If do practice it, we see success in the short term, but more importantly, we are setting ourselves up for long-term success.

So, how do we practice sustainability in business? It's simple. We focus specifically on each of the five areas and move forward from there. Let's take a look:

Capacity: How much do we have? How many customers can we serve? How many products can we make?

Management: This goes without saying. Is there a business on the planet that doesn't have a manager? Management also refers to other systems in the business. You have to manage in order to be successful.

Maintenance: There is a reason we have repair people, maintenance crews, facilities managers and others that are charged with maintaining parts of our business. If you don't maintain something, it won't last very long.

Resources: This is something that hits home with any business person. You need resources to get started. You provide resources to employees to serve clients. You provide resources to clients as the core of your business. Without resources, we are unable to function.

Impact: The impact that various factors have on your business are summed up by all of these things. When something happens, there is an impact. For every action, there is a reaction. It may be large, it may be small and it may be something that takes a while to realize. Regardless, there is an impact to everything we do in business.

That is sustainability in a nutshell. You have to mind the five factors in order to be sustainable in any area. Business is no different, as you can see. The absence of even one of these things could quickly bring a successful business to a screeching halt or prevent a new business from getting started at all.

Wellness is a part of business. With employee health, there is an impact on the business no matter how you look at it. If an employee group is healthy, they are more productive, it costs less to insure them and there are better results overall.

That is well-documented and hopefully only becoming more widely realized. On the flip-side, if employees are not healthy, there is also an impact. They are less productive, it costs more to insure them and results are not as good.

This is the definition of impact. The health of employees is affecting business everywhere right now, whether they are trying to make an impact or not. These companies often want to be sustainable. They often pride themselves on sustainable business practices and processes that help them remain efficient, cost-effective and profitable. All of these things lead to sustainability.

There is one problem. What if a business is not putting a priority on healthy employees? If your company is simply paying more for healthcare each year and ignoring employee health, the model you are in now is not sustainable. Not only is this model missing all five of our pillars, which will disqualify it from most of our definitions, but it is missing the core of sustainability: the ability to endure and long-term survival.

Healthcare as we know it is only getting more expensive. Businesses are finding that it is more and more difficult to provide for employees. As the costs rise, both employees and employers are feeling the pain. The problem with the current model is that no one is working for sustainability. Employees are not managing their resources or impact. Employers are not maintaining their workforces and the whole system is being operated above capacity... hence the continued cost increases.

Think of corporate wellness as a way to reintroduce sustainability into your business. The five pillars of sustainability fit into the wellness model like this:

Capacity: How much do we have? How much healthcare spending can we afford? How many issues can we deal with before making changes?

Management: Management refers to the systems in the business. Employee health is one of those systems. You have to manage it in order to be successful. If you don't, you just pay more and you know it is going to happen. That is non-management.

Maintenance: Just like business equipment and facilities, it is cheaper to keep something up than it is to repair after long periods of neglect or to replace outright. Maintaining employee health is the key to keep costs down. It's that simple.

Resources: You get what you put in. When you put nothing in, you get nothing in return. We see this in all areas of life and business. By dedicating resources to wellness, employee health improves.

Impact: The impact of health on business is incredible. It can severely handicap a company or it can lift it up and create future success. It all depends on how the other four areas are handled. No matter what, health impacts business.

How to Increase the Value of Your Business Before Selling

Whether you have an existing business or are considering starting a business, Michael Gerber in the book, The eMyth, suggests the only reason to build a business is to sell it.

Sadly, many business owners wait too long to prepare the business and they do not have enough time to maximize the sale price of the business; some never plan to sell and others simply get caught off guard by an unexpected illness or unfortunate event.

To help you not get caught off guard, it is best to start as soon as possible to prepare your business. It is never too early.

Here are a few tips to help you increase the value of your business over the next 24 to 36 months.

1. Clean up your books. With "good" accountants, you are likely writing off much more than just the required expenses of the business. The value of the business is directly linked to the profitability of the business. If you have minimized your profitability to decrease your tax burden, you will not maximize your selling price. To maximize your selling price, 3-4 years before you want to sell, start optimizing your business to maximize your profit. This alone can greatly increase the what your business will be worth to a buyer.

2. Note abnormalities that will be adjusted for. When a professional values your business, they will look to "normalize" your books, called "recasting." During this process anything that was not normal will be removed and this will increase the profitability of your business. For example, if you owned a restaurant and had to replace the hood system. This cost would be removed because it is not "normal" and does not happen every year. Therefore, removing it would increase the profitability of your business.

