Building a sustainable business in the post-COVID environment

Building a niche in whichever market it is that you’re operating is an advantage. Building a business with a uniquely targeted product or solution to either meet a need that is currently not met, or delivering to an underserved market bodes well for long term operations.  Once defined, this niche allows for excellence when serving that particular segment of the market. Having a focused business allows for precision strategy, a streamlined operation and often customers that are eager to build a long term relationship.

According to Stats SA, 42% of start-up businesses fail in South Africa. While this is due to many variable factors, it’s worth considering that by being a niche player improves chances of success.

While diversification can be a good growth strategy with the concept of growing a business, diversification can only be worthwhile if it fits with the core strategy. If not, it dilutes the true value of the current business and the services offered.

While innovation has always been part of any business environment, circumstances globally ensured that there was a distinct uptick recently. This is particularly noticeable in the tech industry, the medical sector, insurance and a number of others. Unique perspectives regarding customer service were explored - what that meant for a business and how to best leverage this for profit.

Innovation resilience has also become something that is being discussed with regards to businesses sustainability. These need not be complex and time consuming, think of how many video meetings we participate in as compared to previously. The technology existed and was incorporated into business - a simple solution and one that has quickly become the norm.

Keeping an eye on the bottom line and managing the cost structure of any business is a significant portion of managing the operation. Having a real in-depth understanding of this can mean survival during tough times and thriving in a more positive environment. Financial management is no longer just about reporting and accounts; it’s about overseeing the organisational structure; designing and implementing strategy for best possible outcomes.

By keeping as much of your costs variable as possible, the business is able to remain agile and ensure that in a recession it’s easy to scale down and correspondingly,  scale up quickly when demand rises. This impacts significantly on supply chain management leading ultimately to customer satisfaction, and can easily enhance the value of any business.

Post-COVID, it’s become clear how important physical and mental wellbeing stands within the work environment.  It’s also become increasingly demanding to manage staff and maintain high levels of motivation. With a new generation entering the workforce, these employees are looking to be more engaged, and require leadership that serves not only the business, but has a social conscience and gives them purpose.

Attracting and retaining top diverse talent remains challenging, but is something that does enhance business sustainability. Along the same lines, is making sure that both senior leaders and management teams are aligned with regards strategy and commitment to the business. Consistency regarding business goals in relation to both staff and customers is one of the key paths to growth.

South Africa has been one of the pioneers in corporate governance with the King reports, and with King IV addressing sustainable development and corporate citizenship, companies are now seen to be accountable and responsible for business decisions.

Ensuring a business is a good corporate citizen, which has become a focus of customers, funders, etc., requires having a strategy that has metrics in place to measure this. It provides tangible, measurable evidence of what works well and can drive growth along with what can impede growth.

While the size of and nature business needs to be considered in setting relevant goals, environmental sustainability measures should be implemented, e.g. clean energy supply, water recycling and waste management.   According to the PWC Global Private Equity Responsible Investment Survey 2021, there is increased recognition regarding the value creation opportunities that arise from aligning a business with the transition to sustainability. Investing for impact is becoming a mainstream strategy, and companies that don’t embrace it could negatively impact the value of their businesses.

So are you implementing good sustainable business practices, or are you going to be left behind?

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Liz holds a Bachelor of Business Science Honours degree from the University of Cape Town, a Higher Diploma in Accounting from the University of the Witwatersrand and is a qualified Chartered Accountant.