There are three key areas of business that I believe will determine a business’s long term growth and viability aside from the financial analysis that is so crucial to investors.
The three key questions need to be both a stocktake on where your business stands today and what is your policy going forward. In essence, ESG questions that need to be forward looking.
To have policies in place to ensure sustainable growth and to be accountable to investors are key variants.
The questions revolve around the trends in today's world that are dominating and will dominate investing trends.
What is your carbon footprint?
As regular readers will know, I believe that everyone should start by measuring their carbon footprint and have a plan on how that will be reduced. This is even more crucial for business.
Sustainability accounting is coming at the big end of town, which means it will flow through to SMEs. Not just via accounting but by the role SMEs play in large company supply chains. Net zero pledges will come under increased scrutiny and SMEs have a crucial role to play. Large companies will demand SMEs know their carbon footprint and have a plan to reduce it going forward. As an aside the E in ESG is the area that is most likely to see regulations increase.
How diverse is your company and do you have a diversity policy?
Did you know that over 70% of S+P 500 companies report their diversity scores? As an SME, diversity can be problematic with smaller staff numbers, but it is essential that companies decide early to have a policy that recognises and embraces the need for diversification. Not only will it be a supply chain issue but it genuinely makes for better business decision making.
Technology is a multi faceted term but here I am referring not so much to efficiencies generated from technology usage(which are also essential) but to the threat of disruption. It is worth thinking about, and planning for change that is likely to impact your business going forward and to continually review this plan (at least annually). Today's disruptor can become tomorrow's disrupted. ESG positive listed firms trade on a premium as the equity market is already making these decisions. Listed equities won't always pick the winners, but they give an insight into what future trends may look like.
How do SMEs accomplish this while striving to grow? They need help and this is where Beckon and the “Beckoniser” come in.
Step one identifies where your firm is today on these key issues both qualitatively but also quantitatively. We measure and evaluate both the financial as well as the ESG/impact position of your firm.
Step two sets goals that can show change and be measured.
Step three allocates time to review trends and identify risks as part of an ongoing relationship.
If you want to grow to be a sustainable business these are some of the many issues that need to be addressed. I believe they are key metrics.
David 'Bushy' Nolan
+61 (0) 409 881 910