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A Sustainable Model

I have observed several variations on the definition of Sustainable. Some give it the idea of non polluting and thus to be sustainable it must have no impact on the environment. I agree we must not damage the environment, but man by his very existence breathes oxygen and exhales carbon dioxide. If we are in balance with our environment, then there are sufficient trees and plants that consume carbon dioxide and exhaust oxygen. The problem being that while the population has increased, man has ravaged the land supporting the source of his oxygen. Thus for mankind to survive long term in a closed loop ecosystem, this process must be in balance the same as an equation.

Sufficient Oxygen for One Person = Number of trees needed to produce Oxygen for one person

If we are aware of the processes that nature has put in place, then as stewards of our planet we should do our best not to destabilize them. If we are not vigilant, the balance and inevitable  consequences are simply a matter of time. Unfortunately, the data indicates deforestation is taking a toll and Carbon Dioxide concentrations are increasing. So in that practical sense, we are not practicing survivable sustainability at the most basic level.

Another definition of Sustainability also gives rise to the idea that a process must be self perpetuating to be considered sustainable. To illustrate this point, lets examine a business model for any successful new business venture. Companies that are considered growth oriented organizations, point to their cash flow as evidence of their viability. When cash flow shows an increasing trend based on growing profits, a case can be made to place a long term investment in their stock. However, if there are insufficient profits to support a growing cash flow, then the balance sheet will reflect a company dependent on continuous cash infusions to survive. Long term if the profits cannot sustain the process and funding infusions becomes restricted, the company will wither on the vine and cease to exist.

If we illustrated this type of successful situation as an equation it would look like this:

Successful Business = SB

Business Process Model = BPM

Adequate Cash Flow = ACF

SB = BPM – ACF

We see in this illustration that the Adequate Cash Flow (ACF) needed to sustain the Successful Business (SB) is taken or subtracted from the Business Process Model (BPM). In short, the successful business model is self supporting.

If we must add ACF funding into the equation to support the BPM, as most business startups initially require.  The formula would change to this:

SB = BPM + ACF

This change in how cash flow is provided, would create a business dependent on added cash from investors to continue executing the business process model.

The key point is to emphasize that Successful Businesses must generate enough cash flow from their ongoing operations to fund continuous growth and expansion projects. If they are dependent on cash infusions to survive, they are not sustainable.

 

 

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