BU6019 Sustainable Entrepreneurship “Financial Considerations of Sustainable Entrepreneurship”

Last session, we examined the Triple Bottom Line (TBL) As a starting point: Last session, we examined the Triple Bottom Line (TBL) How does TBL link to Financial Considerations?

ACTIVITY Working in pairs, consider what “Financial Considerations” there may be for any enterprise utilising Sustainability Policies/Strategies. Please be prepared to share your responses in 5 minutes with everyone else!

You may have considered “costs” that may be associated with: Reducing waste Training Staff Depreciation of equipment held on to Research and Development costs for developing sustainable offerings Insurance costs for environmental accidents Sustainability consultancy fees New recycled packaging Outsourcing fees (e.g. Industrial Cleaning) Sourcing environmentally “green” supplies Now, what are the “Financial benefits” of being a “green” enterprise?

Consider; “A Green, Green business is one that is designed to be green in its processes and products from scratch!” (Isaak 2002)

Some definitions: Entrepreneurship = “The process through which individuals identify opportunities, allocate resources and create value” 2. Sustainable Entrepreneurship = “The Managing of marketing, success and environmental concerns equally!” (Watson 2010)

From a financial perspective: Environmental Audits take a lot of time and effort! Be aware of the costs associated with this! (But what about the effect upon reputation, and therefore profit, if environmental audits are not undertaken)

Sustainability Analysis Entrepreneurs should prepare a thorough Business Plan! (to be used as a “live” document!) This is particularly important for individuals starting a new venture! A “Sustainability Analysis” will enhance sustainable development, with an expectation to become PROFITABLE at the same time!

It’s good to think! Think of the balance between: Financial factors, Economical factors, Social factors, and Environmental factors! (Keep thinking “time” and “money”!)

The main question for entrepreneurs! Can the organisation actually afford to do business in a sustainable manner? … Well, for SMEs who have smaller financial resources, finances may not stop Sustainable Development – but, lack of time might!! (Think “opportunity costs” as well as financial costs) Advantages: Risk control, enhanced reputation, stronger stakeholder relationships!

Think: Sources of capital (level of risk) Profit and Loss account Balance sheet Cashflow forecast (and cashflow statement) ROI/ROCE Budgets and variance analysis Financial ratios (e.g. Liquidity Ratio) Credit Terms Depending on the size of the enterprise, consider either: The “Wearer of many hats!” Effective communication between Finance and other functions (departments)

And finally… It is argued business activity influences economic stability (e.g. low unemployment). But, sustaining this economic stability may result in shortages of the world’s resources and increased pollution! Q: What are your views on this? Now – Preparation for your ‘mock assignment’ paired presentations! (ie Preparation for the real assessment!)