Opinion

Four sustainable business models attracting strong growth

5 min read

31 March 2014

Firms with a sustainable business model are more likely to succeed, argues Bridges Ventures managing partner Philip Newborough. Here are four growth areas.

Businesses that can play a role in meeting some of the most pressing societal challenges of our time can have a robust and long-term growth potential. 

From our own 12-years of experience backing high-growth, high-impact businesses we have identified a number of sectors where commercial success and social impact can go in “lock-step”.

1. Under-invested areas and “consumer champions” 

By establishing their businesses in some of the most under-invested parts of the country, SMEs can play a crucial role in the regeneration of local areas by building economic dynamism and creating employment in the local community. 

In exchange, businesses can benefit from the sustained competitive advantages that these areas have to offer, ranging from affordable real estate and unmet local demand, to access to highly-committed employees.

We have also seen that “consumer champion” businesses providing high quality value-for-money services to underserved consumers can enjoy strong growth prospects, whilst making a real difference to the communities they serve. 

The Gym, one of Bridges Ventures’ flagship investments, is a great example of how providing low-cost, high quality fitness facilities to parts of the population who had previously not been able to afford it, makes commercial sense. 

Launched in 2008, The Gym now operates from 40+ sites across the country, mainly located in underserved areas, and around 30% of its 200,000+ members are first-time gym-goers.

2. Health and well-being 

Increasing sophistication of care, lifestyle changes, rising levels of obesity and ageing population are some of the current trends driving a fundamental transformation in the provision of health and well-being services. 

As investors, we see great growth potential for businesses providing specialist services to the healthcare sector. There are a number of sub-sectors where we are seeing tangible high growth opportunities – ranging from well-being services focused on targeted prevention and wellness to keep individuals out of the healthcare system altogether, to cost-effective, high-quality health care delivered at home or in the community. 

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3. Education and skills 

Skills shortage and stagnating school performance, alongside increasing public budget constraints are having an effect on employability levels.

Businesses offering vocational training or whose activities focus on broadening accessibility or increasing quality of education for greater employability are a growing sector. 

We see great potential for businesses offering vocational training, e-learning and training for NEETs (young people Not in Education, Employment or Training). An example of such business is Babington Business College that provides high quality training in areas including accountancy, business administration and financial services, among others. 

Backed by Bridges since 2009, Babington continues to grow both in terms of learner numbers and geographical reach.

4. Sustainable living and the environment 

In addition to the previous themes, issues related to climate change, resource constraints and energy security continue to be some of the most pressing challenges facing today’s society. 

Those providing solutions in key areas such as renewable energy generation, waste recycling or smart buildings, can benefit from very strong global and local growth drivers.

We look for companies that offer entrepreneurial solutions to both mitigate and manage environmental challenge, such as Whelan Refining, the UK’s first and only waste oil re-refining plant.

With social and environmental challenges increasingly influencing business performance, it is clear that companies that put sustainability at the heart of their business model are more likely to succeed than those who don’t. 

More importantly, in some of the sectors we have mentioned – such as education and healthcare – we firmly believe that companies can thrive commercially precisely because they generate positive impact on society.

Philip Newborough is managing partner and co-founder of Bridges Ventures, a specialist fund manager with a 12-year track record of helping to build high growth, high impact businesses across the UK.