What Do Efficiency and Risk Have in Common? Quite a Bit, Actually — Here’s How to Improve Your Business in Both Areas

Efficiency and risk.  We talk about these two things like they’re completely separate — one is a measure of productivity and the other is…well…risk…or the likelihood of something bad happening.  But the truth is these two things are inversely related.  Think about it — if you’re constantly taking risk in your life, are you using your resources efficiently?  On the flip side, if your life focuses on efficiency, how much risk do you take?  Chances are pretty good the answer is “not much”.  If you’ve come here to learn how to eliminate risk or improve the efficiency of your business, you’ve come to the right place.

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So how do we do this?  There is no magic pill that completely eliminates risk or guarantees a smooth-running organization.  That being said, there are some basic ways to improve in these areas that don’t necessary have to require a ton of effort or financial outlay.  Before we start talking about specific solutions, however, you need to understand one thing:  these measures could mean nothing if you aren’t tracking your success.  In order to do this, you need to measure the ‘status quo’ before changes go into effect.  It’s a process, and not always a quick win.  Blah, blah, blah.  Had enough of my lecture yet?

Let’s get to the solutions.

1. Go green – Not only is it a good PR move for your organization, but many eco-friendly options have enough of a positive ROI that make it worth switching over.  Typically there is a higher up-front cost, but reduced variable cost since they use fewer resources.  This added efficiency will reduce your impact on the planet and the power grid, reducing risks of outages and environmental problems, plus the possibility of bad PR for not being Earth-friendly, and also makes you less reliant on the resources required (like power or water, for example, since you’ll be using less of them).
2. Eliminate manual processes – Lots of people are terrified about how automation is “killing jobs”.  While it certainly is eliminating the need for human work on manual, tedious tasks, this isn’t all bad.  It’s simply another revolution in the workforce like the change from a manufacturing-based to a services-based economy.  Workers’ minds will need to be more geared towards creative and personal processes — things like sales, design, customer service, and coming up with new ideas, all of which can lead to more (and better) business!  Eliminating manual processes reduces your organization’s risk exposure to human errors that can be costly.
3. Make sure you’re selling to the right customers – selling higher-margin products to high-volume customers is preferred of course, but trying to stretch your capabilities to match the “wants” of a customer who doesn’t come back often may not be worth it.  By ensuring you’re catering to the right group of customers, you eliminate the risk of stretching your workforce thin and making bad sales.  Keeping your focus allows you to do a great job every time, instead of ‘sometimes good, sometimes bad’.

Eliminating inefficiency and risk are basically an art form.  Although I’ve only listed a few ideas here, there are TONS more out there, including everything from supplies-sourcing to financing options to service levels and everything in-between.  My best advice here would be to recommend that you continue on with further research.  Don’t stop here.  Businesses that pursue efficiency are businesses that reduce risk and build a foundation that can last an uncertain future.

Have any more ideas or recommendations on how to increase efficiency or reduce risk in an organization?  Tell us about it in the comments below.

 

Ways to Make Your Business More Environmentally-Friendly (and Save Money Too!)

Earlier this week, we discussed some of the elements of an effective CSR strategy.  One of the most common measures taken by many companies to help their organization’s image is to “go green”.  If you haven’t done so already, it’s something you should definitely consider!  Many assume that ‘going green’ automatically means an increase in costs, but it doesn’t have to – in fact, some of these measures can actually save you some money.

The level of measures you should take and any potential costs (or savings) will depend on the nature and size of your business.  If you’re a business that produces industrial/chemical waste, you’ll need to follow the Resource Conservation and Recovery Act (RCRA) and properly dispose of that waste, which is an expensive process, but you can find companies that will perform this service and compare pricing for what you need.  Many businesses (of any size and industry) don’t realize they produce regulated universal waste (in the form of batteries, lamp bulbs, light switches, and pesticides, among others), which can often be properly disposed of according to EPA guidelines at a relatively low cost.

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Large industrial businesses like this one are subject to plenty of EPA regulations on how to store, transport, and dispose of chemical & industrial waste properly.  But did you know your fluorescent lamps could be considered EPA-regulated waste too?

Aside from proper waste disposal, there are lots of other ways to make your business more environmentally friendly.  Re-considering the sources of your supplies is one of them — many products (especially paper and plastic-based products) can be from recycled sources (like post-consumer paper for example).  You can also take measures to reduce your usage of these supplies by implementing more digital ways of doing business (reducing or eliminating the use of “snail mail” or paper invoices, for example, in favor of electronic versions of these documents).

