The statistics from the last few years confirm that women entrepreneurs are a force to be reckoned with. Women are starting businesses at twice the national rate, and the revenue from women-owned businesses is estimated at $2.8 trillion, according to an October 2009 report on the economic impact of women-owned businesses. If U.S.-based women-owned businesses were their own country, they would have the 5th largest GDP in the world.

At the same time, we’re seeing that many of our most common business practices are fundamentally unsustainable. For example, many businesses today are built on the use of cheap labor from third world countries to develop products full of toxins that are then shipped worldwide using fossil fuels. How long, realistically, can such a model be sustained? The rise of sustainable business is in large part due to the realization that business models dependent upon the indiscriminate use of both social and natural resources are not sustainable in the long term.

Both women-owned businesses and sustainable businesses are fairly new trends in business. Neither had an impact until perhaps the past 20 years, and weren’t even a consideration during the Industrial Revolution when many of our business practices were established. Now, however, they are both positioned to significantly change the way we do business in the 21st century.

The opportunity that we have with women-owned businesses is this: to harness that entrepreneurial activity and steer it in a sustainable direction. By doing so, we can demonstrate that businesses can be successful without depending upon the exploitation of workers in third-world countries. We can show that businesses can be successful without destroying our natural environment or exposing us to toxins in the products we bring into our homes. We can show that business has a role to play in mitigating the effects of climate change. We can develop businesses that benefit the communities in which they operate.

All of this is possible through sustainable business, which shows that businesses can be financially profitable while also being ecologically sustainable and socially beneficial. And women can lead the way, because we are the ones who are currently driving much of the entrepreneurial activity. If small businesses are the engine of the economy, then women are in the driver’s seat. We can choose the path that we want to take.

What do you think? Would you like to develop your business to be sustainable? Why or why not?

Do you remember rotary phones? At one time, rotary phones were in every home. Now they’re relics of the past, displaced by better, newer, faster technology.

If you were starting a business today, would you set up a rotary phone for your business? Of course not. The very idea is ludicrous. However, you wouldn’t do it because the rotary phone doesn’t work; technically, you would still be able to make and receive telephone calls. The reason you wouldn’t do it is because the rotary phone is not suited to the business needs of the present. To keep up with the pace of business today, you need a phone that you can take with you, that allows you to read email, search online, and send and receive text messages.

Many of our business practices and beliefs are just like the rotary phone. They were developed during a different era, in which they were widely used and met the needs of those times. However, they are not suited to the needs of the present, much less the future. Consider a few long-held beliefs that are now being challenged:

• Resources are unlimited. At the beginning and during most of the Industrial Revolution, resources appeared to be unlimited. Drilling for oil was on the rise, forests were being cut down, and rivers and lakes were being polluted. However, we now know that those resources are actually limited. Just one look at the famous picture of the blue marble shows that our planet is finite, as it hangs in the vast darkness of space. Therefore its resources are generally finite as well, with the exception of certain renewables such as wind and sunlight. Simply put, there is only so much water, lumber, and minerals available on the planet. As economist Kenneth Boulding once said, “Only madmen and economists believe in perpetual exponential growth.” To expect unlimited resources on a finite planet is simply unrealistic.

• Hierarchical management is best. What we accept today as the way that management must be set up is actually a system that developed in response to the manufacturing environment of the Industrial Revolution, when many low-skill factory jobs needed to be coordinated by a foreman. Unfortunately, this model of one person (or a few) at the top making the decisions and having everyone else fall into line is completely unsuited to the knowledge economy in which we now find ourselves. Today, all employees in a company have access to information, not just the senior management. By holding onto the old belief that only management has the knowledge to make decisions, businesses are actually  missing out on the wisdom of their own employees – and putting themselves at a disadvantage, when their more savvy competitors are tapping their own internal resources.

• Financial profit should be the defining feature of business. As Milton Friedman famously said, “there is one and only one social responsibility of business: to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” In other words, a business should exist only to make a profit. However, what happens when the rules of the game change? A generation ago, perhaps, we could plead ignorance to the destruction of the environment and exploitation of workers in pursuit of corporate profits. Now, in the wake of the Wall Street meltdown and the BP oil spill, the damaging evidence of the natural and social costs of pursuit of profits at all costs is all too clear. While financial profit must necessarily remain an important component for business, it cannot remain the only reason for business to exist. Indeed, businesses that embrace social and environmental responsibility are showing that it is possible to make money while doing good. B Corps provide an excellent example of this.

