For Earth Day 2016, it seems appropriate to consider the role environmental sustainability plays in selling your business.
Environmental responsibility is a common theme in large corporations, many of which invest heavily in programs to conserve energy and reduce their companies' environmental footprints.
But the trend toward greater environmental responsibility has also found a home in the small business community - and green practices are having a noticeable impact on the value of companies in the current marketplace.
Green Practices Are a Boon to Sellers
There was a time when environmentally responsible business practices were seen as an additional expense that created little or no value for the business. Fortunately, those days are over and business owners now see tangible benefits from going green.
Those benefits are very apparent in the business-for-sale marketplace. At BizBuySell.com (my employer), we routinely see green practices increase the value and salability of listed business opportunities. This is likely due to the fact that about 66 percent of consumers are willing to pay more for products and services that come from companies who are committed to positive social and environmental impact, according to a recent Nielsen survey.
1. Improved Profitability
Strong financials increase sale price and reduce time on market. In many cases, environmentally responsible business practices generate cost savings to the business, improving both the income statement and bottom line profitability.
According to SCORE, small businesses that strategically invest in energy efficiency can reduce costs by 10 to 30 percent per year. Combined with tax credits and other incentives, the cost savings from green business practices make good business sense. But they also make your company more attractive to buyers.
2. Less Risk
Environmentally questionable practices like using outdated equipment that falls short of today's emissions standards or improperly handling waste can create real financial and regulatory risks for small business owners. The last thing a business buyer wants to acquire is a business that is primed for lawsuits, fines or worse.
By proactively targeting potential trouble spots and incorporating green practices throughout the business, you can significantly reduce your risk exposure and increase buyer confidence. Another important benefit? The sale process should go more smoothly because you will eliminate issues that could arise during due diligence.
3. Increased Brand Recognition
There's a reason why businesses frequently tout their green credentials: Customers love to do business with companies that go the extra mile to integrate environmentally friendly activities into their production and operating routines.
The first step toward environmental responsibility is to identify and execute green initiatives that are good for both your company and the environment. But the second step should be the development of a plan to strengthen your brand reputation by broadcasting your efforts to industry influencers and within the local community.
4. Alignment with Buyer Preferences
Consumers want to buy goods and services from companies that demonstrate environmental responsibility. But business buyers care about environmental responsibility, too.
As more consumers list sustainability as an important factor in their buying decisions, a growing share of buyers rank green practices high on the list of criteria they're looking for when they enter the business-for-sale marketplace. Energy-efficient equipment, reduced carbon emissions, the use of renewable energy sources, recycling - it all makes a difference in earning the goodwill of prospective buyers.
5. Improved Hiring Power
It's important to recognize that your employees also have a stake in environmentally responsible business practices. Millennials and other generations of workers have incorporated environmental sustainability into their personal lives and they expect their employers to share their green values.
The more you can do to involve your workforce in environmental initiatives, the better. By leveraging green programs to improve employee acquisition and retention, you can increase the value of your workforce to buyers.
Of course, the most important reason to incorporate green practices into your business is because it's the right thing to do.
By advocating for environmental responsibility as a business owner, you can exit your company with the peace of mind that comes from knowing that you have done your part to protect and preserve the earth for future generations. As a side benefit, you can also increase the value of your business for when it comes time to sell.