Sustainable business: it’s a fashionable phrase, a buzz word. But when you hear it, you think ethical. Right?
Well, sustainable business isn’t just about green and socially responsible enterprises. At base level, sustainable business is all about longevity: it’s about the long term maintenance of a healthy profit.
In these tough economic times, businesses are tested to their limits. Consumers are risk averse: they only want to deal with firms they know and trust. The upside of this is, people will do business with companies if they believe they’re going to stick around for a while.
Assuming you want to be one of those businesses, you’d best get to know what makes an enterprise ready for the long haul. Just what kind of business is sustainable?
On a case-by-case basis, of course, you can consider a business’ fundamentals: its financial statements and health, its management and competitive advantages, and its competitors and markets. But to speak generally, there are some sectors that are more likely to produce the kind of solid, sustainable business that will see out – or even benefit from – the downturn.
To give you a nod in the right direction, we’ve picked out business types we think will last the tough times:
1. Online retail
High street sales are plummeting and consumers are disappearing: but online sales creep up and up.
How is it possible? Well, web-based enterprise has all the qualities of a sustainable business: low set up costs, low running costs and the potential to garner a broad client base. If done well, it’s virtually immune to economic change.
With no high street overheads to speak of, no geographical or time restrictions and no need to display stock, online retailers are not only the shopkeepers of the future, they’re also the ones cleaning up right now.
So whether you’re thinking of selling a niche service online, plan to go live with an online information product, or aim to trade as a web-based retailer, don’t let the downturn hold you back. Because if you’re online, it won’t.
2. Funeral parlour
Setting up a funeral home might sound a bit grim, but hear us out.
Human needs remain the same no matter how the economy fares: food and shelter are everyday necessities. Illness can strike at any time. And one day, ultimately, the clogs are going to pop. It follows: businesses like funeral parlours do well no matter what the GDP.
From a demand perspective, accommodation providers, healthcare and food suppliers have the sustainability hallmark too. Even so, you have to watch out for changes in the market.
It’s worth noting that restaurants do badly in lean times, for instance. And then, the recent collapse in prices means that investment property is probably not the best way to go… But buying to let is a profitable alternative route. And supermarkets and convenience stores are a short but lucrative step away from catering.
Healthcare supply and funeral care are constants though. Business-wise, pine boxes – and pill boxes – are a safe bet.
3. Pound shop
The closest thing to ‘free’ is a 99p sticker.
It’s recession time, and customers are cutting back on expenditure. High street units are emptying across the country. If you want to set up shop and you’re keen to avoid risky ventures, you can’t go wrong opening a store full of bargains.
Toys, toilet roll and tat: these outlets aren’t classy. But they’re reliable in their offerings and are a one-stop-shop for children’s parties, Christmas lights, cheap chocolates and candles. And your stock is as cheap to buy as it is to sell.
Just make sure plastic flowers and ‘Made In China’ signs are to the taste of the high street in question.
4. Luxury goods
It may be counterintuitive, but the upper end of the market is generally immune to financial flu.
High-end products, from luxury holidays and designer handbags to artisan ice-creams, are defying the consumer spending slump. Back in the downturn of the nineties, Haagen Dazs did a booming trade; your business could be the surprise luxe success of this recession.
The logic goes like this: even if skint, the modern-day consumer is accustomed to the odd treat. But instead of buying ten middling things, as was their wont in the good times, consumers are more likely to go for quality than quantity now. They’ll go for one good item -- even if it’s a bar scented soap or fancy chocolate.
There’s still money being spent out there: you’ve just got to create the right net to catch it.
5. Domestic tourism
With the pound down against the euro and the dollar, and job-security at an all-time low, it’s likely holidaying abroad will be a low priority for Britons this year.
But families still want to keep their commitment to their annual holiday. As a result, those camping holidays in
Whether you have plans for a budget B&B or your eye on a seaside hotel or campsite, now’s the time to get listed in holiday guide books. Similarly, bus tour operators, historical guides, hiking and adventure organisers – and those running local culture and music fairs – should plan for a busy summer.
These are gloomy times, but the sun may yet shine on businesses offering a traditional British holiday.
If consumers are not buying anything new, older items – from clothes and shoes to cars and home fittings – will still need to be repaired eventually.
There are happy side-effects to a conservative economic climate: cobbling, home, car and general repair firms look set to benefit from a resurgence in popularity. Sustainable living – in the green sense – works well for these businesses.
So if you are a skilled tradesman or mechanic, or if you have a passion for professional-standard DIY, now could be the time to turn your hand to setting up on your own.
7. Green and ethical business
Now that fewer people can afford to buy organic, green business has lost some of its cachet. But this is a sector that fits with the frugal mood.
Ethical retailers, offering fair trade, locally sourced or organic produce, tend to have a loyal customer base that looks for more than the cheapest price. And green still has promise: sustainability is, after all, its motto.
Demand for green goods remains high, and the rising cost of energy and other resources means that eco-friendly business makes good business sense. Investment in green goods, such as energy-saving light bulbs or solar panelling, saves the consumer money in the long run.
So don’t let the pile-em-high, sell-em-cheap brigade get you down: your start-up eco business may soon have competitors green with envy.
If you have specialist knowledge, there are people out there who are willing to pay for it. This is a business with sustainability written all over it.
Whether you’re thinking of becoming an IT consultant or manning a business consultancy, your job will be to act as guide to your clients. You fix problems, both minor and large scale. As you can imagine, during a downturn there’ll be lots of demand.
But if you’re good, you have a guaranteed client base, downturn or none.
The great thing about becoming a consultant is the low entry cost: it needn’t involve an outlay of precious savings or expensive borrowings, which makes the risk much more manageable.
If you have the knowledge, the motivation and the interpersonal skills, why not break out of the box and set up on your own?
9. Money lending
An unpopular one, this. After all, bad debt is what got us into trouble in the first place.
But if you have money, you can make money: and the rates of interest on small sums lent, and hence the return you can expect, are generally high.
Low set-up costs and minimal running costs make this business relatively stable and sustainable. Especially if your enterprise is based online.
High street banks take up the greater portion of the money lending market, but there are opportunities for smaller businesses offering on-the-spot cheque cashing and payday loans, as well as home credit and sums as small as £100.
But beware: operating without a credit licence makes you a loan shark. Sharks are deservedly unpopular, bringing disrepute to legitimate lenders by targeting vulnerable borrowers.
If you go down the money lending route, just make sure you operate within the law.
10. Debt collection
And you thought money lending was unsavoury. But, with the fervent hope that collectors aren’t all bad, we offer you debt collection as a prime example of sustainable business.
These are tough times, and as customer debt grows, the demand for non-court action debt collection increases.
Debt collectors chase so-called ‘delinquent debts’, through snail mail, telephone and email, for businesses. The older the debt, the higher the commission you can collect: rates run as high as 60%.
Minimal overheads and low start-up costs are in debt collection’s favour. Many debt agencies operate from a home base, and if you network well, and establish good word-of-mouth, you can quickly build up a client base.
But remember, Shylock is a fictional character: if you’re doing it right, you will not need to go ‘heavy’.