How to start a sustainable business

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Starting a sustainable business may seem like a big undertaking, but it can be a positive experience for you and a significant benefit to your community.

Naturally, your priority when starting a business is ensuring it’s profitable. Otherwise, you won’t be able to continue operating. But there are now more ways than ever to ensure your business uses less energy, produces less waste, and makes net positive contributions to the world around it.

This guide will give you a good idea of how to get started.

Establish Your Business

Your first order of business is to establish your business as a legal entity. You have several organizational options to choose from, and each has its benefits and drawbacks.

Sole Proprietorships, Partnerships, and LLCs

Sole proprietorships and partnerships are good options for freelancers and individuals who want to band together to start a small operation. However, many entrepreneurs choose to operate as a limited liability company (LLC) because it provides legal protection of their assets while also conferring tax advantages.

An LLC can be set up relatively quickly. Simply file “articles of organization” (also known as “certificate of organization”, or “certificate of formation” in other states) with the business division of your state. Once the filing fees are paid, they will be quickly approved.

Depending on the number of members and the purpose of your LLC, the articles of organization can consist of one page or an entire document. Simple LLCs can be formed within a few hours, unlike other business structures.

C Corps

If it's appropriate, you may also wish to file as a corporation, or C Corp. Like an LLC, this is a legal business entity that is separate from your personal finance. Operating as a C Corp offers you considerable protection from personal liability.

There are some key differences between C Corps and LLCs, however. C Corps are more expensive to establish, and they require meticulous record-keeping and reporting.

Unlike sole proprietorships, partnerships, and LLCs, C Corps aren’t “pass-through” entities, either. That means they must pay taxes on their profits. If you’re a shareholder in a C Corp, the profits may be taxed once when the business earns then, then taxed again on personal income statements when dividends are paid out to shareholders.

If you plan on running a small business, you’re probably better off as an LLC. But if you want to grow in size, have shareholders, and have a much larger operation, you may eventually want to file as a C Corp.

Engage in Sustainable Business Practices

The best reason to start a business is to fill a specific need. That said, there are also a host of green business ideas available if you need inspiration. Instead of simply implementing sustainable practices into your traditional business, you can set out to make environmental concerns an integral part of your business plan.

For example, you could start a business that turns recycled material into something useful. You could even start an app that helps consumers find sustainable businesses to shop with.

Regardless of your business model, having a sustainable business means making a positive impact on the environment, or at least minimizing your impact on the environment as much as reasonably possible. There are multiple ways to accomplish this, but the three most important business practices to keep an eye on are your energy consumption, procurement practices, and waste generation.

Renewable Energy

Consider using renewable energy to power a portion of your business or your whole operation. This can tie into an initiative to become carbon neutral, and you can lead by example in your community.

Many energy service providers now offer sustainable options, and they make it easy to switch. Depending on where your business is located and what company provides your power, you could draw a percentage of all your energy from sustainable sources. Renewable energy can sometimes cost more than dirtier alternatives but being able to market your business based on its renewable energy credentials could result in a net positive in profits.

Sustainable Procurement

When procuring the goods and services, search for suppliers who have made commitments to sustainability as well. You should also ensure your suppliers comply with environmental regulations and live up to your company’s environmental standards.

You should also consider sustainability when engaging in financing. Getting off the ground often requires substantial investment. While this can come from your savings or venture capitalists, another source of funding is a small business loan from a bank.

Consider borrowing from banks that make commitments to sustainability. Just be sure that when selecting a financing option, you understand how your company’s finances fit in you’re your loan commitments.

When applying for such a loan, your debt-to-income ratio will be one of the qualifying factors. Be sure that you consistently make sound financial decisions, both for yourself and your business, in case you ever find yourself in need of a loan.

Waste Reduction and Recycling

Finally, minimize the amount of waste your business produces by participating in recycling programs and using as much reusable material as possible. There are ways to reduce waste that may not always be obvious.

For example, some waste materials your business produces may be compostable. If there’s a composting program in your region, you may be able to compost some of your waste materials instead of sending them to a landfill.

You should also try to limit operational waste, such as wasted energy, as much as possible. Not only will this save your business money, but it will reduce your environmental footprint.

Register as a Green or Sustainable Business

Saying you run a sustainable business is one thing, but you can give your sustainability program—and your credibility—a huge boost by getting certified.

There are a few national accreditations you can apply for to become a certified sustainable business. Keep in mind that you’ll need to meet these organizations’ requirements if you want to be certified or accredited. Here are just a few to consider:

Your town, city, county, or state may also have a green business certification program. For example, Culver City, California has a sustainable business certification that local businesses can earn by demonstrating environmental stewardship, community engagement, and social responsibility.

In some cases, you may be able to take advantage of tax benefits if you are registered as a sustainable business with your local government. Contact your local city hall, county, or statehouse to find out if local certifications are available.

Incorporate Sustainability into Your Marketing

If you’re going to operate a sustainable business, there’s no reason to be shy about it. You can even make sustainability a part of your marketing strategy itself.

Social media can help you market your business in a greener way than paper-based advertising. It is better for the environment and your connection with people if you refrain from using more conventional methods that are bad for the environment.

You won't be limited to your geographic reach with social media, either. This will allow you to connect with people all over the world so that they can see how green your company is and whether that fits into their lifestyle.

Share your green initiatives on social media. Use well-written content to highlight your green operations and provide your audience with insights.

Finally, regardless of what type of business you have, you need a great logo as well. A logo that highlights your dedication to sustainability will help you build brand recognition and stand out. You could create a logo for free using simple software, but you may want to work with a professional designer to ensure your logo is both unique and recognizable.

Going All-In on Sustainability

The process of creating a sustainable business can be challenging, but it can also be one of the most rewarding experiences of your life. When you make the environment a part of your company's philosophy, you'll be able to reach a wide clientele who have the same values you do, and you'll receive different tax benefits and community benefits.

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