These are just a few examples, but they illustrate the point that some of our most central business ideas were developed under vastly different circumstances than the ones in which we now find ourselves.

It is time for us to reimagine business for the 21^st century.

When it comes to sustainability, most of the attention is focused on how large corporations can minimize their environmental impact. Wal-Mart’s Sustainability Index, for example, received much fanfare when it was first announced, since the ripple effects of the world’s largest retailer greening its supply chain would be considerable. However, even solo service professionals have a supply chain and can take steps to reduce their carbon footprints. In fact, in many ways the issues are similar to those of a large corporation but on a much smaller scale. Here are some ways to reduce your impact:

• Marketing: Despite the plethora of technological means of communication, the humble business card remains a required business product. And here lies the first choice to make. Do you order the free business card printed on virgin paper, or do you choose a green printer who uses recycled paper? I recommend using a printer like Greenerprinter, whose sustainability practices have been vetted by third-party organizations (full disclosure: I handled sustainability and marketing for Greenerprinter prior to launching Cultivating Capital).
• Office: Whether you work at home or in an office building, you can still take steps to improve your energy efficiency. For example, many basic steps include using compact fluorescent lights (CFLs) instead of incandescent lightbulbs and installing low-flow toilets that use less water when flushing.
• Supplies: Do you purchase disposable items like stirrers and paper napkins, or use items like spoons and cloth napkins instead? (I recently switched to cloth napkins at home, which means that I no longer have to purchase paper napkins at all.) Also, do you buy from large chains like Office Max/Office Depot or a business like Give Something Back that donates profits back to the community? Shifting your purchases away from disposable items and purchasing from businesses that operate responsibly will support the transition to a green economy.
• Beverages: Even a home office requires a necessary cup of coffee or tea to start the day. When you choose your morning beverage, consider using fair trade coffee or tea. Fair trade ensures that the workers who grew the coffee beans or the tea plants are paid a fair wage and work under fair labor conditions. Plus, if you carry fair trade beverages in your office, you have the opportunity to educate your clients about it when you offer them a drink in your waiting room or during your appointment. And remember, when it comes to water avoid plastic bottles. Watch the “Story of Bottled Water” for more on this important topic.
• Transportation: Of course, many solo service professionals attend networking events, conferences, client meetings, and a number of other gatherings. Fortunately, when it comes to transportation and meetings, there are many alternatives. Video conferences and webinars can eliminate the need for in-person meetings in some cases. When face-to-face meetings are necessary, you can choose meeting locations that are accessible by public transportation. Driving can then become a last resort.
• Raising awareness: Because sustainability is not limited to a given industry but rather affects all of us in many ways, every industry is being touched in some way. For example, the American Psychological Association has begun researching psychological reasons for the denial of climate change. Sustainability is a relatively new concern for most people, so there might be an opportunity within your industry for you to raise awareness among your colleagues about the effects of sustainability on your profession.

These are just a few things to think about in terms of your environmental impact as a solo service professional. What else would you add to this list?

The triple bottom line is one of the fundamental principles of sustainable business. The bottom line refers, literally, to the last line on an income statement that shows the profits made by a business. Traditionally, business has been all about the bottom line and profits.

That is all changing now.

A business that focuses only on profits ignores two critical elements necessary to its success: human capital and natural capital. Simply put, a company cannot operate without people to carry out the operations or without natural resources to provide raw materials that can be turned into a finished product. Thus, to look at a business solely in terms of profit is to ignore two of the necessary components of a viable business.

The triple bottom line attempts to rectify this situation. Rather than looking just at profits, the triple bottom line takes into consideration both people and the planet as well. What are the social and environmental impacts of a business in its pursuit of profits? Or, how are people, planet, and profit interrelated in a business?

The triple bottom line has been recast in several related ways, such as environment, economy, equity and human, natural and financial resources. In the case of Cultivating Capital, I prefer to think of it as human, natural, and financial capital.

Businesses that work to implement the triple bottom line are recognizing that a business model focused solely on financial profit is inherently unsustainable. The focus on the triple bottom line provides a more holistic understanding about the business, which can also help savvy owners and managers identify both risks and opportunities that might not be readily apparent when taking a more traditional, one-dimensional perspective of the business.

A triple bottom line business, therefore, will consider its social and environmental impacts when making business decisions. In many cases, this means that the business will report not just on financial performance but also on social and environmental performance. This has also given rise to corporate social responsibility, the practice of businesses assuming responsibility for their social and environmental impacts.

Are you interested in learning more? If so, you might want to read the next post about “Natural Capital: What It Is and What It Means for Your Business.”