In light of the report issued by the UN's Intergovernmental Panel on Climate Change that was released this month, it is apparent that our society stands to benefit from a shift towards eco-friendly practices. Interestingly enough, the initiatives to “go green” have been around for a lot longer than you may think. In fact, the environmentalism movement first began to take off in the 1830’s and 1840’s. Today, more people are interested in green technology and efficient living than ever before. This is good news for our society’s global well-being. And not only that, but incorporating eco-friendly practices into your business model can result in a wide range of drastic benefits for you and your bottom line.
For those of you that are beginning to think about your exit strategy in the coming years, now is the time to consider implementing environmentally-friendly changes to your business. Green initiatives are having a noticeable and positive impact on the value of companies in the current marketplace- however, these initiatives do not come to fruition overnight- they take time. In this article we will outline the benefits associated with incorporating eco-friendly practices and how they can help you sell your business.
Going Green Can Increase Your Company’s Valuation
How does going green affect your business’s value? Simple: it will save you money over time (which will increase your profit margin and your EBITDA), enhance your capital, and will therefore can increase your company’s valuation when it goes to market. This all can help you earn a more sizable payout, and who doesn’t want that? Here is a selection of financial benefits associated with going green:
1. Save money by investing in green products and practices
2. Broaden and expand your customer base
3. Consumers are willing to spend more on eco-friendly products
Related: What is My Business Worth?
Going Green Can Improve Your Hiring Power and Your Employee Retention
A factor that buyers must consider when purchasing a business is whether or not they will be able to retain the existing employees. While a buyer is not obligated to keep prior staff members on board upon acquiring the company, it is certainly in their best interest to do so - financially speaking. Many surveys suggest that it can cost upwards of tens of thousands of dollars to replace even entry-level employees. Therefore, by incorporating eco-friendly practices that can improve your hiring power and your employee retention, your business will become that much more appealing to an interested buyer.
1. Eco-friendly initiatives can improve your company’s hiring power
2. Eco-friendly initiatives can improve employee retention
Eco-friendly Businesses Can Increase Buyer Confidence
There is a reason why environmentally-friendly companies tout their green initiatives: people love to do business with companies that make them feel good about their purchasing choices. Business buyers are no different - most take pride in participating in the global effort to combat climate change. And not only that, but green initiatives often protect companies from financial anxiety as well.
1. Green companies are less at risk of becoming targets of environmental lawsuits
2. Green initiatives enhance your chances of earning the goodwill of prospective buyers
Developing Eco-friendly Business Practices Can Strengthen Your Reputation and Your Legacy
This is perhaps the most important aspect to consider. Remember that regardless of who acquires your business, you were the foundation of your company’s legacy. Creating an affluent, successful business is not the big picture - you must think beyond the current generation and consider how your business will affect your local and global community after you are no longer in charge. You worked hard to grow your business, and if you are able to leave it behind as a source for positive change, you will have achieved a meaningful and lasting legacy for yourself and your family.
Lastly, while there are many personal and financial incentives to incorporate eco-friendly practices into your business, the best reason to do so is because it is the right thing to do. The most important reason is relevant not to us, but to our children. We must each do our part to ensure that we are contributing to the wellbeing of all future generations to come - one business at a time.