Perhaps one of the best ways you can become more environmentally-friendly AND save money is to reduce your energy usage.  Luckily, there are also tons of ways to do this!  Switching to energy-efficient lighting sources, appliances, and electronics can save you quite a bit on your monthly utilities, as can some basic maintenance tips like sealing up drafty windows and doors, keeping the blinds closed on a hot summer day (or cold winter day), or opening those windows and turning the A/C off on a more temperate day.  If that’s too uncomfortable or not feasible (maybe it’s too windy or noisy), you can also set your office thermostat to a few degrees higher or lower depending on the season to save on your energy costs while keeping the temperature at a comfortable level.

We’re only scratching the surface here, since there are nearly countless ways to improve your environmental footprint, but these basic tips should help you and your business “take out the trash and save some cash”.  OK, maybe that was a little cheesy, but I hope it helps.  Do you have any more tips to give?  Share them in the comments section below.

Is Socially-Responsible Investing a Way to “Get it Right”? — It Depends…

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Disclaimer:  I do not provide financial or tax advice.  You need to speak with a financial or tax advisor before making any decisions regarding these activities.  This article is very general in nature by design.  

So up until now, we’ve mostly discussed why it’s so important to do the right thing and why it’s so critical to keep a good reputation.  What we haven’t spent much time doing, however, is discussing real life actions you can take to “do the right thing”.  Today we’ll discuss Socially-Responsible Investing (aka ESG – Environmental, Social, Governance -based investing) as an option for you to feel like you’re doing the right thing by supporting others who do right.

So what exactly is ESG or SRI?  Technically ESG is only one method of Socially-Responsible Investing, but given that most Americans already aren’t able to cover basic retirement expenses, along with budget after budget that adds billions or trillions in debt every year, we’ll focus on ESG since the vast majority of us will never hold enough shares to seriously sway a board of directors, and the outlook is bleak for most of us to make an individual impact.

ESG-based investing can take place in a number of different ways – you can build your own portfolio by picking and choosing individual stocks based on your own metrics (for example, if green energy is important to you but maybe tobacco is not, you might include Tesla with Phillip Morris), or you could invest in socially-responsible ETFs and mutual funds, or maybe you set your retirement plan to invest in socially-responsible pension funds or a socially-responsible 401(k) or IRA.  You could even invest in “anti-ESG” funds, or funds based on your religious values.  The options are nearly endless.

Although we’ve only scratched the surface, you should at least have some idea of how you can put your money towards companies who share your values.  But is it worth it?  Traditional knowledge suggested that choosing a socially responsible investment meant sacrificing higher potential returns, but that is not always the case, as many socially responsible investments now deliver competitive returns.

So why include “It Depends” in my headline?  Well, I say that because the meaning of “socially-responsible” is subjective to your own values.  If you pick an SRI fund, you might be supporting some things you like, but supporting other causes you don’t agree with.  Every security or fund you look at will be different and they will all have different factors to consider when comparing the returns you want with the values you support.  So to “get it right” with socially-responsible investing, you’ll want to do plenty of research.  Consult with a licensed financial advisor if you’re thinking of including your investments in your quest to “get it right”.

What values are important to you when making decisions about your investments?  Leave a comment below.

 

Go Long!: Why Your Focus Should Be On Doing The Right Thing Rather Than Short Term Profits

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“Are you motivated by money?”  What a silly question, right?  Who isn’t!  We all have to find a way to provide the very basic necessities:  food, water, shelter, etc., and we satisfy those needs through our labor.  Whether you’re self-employed or work for someone else, you’re providing someone your services in exchange for money, which is then used to help you meet your needs (with the exception of bartering – but then you’re still trading your services in order to obtain something that will help you meet your needs).  All of this is fantastic, unless your priorities get “out of whack”.

Here’s an example of how it can go wrong.  Stop me if you’ve heard this one before…..the Enron / Arthur Andersen scandal.  Clearly Enron had its own monetary interests in mind when it carried on such massive fraud, but why would Arthur Andersen – then one of the most-respected auditors in the world – choose to participate in such egregious activities?  It’s not like Enron was their only client and they absolutely needed Enron’s business to survive.  Yet, this former pillar of accountability chose money over integrity and ended up “going down with the ship”, so to speak.

“OK”, you say, “so don’t do illegal/unethical stuff or help my clients hide illegal/unethical stuff”.  Well, that’s not enough.  If you really want to get ahead and succeed, you’ll want to make sure you and/or your organization are doing the right thing first rather than being second to shareholder returns.  It sounds like blasphemy, but some reports actually show that companies who focus on doing business in a just and ethical manner outperform those who focus on shareholder returns by a wide margin.

It may not always be pleasant fiscally for you or your client, but the odds are that you will gain respect and credibility for handling a problem correctly in the first place.  So don’t lose sight of your long term goals just to have some short term success today.  Do the right thing and results will eventually follow.

Have you ever faced a dilemma where you could profit from looking the other way?  Leave a comment below.  (Be smart.)