Environmental Issues and Your Start-Up

A modern business plan needs to address the possible impact of the business on the environment. Lenders know that negative publicity about environmental problems in a business can reflect badly on the people financing the business, so they want to know that you have thought carefully about the environment in your planning.

Do not underestimate the impact environmental issues can have on customers, too. Your competitors are likely to promote the “greenness” of their products and your customers will probably consider the environment an important part of their purchasing decisions. Add to that the fact that governments hold companies accountable for their environmental performance, and you have a lot of reasons to pay attention to environmental opportunities and obligations.

What Needs to Be Considered?

At minimum, every business plan should address the following liability protection questions:

1Are you familiar with all applicable laws and conditions — including federal, state/provincial, and municipal environmental regulations — relating to your business operations?

2How does your company reduce or avoid any negative impact your operations might have on air, water, and land and on living organisms (e.g. via design improvements, process modifications, materials substitution, monitoring, treatment, etc.)?

3How are hazardous waste products managed from purchasing to final disposal?

4Has your property been used in such a way in the past as to pose any environmental risk?

5What are your company’s emergency plans in case of an accidental spill, fire, or explosion?

6How will management ensure that your business complies with applicable regulatory requirements?

7How will your company detect potential environmental problems?

8What environmental and health and safety-related training is provided for your company’s employees?

9What kind and amount of insurance coverage for liability damage will your firm need? What must be done to qualify for such coverage?

In addition to the above considerations, companies are seizing potential environmental opportunities as a means of enhancing their profitability and to become more eco-efficient in their operations. Eco-efficiency is about making production processes more efficient and creating new and better products and services using fewer resources and creating less pollution.

Eco-efficient practices are of interest to both companies and investors since they can lead directly to higher profitability. An eco-efficient company should strive to —

  • reduce the amount of materials/inputs used in the production of its goods and services;
  • reduce the amount of energy used in the production of its goods and services;
  • reduce the use and release of toxic material;
  • make it easier to recover and recycle materials;
  • ensure that if renewable resources (e.g. water and wood) are used, they are sustainable;
  • extend the durability of its products; and
  • increase the maintenance service provided for its goods and services.

It is to your company’s economic advantage to incorporate eco-efficient thinking into all stages of your business — from design through production and packaging to after sales servicing.

Because they minimize your business costs, be sure to highlight these efforts in your business plan or any presentation to investors.

For help on this topic, contact the EPA or in Canada your local Environment Canada office.

About This Article business-startup-kit-large This is an excerpt from the Business Startup Kit, published by Self-Counsel Press. Click on the image on the left to enlarge the picture. The kit contains tips and information on starting your business, including a series of self-evaluations and information to help you decide your business structure and plan.

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