I’ve been thinking a lot lately about the hyper growth in businesses that most modern investors expect and what kind of pressure that places on the leaders within those businesses. I’ve been a part of many different kinds of companies – start-ups that grew big and ran profitably and happily for years, start-ups that grew too big and had to scale down, CPGs that were grossly bloated and needed to slim down to return shareholder profits, small companies that pivoted again and again until the right product/market/capital fit revealed itself.
In my 20+ years in this business, I’ve seen a lot of companies make bad decisions because investors wanted returns that weren’t naturally possible. I’ve seen every trick to bump quarterly revenue. I’ve seen how that artificial uptick in quarterly revenue can be misconstrued (or misrepresented to investors) as sustainable. I’ve seen that artificial uptick become part of the plan for the rest of the year. I’ve seen teams struggle to meet those artificial goals. I’ve seen people lose their jobs in trying to meet those artificial goals. Goals that were never real. Goals that were never possible. Goals that — in order to be met — would require damaging whole sections of the business.
A dear friend and I were chatting about this the other day and he shared the same perspective from the wine industry: whether it’s fine wine sales for a boutique distributor or big box sales for large spirits CPGs, your sales for a quarter or a year were always expected to rise year over year. Even if that one quarter last year you did something extraordinary. Even if that one quarter last year a huge new hotel chain opened and filled their cellars with wine for years to come and won’t ever do that again. Even if that one quarter last year saw a trend in rose sales that has never happened again.
We are always chasing more. More revenue. More profits. Greater margins. Bigger sales. More and more and more. And we want our “more” successive. Showing a very clear increase month over month, year over year. Ever chasing the chart that looks great in every deck, every investor pitch — the ever holy trend line up and up and up. Doesn’t matter that nearly every business has a seasonal cycle. Doesn’t matter that every year or crop or season is different. Or that trends may change. Or that we may be R&Ding something revolutionary but that it will take time.
I no longer believe there’s much courage in chasing MOM and YOY profits at all costs. I’m far more interested in building businesses that are intentional, growing naturally with their customers over time. Moving in unison with the ebbs and flows of the market, of trends, of the seasons.
Do we want profitable women-led businesses that allow their founders and their employees to thrive? Of course. Yes. Always. But I’m not convinced that profit at all costs is the answer. I’ve been working with several businesses who have taken a different approach. Who did not start their businesses to become rich and free — but who started their companies to be part of something greater and to have that something greater be sustained over a long period of time. Not just for an investor, a liquidation event or a single season.
A restaurant owner client of mine has it right: she has a thriving tapas restaurant that she opened 20 years ago. Her restaurant has seasons where business is slow and she not only plans for it, she relishes it. The summer and winter are her time to travel the world with her family. When she buys wine from her reps, she knows exactly what she can spend and doesn’t go over, even as her love of fine French wine has only increased with all her travel. She has resisted the calls to open more locations. To expand the size of her space. To add more programming, more menu options, more events to lift business during off-peak times. She makes enough money to have a beautiful home, put her girls through college and take several trips a year to far flung places. Could she make more if she expanded? Yes. Would she work a lot more hours of she expanded? Yes. Is she interested in taking all that on simply for the sake of more, more, more? No. She’s not. She knows who she is, she loves the business she created and she loves the life her business has allowed her to create for herself, her long-time employees and her family.
I firmly believe these are the businesses of the future. The businesses that are not built for big exits, but are built to sustain our souls and our communities. That are intentional, slow, meaningful and wise. Big profits and intentionality aren’t mutually exclusive. But I do believe artificial growth propped up month over month and year over year by yet more artificial growth is not sustainable and is not healthy for anyone involved except for investors.
How do we build businesses that allow us to expand as humans instead of shrinking beneath the weight of more, more, more?
How do we build businesses that earn enough to give owners and employees and communities greater freedom to do what inspires?
This is the work that matters most to me now.