I have seen many very successful entrepreneurs take on investors only to regret it. Painfully, regret it.
There could be many reasons for this, and I have always been wary, turning down many offers of investment money that would have given me quite a nest egg by taking chips off the table. It never felt right though.
My journey has taken a very different path from most business people, because I started with nothing, literally. I just knew that when I started EarthKind® with a 99 cent package of garden seeds, and a dream, that I would turn it into something special one day. Now with a company worth over $20 million I can honestly say that I’ve never done things in the “traditional way”.
I hoped for a better future, a future where I was in charge and could make a living protecting the planet and families from dangerous pesticides.
Let’s start at the beginning, so you can see that it is possible to start and grow a company without outside investment, much like many of our countries early immigrants seeking the American dream. I began by using what I had. Being a farm wife, I had the availability of clean, organic soil and water. I bought a book on how to make $10,000 cash off your backyard. I sold produce for cash every Saturday morning. I’d keep all the money and continue to reinvest for our growth. The only cash I'd take out was what I'd pay my kids for helping me and for the lot fees at the farmers markets. Believe it or not, it was possible to make $10,000 a year from a parcel of idle land, selling the produce, and living off my harvests throughout the year. In case you are wondering, we lived pretty frugally –we didn’t have running water, or air conditioning in our farmhouse back then. We lived on $18,500 a year. My kids tell me today they didn't know we were land rich and cash poor.
I then joined a co-op to grow everlastings on my space. My plan was to turn that $10,000 into $30,000 a year. The co-op failed and I was stuck with thousands of dollars of dried flowers - with no way to market them. I got creative (after a lot of crying), and cut them into 1"-2" pieces, mixed them with North Dakota wild-crafted yucca and bittersweet, added essential oils for aroma, and marketed them as North Dakota potpourri for $12.50/bag. People living with allergies and chemical sensitivities loved them! I made the rounds with a tank full of gas, and attended regional trade shows. Before long I had over 200 stores continually reordering my beautiful blends. Eventually the other growers who’d lost their tails from the same co-op group, sold me their flowers at a discount once they saw my success. I was making $30,000 a year, the SBA noted ceiling of revenue for most small businesses, but, I wanted to go bigger. Customers however were transitioning to scented candles instead of potpourri. I couldn’t believe that people would prefer to burn petroleum wax with toxic fragrance, but they did. So, plan B! I made the conscious effort at this time to commercialize the tractor cab potpourri that I had developed and been using on the farm to keep mice out of our equipment, and so Fresh Cab was born.
Fast-forward 7 years, we’re selling our plant and essential oil based pest repellents (a few stores still call them cab potpourri) into Ace, TSC, Lowe’s, Target and many more retailers. I’m now getting a six figure salary (I honestly never thought I’d be worth that!) It’s crazy to think that only 4% of companies in the USA make it to this size, and only 1% are still privately held. Clearly I am making more good decisions than bad, and still managing coins in a way that they continue to multiply. Just this past year investor inquires numbered over one hundred. What they had to say forced me to think a little differently, and I started to change my mind about going it alone.
As I delved into the process, I’m looking at it a little differently (surprise)! It’s certainly not typical for companies to do a valuation process on potential investors, yet it provides a wider lens of ‘value’ when you put a pen to paper.
Here are the top 3 things I’m evaluating:
1) I put pen to paper on the value of mistakes.
They used to be small, now they’re big. They happen. So, I wanted to find a minority investor with the same purpose who’d been a CEO that successfully scaled a company, and created a new category. In the beginning our mistakes were costing around $3,000, this rose to $30,000 and now the cost of our mistakes are $300,000+. When you add scale, scope and complexity, it simply adds time and cost. I figured out that saving money on my newbie CEO mistakes (which can now go into the millions) would ultimately save customers money, which is key to fulfilling our mission to reduce the % of hazardous household pesticides to 50% by 2022. When I began EarthKind® it was 98%.
2) I put pen to paper on the value of social capital.
You can’t put social capital on a balance sheet, yet it’s been proven that companies with a strong purpose perform 30% better as a result of it—building goodwill amongst all stakeholders, effectively creating wealth for each person along the way. I’ve always thought of wealth building in the literal sense of the meaning of the word: ‘weal’ = well-being. I knew if I found an investor that understood the concept of social capital, they’d support me in making the best long-term decisions in the same way as I always had, considering people, planet, and profit equally.
3) I put pen to paper on my own value as a CEO.
Looking back at what I’ve learned in the past 10 years is staggering (I don’t often do this, which is one reason I love to keep this blog as a journal). The fact that I now know how lead an industry, inspire people to become leaders in their own lives, and create wealth among all stakeholders, helps me to quantify the value of my ability. As I looked to the future in another 10 years with the right investor group, I compared my salary, and influence, to that of other CEO’s of like companies 10X my size. The gap was as huge as the last 10 years to now have been.
Joining forces with other like-minded CEO’s and creating a global network of purpose driven companies is valuable, life-changing, and highly exciting to me both personally and professionally.
I can’t help but wonder what the next 10 years has in store for me. Will I still be blogging? I’ll be sure to look back at this post and add comments along the way!