The end of the year is a great time to plan for the new year. This is an opportunity to reflect, evaluate what worked and what didn’t, and set goals for the new year.

As a business owner, you are already constantly working on four of the five key areas for a sustainable business: planning and strategy, finances, operations, and sales and marketing. The fifth area – sustainability – is one to begin working on, if you haven’t done so already. Taking the time to review your performance in these areas during the past year and engaging in reflection and planning will prepare you to get off to a strong start in the new year.

• Planning and strategy: A SWOT analysis is a good way to think through the strengths, weaknesses, opportunities, and threats that will affect you in the coming year. The strengths and weaknesses are internal to your business, whereas the opportunities and threats are external. As you think through this, consider how you can leverage your strengths, improve your weaknesses, capitalize on opportunities, and mitigate the threats. This process can help you to then identify your top business goals for the coming year.
• Finances: This is the time to make sure that your financial records are organized and to work with your accountant. The Business.gov site has set up a Small Business Tax Center for 2010 that has a number of resources available, including information about recent tax changes and the health care tax credit as well as a virtual small business tax workshop. You should also check the financial health of your business. Review your financial statements with your accountant, especially your balance sheet, income statement, and cash flow statement.
• Operations: During the past year, you’ve most likely noticed some inefficiencies in your business. What were the recurring problems that you encountered? Maybe your product ordering process can be streamlined, or customer orders can be delivered more quickly. Take the time now to analyze these inefficiencies and develop a strategy for fixing them.
• Sales and Marketing: If you have a marketing plan, review it and make updates as necessary. If certain strategies aren’t working effectively, now is the time to reconsider them and try something new. If you don’t have a marketing plan, make that a priority for the coming year. This is also a good time to review your sales strategy. Remember the 80/20 rule – 80% of your sales will come from 20% of your customers. Identify who those customers are and reach out to them. Simple ways of reaching out, such as a personalized holiday card or a phone call, are nice ways of saying “thank you” and staying in touch.
• Sustainability: Review the sustainability initiatives that you have in place and update any measures that you are tracking such as energy use or solid waste generated. Identify any new initiatives that you might want to implement in the coming year. Maybe it’s time to launch a green team or to green your supply chain by switching your purchases to socially and environmentally responsible vendors. Or perhaps you might decide to begin working on a sustainability certification like B Corp.

While this may seem overwhelming, the key will be to keep it manageable. Set aside some time to review each area of your business, identify the key improvements you can make, and plan out your strategy for the coming year. Even a day or an afternoon devoted to each area will help you to get prepared for a successful 2011. (Of course, don’t forget to take some time from all the planning to rest and enjoy time with friends and family!)

What would you add to this list? Are there other end-of-year business activities that you recommend?

The conventional wisdom when it comes to business is that, as a business owner, you have to make a choice: you can either make money, or you can do good.

This is, however, a false dichotomy. You don’t have to choose to either ensure your personal livelihood or to live according to your values. As one of my instructors from the Green MBA used to say, you can choose “both/and” – you can both make money and do good.

What are B Corps?

Benefit Corporations, commonly known as B Corps, are a new type of corporation. Unlike the traditional corporation that gives priority only to financial profitability, B Corps actually use the power of business to address social and environmental problems.

How do they do this? Among other things, they “institutionalize stakeholder interests.” Instead of taking the shareholder as the primary person to which they are responsible, B Corps give primary consideration to the stakeholder. This is a very important distinction. A shareholder, as we know, is someone who owns shares in a company; a stakeholder, by contrast, is someone who has a stake in the company, regardless of whether he/she actually own shares. Who can have a stake in the company? Anyone who is affected by the actions of that company, such as employees, members of the local community in which the business operates, or members of the community in which the business has an environmental impact.

A traditional C Corporation will focus on increasing shareholder profits, often without regard to how that affects other stakeholders. This is why corporations sometimes do not pay living wages or provide inadequate health benefits – because those are costs that, if saved, can provide profit for shareholders. B Corps, however, are committing to taking social and environmental interests into account when making decisions.

Why are B Corps Important?

B Corps are important for several reasons:

• They are demonstrating that business can address social and environmental problems. This by itself is important, as it provides a new model for how business can be different in the 21st century.
• They are creating rigorous and transparent standards around social and environmental responsibility that support the triple bottom line. In effect, when a company becomes certified as a B Corporation, that company’s practices have been vetted by a third party.
• There are already over 300 B Corps representing over 54 industries with $1.6 billion in revenues – and this is just the beginning.

However, beyond all of these reasons, there is one primary reason why I believe that B Corps are important. They are fundamentally changing the rules of the game when it comes to business.

You see, when a company becomes a B Corp, it doesn’t just earn a certification. It also commits to changing its legal organizing documents to include consideration of stakeholders. Earlier this year, the states of Maryland and Vermont became the first states to legally recognize B Corps.

One of the co-founders of B Lab, the non-profit that issues the B Corp certification, explained why this is important on the B Corp blog earlier this year:

“Today, there is a critical mass of entrepreneurs, investors, consumers, workers, and policymakers seeking to create social and environmental impact through business. However, they face two systemic obstacles: 1) the absence of transparent standards which allow all of us to support “good companies” not just good marketing; and 2) the legal concept of shareholder primacy which makes it difficult for corporations to include employee, community, and environmental interests in decision making.”

B Corp provides a fundamental alternative to these obstacles by establishing transparent standards and challenging the legal concept of shareholder primacy.

How can B Corps Help Your Business?

There are several ways that B Corps can help your business:

1. Get certified! B Corps must get a score of 80 out of 200 on the Impact Assessment, a survey that covers all areas of the business, including corporate governance, employee benefits, and more. By becoming a B Corporation, you will ensure that your own business meets high standards, join a community of like-minded businesses, and support a larger movement towards sustainable business.
2. Commit to stakeholder interests in your business. Prior to becoming certified by B Lab, you may be able to include your commitment to consideration of stakeholder interests into your legal organizing documents if you are an LLC, which is what I did for Cultivating Capital. However, be sure consult with an attorney about this, preferably one who is familiar with B Corps. The Katovitch Law Firm explains more about the legal implications of being a B Corp on their blog.
3. Identify areas in which you can improve. Even if you do not get certified right away, the Impact Assessment is a tool that you can use to identify areas for improvement in your business. To get started with the Impact Assessment, visit the B Corp website.
4. Support other B Corps. Every dollar that you spend, for yourself or your business, is a vote for either an economy in which businesses can make money at the expense of people and the environment, or one in which businesses can make money in support of people and the environment. Supporting businesses with a social and environmental mission will also help to green your own supply chain.

To learn more about B Corps, you might want to read a related post about “Completing the B Corp Impact Assessment.”

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.