Setting up a green business is a great idea in theory, but turning a vision into reality can be difficult.
Knowing how to build a sustainable business leaves many entrepreneurs feeling overwhelmed. If you’re one of them, you may feel unsure about:
- Which sustainable practices apply to your business model.
- How to integrate sustainable business practices without affecting profitability.
- How to overcome sustainability challenges in South Africa’s unique business climate.
If you’re wondering how to build a sustainable business without crashing into one of these hurdles, then a well-thought-out plan is the important first step.
Below, we aim to help you with this by asking experts to lay out the eight steps you’ll need to take in order to turn your sustainable business dreams into a reality.
Funding could be the difference between success and failure for your sustainable business. Explore Lula’s alternative funding solutions today and find out how you can seize opportunities and grow your business.
What is Sustainability in Business?
Business sustainability can mean two things, both of which are important in today’s world.
One involves running a company in a way that achieves its goals without jeopardising the ability of future generations to do the same. Often, entrepreneurs launch a business with a short-term view, which leads to shaky foundations which pose a risk to its future.
In South Africa, this is a major issue, with some industries experiencing a 95% failure rate. The other sense of the term lies in its environmental impact.
This includes minimising a company’s negative effects on the environment, like reducing carbon emissions, waste and energy consumption.
Both these aspects of sustainability are important to modern business success.
“A sustainable business model is what every business leader hopes to achieve – a business that will turn a profit quickly and stay afloat for the long term,” says Lia Colabello, managing principal of Plastic Pollution Solutions. “A business model that prioritises sustainability is one that, at a minimum, considers all stakeholders, assesses and addresses environmental impacts and is transparent and thorough in its reporting.”
Long-term strategies that are both financially sound and environmentally responsible will help you balance profits responsibly, meet ESG targets and minimise your business’s carbon footprint for future generations.
How to Build a Sustainable Business in South Africa: A Step-by-Step Road Map
South Africa presents a unique environment for business growth, with its diverse markets and vibrant entrepreneurial ecosystem.
Yet it may also appear daunting for business newcomers who may ask themselves, “What are the principles of a sustainable business model that I must follow?”
In short, building a sustainable business requires careful planning, adaptability and a commitment to long-term goals.
Below are the key steps that business leaders should follow when researching how to build a sustainable business.
1. Identify a market need
Before launching, you must be sure that your product or service fills a clear gap in the market.
Doing detailed market research to understand customer pain points (and suss out what competitors are up to) will help you create a unique product that is more likely to succeed.
South Africa’s challenges, such as unemployment and infrastructure gaps, also present opportunities for innovation. It’s how you take advantage of these that will determine how well you fare later on.
Pro tip for SA entrepreneurs
Look into underserved sectors, like renewable energy sources, fintech and agritech to find out what people are looking for but can’t easily access.
Once you have a solution in mind, come up with a Unique Value Proposition (UVP) for it. This is simply what sets your product apart by addressing those needs in a way your competitors can’t match.
2. Build a resilient business model
A sustainable business thrives on a solid yet adaptable business model.
Building diverse revenue streams is central to this so that you get both flexibility and stability. One idea is adding subscription or maintenance plans to the product, as Lauren Cooney, Product & Technology executive at Spark Labs, explains:
“It’s imperative to ensure there are a few demonstrated methods [by which] you can drive revenue,” she says, “whether you’re selling a product and provide additional services with that product, or you provide support services for a subscription fee.”
Another way to build resilience is to make sure you have the right funding. Covering unexpected costs is one thing, but all businesses need the right resources to grow. Strict business lending criteria are a major obstacle to that in South Africa.
Pro tip for SA entrepreneurs
Explore alternatives to traditional bank loans. Our funding options give small business owners access to fast, flexible funding. Many lenders provide a way around lending hold-ups with less stringent demands and easy access to business funding.
3. Build a strong team
Your team is the backbone of a sustainable business.
In South Africa, the silver lining to the high unemployment rate is that there is a pool of talented, eager candidates who could help drive your business forward. These will need to be people who share your company’s values, so a detailed interviewing process is critical.
Not only that, but the most successful businesses are rooted in how they engage with their employees. Educating your team on sustainability will create buy-in across the organisation and make sure that everyone is invested in the company’s goals, not to mention giving you a more knowledgeable workforce.
To make this happen, you can use simple but effective strategies to build sustainability into company culture, from using sustainable terms in team meetings to hosting regular webinars.
Pro tip for SA entrepreneurs
Education needs a strong theoretical basis, but practical action also counts. Volunteerism is a powerful way to involve employees in your sustainability efforts. Volunteer Time Off (VTO) allows employees to take paid time to volunteer in sustainability initiatives, such as tree planting or environmental clean-up drives.
South Africa’s wide variety of local community initiatives and NGOs offer a never-ending source of volunteer opportunities.
Not only could you see a boost in employee morale, but it will also strengthen your business’s connection to social causes.
4. Commit to CSR
Corporate Social Responsibility (CSR) is a socially responsible framework designed to make it easier for businesses to be more sustainable.
It’s built around one question: What are the 3 P’s of business sustainability? The answer is:
- People: Treating employees and communities well.
- Planet: Taking care of the environment.
- Profit: Making money in a responsible way.
CSR suggests a series of measures businesses can take to fulfil these objectives.
Rethinking their supply chain is one of them. This involves sourcing raw materials ethically, and finding ways to maximise fuel efficiency to bring down carbon footprints.