3. Replace yourself and family members with staff. If you have family members working in the business, start to replace each one with non-related staff. When a buyer looks at your business, the business has less value and is riskier if there will be a mass exodus at the time of the purchase. Slowly, replace each family member with a staff member that would stay with the business after the purchase.

4. Secure key employees. You will also want to create an employee retention program to secure employees that are critical to operations. A new owner will feel more comfortable knowing the critical employees are incentivized to stay with the business after the purchase and this will make the business less risky and more valuable.

5. Design your business on systems. Every major task in your business should be documented and systematized. Although your current staff knows exactly what to do, for the buyer, having systems in place assures him or her that the business will run without you. Start by documenting the critical functions and then over time document all functions of the business. This task is time-consuming, but will make a huge difference in the sales price of your business.

6. Have a growth plan. Now is the time to ramp up your marketing, sharpen your sales team and make sure you have a solid plan for growth. Buyers pay more for growing flourishing businesses than ones that are stagnant. Now is the time to make your business look the best it's ever looked.

Critical Things Small Business Owners Neglect

What are three critical things that small business owners and operators neglect?

The first is not having a strategic and business planwhere they define the ultimate objective of the enterprise. The Late Professor Randy Pausch commented in one of his last lectures "if there is no plan there is nothing to manage".

The second is neglecting the primary reporting systemof the business. I refer here to the accounting system. This is in fact the "sexiest" and most valuable system in a business. I can hear readers cry out - "Only an accountant could say that!!!", read on and you'll discover why.

The accounting system provides the information the manager needs to make informed decisions. Decisions made without current and accurate information have no substance and are at best guesses. Decisions made with the benefit of well prepared, timely and accurate reports have good ground to stand on and are more likely to be good decisions.

Thirdly owner operators neglect operating systemsin general. Activities in a poorly run business are done in an ad hoc fashion, on a needs basis, and are usually not carried out in any consistent fashion.

Why is it important to owner operators to recognise these shortcomings?

Businesses are almost always established with the intention to make money and build an asset. The return on investment and ultimate value of the business depends on these factors and how well they are conducted throughout the life of the business.

Businesses that have the highest returns and residual value are those that were built with the primary thought that the business will ultimately be sold. Businesses which are built this way have a strong planning culture, an efficient and effective reporting (feedback) system and are based on systems that interlock and deliver consistent results.

When small business operators seek professional help these are factors that are frequently low down the list of priorities of the owner/operator.

The operator is, as Michael Gerber so neatly describes in his book "The E-Myth Revisited", so busy doing his work that these very important areas are neglected.

Business planning is seen "as a waste of time and energy because nothing works out like the plan anyway', paraphrasing clients comments I have received over the years. They fail to realise that the business plan of today is a very flexible program that enables the manager to "change horses" if the conditions don't suit the "nag" he's on. The strategic plan will have "other horses in the stable" to bring out to meet the new conditions and enable him to reach the destination he planned at the start of the period.

Many business operators see the accounting system as being there to report income and expenses to taxing authorities and as having little internal value. The reporting system frequently is ignored until the pain from the threat of fines or worse hits the businessman for not meeting statutory obligations. Then it's a mad rush to catch up and management information is so out of date that it is virtually meaningless.

As for systems, these are usually carried in the heads of the various role players in the enterprise. They may be passed on from employee to employee and research has shown that this is not a reliable way to achieve consistent results in a business. Is it any wonder that no two items produced are the same, inconsistency is the order of the day, and that there are inexplicable cost blowouts or volatile expenses incurred to the untrained eye.

If the enterprise had a strategic and business plan in place there would be a clear vision of the expected result for the year; each step of the mission would be measurable and reported and there would be options available to adopt if circumstances changed.

If the accountancy system was operating well, decisions could be made with confidence that they are based on solid foundations. The reporting would show if the heat needed to be turned up or down and by how much.

The systems in place would ensure that every task was conducted the same way irrespective who was doing it. The systems would determine when activities occurred and how different systems interact with each other.

How do these critical factors become part of the enterprise?

This is the simple part.

The business owner makes a decision.

Resources are allocated in terms of

time and people -

to implement a business plan;

to design and build an accounting system that works for the business; and,

to document all the necessary tasks and procedures to be completed in the operations of the enterprise.

Will this happen overnight? No it will take time and commitment because these are the building blocks for a successful and valuable business. In many businesses this process, depending on resources, can take up to two to three years and then it's constant monitoring and updating.

What if these three critical factors become part of the enterprise?

The first thing the owner/operators might notice is the increased productivity and profitability and increased capacity the business has. These steps will unlock hidden capacity as they will also eliminate waste.