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Business sustainability is an important issue in business planning. On my website I share a terrible statistic: less than five percent of businesses started in Australia last more than five years. I’m really passionate about changing that statistic – and I believe the answer to improving this is to focus on the sustainability of a business, which means the long term growth, survival and profitability of a business.

Most people think of a business as being successful if it turns a decent sized profit or has a large market share- but sustainability also involves innovation and systematizing the business. The reason you can’t rely on profit as the only factor in ensuring a business’s ability to sustain over a long period of time is because there are a number of businesses who can show high profits, but they don’t actually have any money.

The cash flow of a business is just as important, if not more so, than the actual amount of profit the business is earning. If cash flow is managed properly, then the profit will just happen naturally – and there will be an increased chance at sustaining the business.

One of the main causes for the failure of so many businesses is due to poor cash management. People will spend money on new developments, either product development or market development - even if the payback won’t come for months or years down the line. While waiting for the payback on that investment, they might then decide to move into export market development, and the payback for that isn’t for another few years down the line. Suddenly, the business doesn’t have cash available to pay employees or the bills. So, poor cash management and the failure to effectively plan your business, it’s goals and how you will achieve them, is the main cause for business failure.

Getting the team in a consensus as to the business’s direction, and focus helps everyone work towards the same goals. When everyone is on the same page with business planning, the goals are far more likely to be achieved and then of course – the business has an increased opportunity for long term business sustainability.