Other measures include reducing resource consumption, minimising waste and using renewable solutions like solar power.
Finally, offering fair wages and providing employee benefits, such as healthcare or professional development programmes, supports the well-being of your team and ticks the ‘People’ aspect of CSR.
Pro tip for SA entrepreneurs
The earlier you put CSR measures in place, the better.
“One of the most crucial things for a sustainable business is to build your value system from the beginning,” says start-up consultant Neha Kesarwani. “Values will set the tone for the vision, company culture, people you want to hire, collaborations, product building and running day-to-day operations. It’s the great values that build great companies and best places to work for.”
5. Build strong relationships
Long-term success in South Africa often hinges on building strong networks. We’ve mentioned how partnering with local organisations and nonprofits like NGOs can boost a new business. Although doing the networking to make these happen can be daunting.
Andrey Shelokovskiy, owner of 360 Painting of Dallas, points out some tips for nervous first-timers. “Networking events can sometimes appear overwhelming, but pinpointing a core group of potential partners within the crowd is a highly effective strategy for navigating this challenge,” he says.
This might involve researching attendees before you go, getting a feel for who they are, and then targeting them once you arrive.
“Pinpointing a core group of potential partners within the crowd is a highly effective strategy for navigating networking events.”
A change in mindset is also vital, as Shelokovskiy explains: “One common mistake in networking is approaching it solely as a sales opportunity,” he says. “The process itself should prioritise offering value and building rapport, including sharing knowledge and genuinely trying to help others.”
Pro tip for SA entrepreneurs
Try the ‘triple-touch’ method at events. After pinpointing key contacts, aim for three interactions: a brief introduction, a deeper conversation and a follow-up commitment (like exchanging emails or scheduling a coffee). This method keeps the conversation moving and solidifies connections.
6. Don’t shy away from technology
It’s tempting to think that targeting green initiatives means rejecting technology and innovation, but that isn’t true.
South Africa’s growing digital economy provides a wealth of options for up-and-coming enterprises, and there are plenty of options that do so while supporting eco-friendly practices.
For example, investing in research and development to create sustainable products opens up doors to energy-efficient technologies and renewable materials that minimise waste.
Automation tools, too, can increase efficiency, which brings down energy use. Take cloud-based software solutions like Xero or QuickBooks, for example. These tools streamline financial operations, so that you don’t need physical paperwork and, as a result, your carbon footprint drops.
Pro tip for SA entrepreneurs
Encourage employees to think creatively about sustainability by holding regular innovation workshops or brainstorming sessions. Focus on challenges like reducing waste or improving energy efficiency and reward the best ideas with recognition or small incentives.
A quarterly ‘Green Challenge’, for example, where teams pitch eco-friendly solutions for your business can produce some great ideas. The most viable idea gets used and you can measure its impact to show how small innovations can lead to big sustainability wins.
7. Prioritise financial health
Many businesses fail due to poor financial management.
In South Africa, a common occurrence is for small business owners to do well at first, then run into trouble as they start to live beyond their means.
“When building your business, it’s easy to want to enjoy the rewards of your success. But do not ratchet your lifestyle up with your cash flow,” says Skyler Ditchfield, co-founder and CEO at GeoLinks.
“The time will come when that cash flow needs to go back into the business to grow. It’s hard to turn your lifestyle back down. I’ve seen so many businesses stuck in the mid-size range where the owner is stuck and cannot grow.”
The problem is, that when the same people turn to funding for help, they find that their application gets turned down for a variety of reasons.
Yet funding isn’t just for covering debts; it can be a key driver in growth, too. Working capital finance , manufacturing loans and equipment financing are all springboards towards expanding business operations and your bottom line.
Pro tip for SA entrepreneurs
Staying in good financial health is not as tough as many people think.
Keep finances organised by separating personal and business accounts and review your budget regularly to adapt to market changes.
Having access to alternative funding options that offer better terms and a faster turnaround than traditional lenders will also help you stay financially agile and position your business for long-term success.
8. Keep your eyes on the long-term picture
Taking risks and going for short-term gains is part and parcel of the business game, but take too many of them and you risk the long-term health of your business.
‘Sustainable’, after all, means building something that lasts, as well as making a positive impact on the environment.
“The best advice I can give is don’t trade short-term gains for long-term successes,” says Bruce Maxwell, customer experience builder at business consultancy MSI Management and Consulting Services, Inc. “And have a trusted associate who is not involved directly in the business to validate your plans and vision. They can share a lot of good insights you may not see yourself.”
A sustainability strategy (in the eco-friendly sense) will also require time and patience to bear its fruits. Investing in solar panels, for example, will make a dent in your bank balance, but will bring you sweet savings a year or two down the line.
Your business will also bask in the glow of using natural resources, rather than contributing to greenhouse gas emissions.
Pro tip for SA entrepreneurs
Make up for the frustration of not hitting your sustainability goals immediately by publicising your company’s efforts on social media, just like with any other business strategy. The likes of LinkedIn and Instagram are great places to let the world know what you’re doing.
You can then use this visibility to build partnerships and let customers know how your business is contributing to environmental sustainability.
After all, you’ve put all this effort into finding out how to build a sustainable business; it would be a crime for it to go to waste.
Don’t let a lack of funding hold you back. Start your online application to see if you qualify for up to R5 million in business funding and access it within as little as 24 hours.
