The Characteristics of a Sustainable Business
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What makes a business resilient and enduring?
A long term sustainable business has the following characteristics:
- Redundancy
- Diversity
- Modularity
- Adaptability
- Prudence
- “Can do” culture
Table of Contents
Redundancy
Think of your business as a well oiled machine. If one part fails and you have a backup, all is well. If you have only one battery and it fails you are out of luck until you either recharge or replace it .
Include components that are not absolutely necessary for the day-to-day running, but will provide another way to operate in case of a critical failure – a backup battery so to speak.
Murphy’s Economics is about the cost of NOT having something.
Redundancy should be used in procedures, equipment, staffing (definitely staffing) – across the board.
Reduce Failure Points
Look for break-points in the business – can we continue if that person is not available? that machine fails? that raw material in not available? etc. As part of your risk analysis, weight the risk then define a mitigation strategy.
Have no indispensable parts of the business whether it is a process, person or machine. Never set yourself up to be held to ransom.
Do we use two smaller machines instead of one large one. Do we buy a smaller machine to act as a backup whilst the main machine is being repaired or serviced? Can we use them both to improve throughput and flexibility? The same applies with people.
Standard Operating Procedures allow you to create a business that is process dependent which is position based rather than person based. This means that you have multiple people capable of doing any process – even yours – particularly yours.
A rural business has more potential failure points than most other businesses.
- the season
- the economy
- politics
- the government
- raw material quality
- personal health
- staff availability
- the market
Diversity
Monoculture is gambling.
The difference between a single cable and a spider web is the number of connections – the number of critical failure points.
A cable (a single product) has only one failure required to stop the show. A spider’s web has many and can continue to catch flies (income) even if some are broken.
Diversity of product is necessary. To protect the business you need multiple income streams. Consider it a form of Redundancy.
This year there will be a couple of products that are doing well, some that are OK and a few that are not good at all. Next year it the same, but with different products. This will even out the total income and reduce the gamble.
If you only have one product the same thing occurs – some years you do well, others it is a bit ho-hum and others not well at all. This seems to me to be a bit of a risky way of operating!
Author’s Note
I cannot emphasise enough that Monoculture is gambling.
A range of income streams is the only protection in a variable enterprise like agriculture.
Modularity
Broadly speaking, modularity is the degree to which a system’s components may be separated and recombined, often with the benefit of flexibility and variety in use.
Each component is a different product set. For example look at using rotational grazing of cattle combined with free range poultry (eggs or meat) following in 72 hours as a soil fertility boosting exercise for later cropping. Graze for 5 years then crop for 4 years – rinse and repeat. Each component is integrated and compatible. They are Clean, Efficient and Profitable.
Use a multi-species pasture ley for the cattle, to provide better nutrition. Species like Sainfoin and Fenugreek reduce bloat whilst Anthelmintic plants – chicory, sainfoin and birdsfoot trefoil manage worms naturally.
The poultry spread the cattle manure and clean up any weed seeds and insects. They naturally break pest cycles and are quite productive in their own right.
Consider the components to be a form of business Lego. They snap together in many different ways.
Adaptability
A business must be nimble, flexible and able to adapt to changing conditions. If it is unable to take advantage of opportunity, it is on a short path to failure. This world is changing too rapidly to allow processes to remain static.
This applies to all levels of the business. If the management cannot accept suggested changes from staff (ego) and the staff are unable to improve their daily operations (fear), the mechanism will quickly rust and stop – or even worse, stagnate.
Not all suggestions are advantageous, but most should be tested to validate their potential for greater efficiency rather than immediately judged.
If nothing else, management acceptance of staff input will provoke ownership of the business goals by the staff.
Prudence
A sustainable business needs to be risk tolerant but exercise careful good judgment that allows someone to avoid danger or risks.
Errors are expected as part of an agile business – they are not punished, instead they are examined with an eye to changing systems to remove the possibility of them happening again whilst improving the business overall. What was the lesson learned? Turn failure into opportunity.
“Can do” culture
Embed a “willingness to improve” into the company culture. A base of Kaizen and Kanban will allow ownership of tasks by staff.
Invariably, staff know their tasks better than management – they face them daily. They are therefore in a better place to identify improvements.
Create a culture of constant improvement at all levels. Staff willing to improve and management willing to support change.
Elon Musk regularly says that apart from stupidity (theft, vandalism etc), the main reason he fires people is a failure to innovate. He does not tolerate corporate antibodies.
Prior to devoting my time to Properly Organic and Designer Acres, I served as a contracted super tech in the bleeding edge of satellite imagery, business management and accounting software, then telecommunication software bringing SMS and Mobile Application Protocol into Australia. I then decided to return to the land. I quickly discovered that apart the shape of the bales and the colour of the tractors little had changed.