Why Transparency Will Help You 10x Your Business — Even During A Market Downturn In an uncertain economy, read on if you're wondering whether to start the company, hire for growth or lay off staff to protect your margins.
By Adam Kroener •
Opinions expressed by Entrepreneur contributors are their own.
Building a company comes with no guarantees. According to a Gallup study of 4000 entrepreneurs, 50% of companies fail within the first five years.
So when I launched my first beverage company Carbliss in 2019, there was no way to foresee what was around the corner. When the pandemic hit, as many others experienced, it looked like I was setting myself up to fail. In the first year, everything went wrong. Many bars and restaurants, which normally stock our product, were closed.
Also, after our first four months on the shelf, we lost a distributor and had to return 75% of our revenue after getting reports that the cans were defective and leaking in the stores. Things went from bad to worse; in May 2020, we put in a correct lead time purchase order to be ready for distribution in June, but the product wasn't made until November 2020. Therefore, we had zero revenue from July through October 2020. In addition to these company-wide setbacks, we faced the nationwide adverse business conditions surrounding the pandemic and economic slowdown, many of which continue today.
In a recent KPMG survey, 90% of CEOs believe a recession will occur this year. Many companies fear shutting their doors, slowing customers, supply chain issues or losing market share.
Is now a good time to launch — or even scale — a company if consumers aren't buying? Should you consider that next hire to grow or plan to lay people off to maintain your current margins? We take a different approach, which we call "patiently aggressive." We want to capitalize on a narrow market and go deep; we like to say, "We're a mile deep and an inch wide, rather than a mile wide and an inch deep."
Despite the unimpressive beginning, today, Carbliss has scaled to over 1 million cases distributed to 6% of the nation's population and available nationwide via our direct-to-consumer online platform. I realize we implemented three pillars into the company early on that paid massive dividends over the long term.
If you're worried about starting or scaling your company during turbulent times, here are the three differentiators that allowed us to scale triple-digit growth year over year.
Related: 7 Ways To Scale Your Startup or Business
1. Hire right
In the early days of the business, each team member plays a critical role in the company's performance and the culture at large. Identify the criteria you want every team member to possess.
We focus on our hiring principles from the book The Ideal Team Player by Patrick Lencioni. We look for individuals who share these core foundational traits, being hungry, humble and smart. Depending on the role of each hire, we tie in a certain amount of experience and proven ability to execute. For example, our Market Managers have a background in Health Care, Milk Sales, Wood Sales, Window Sales and other similar supplier and distributor roles. Everyone enters the team with a true team spirit, which we cultivate through the second principle.
Related: 6 Steps for Hiring the Right People to Build Effective Teams
2. Be transparent
A Microsoft study of 40,000 employees showed that 41% consider looking for new work in what is commonly known as "The Great Resignation." If you are concerned about low engagement and fear losing your key team members, involve them as true partners. For example, we got everyone on the same page early on. When we were losing money monthly, I allowed the sales and business development teams to see it via our profit and loss statements and customer feedback during our monthly meetings.
They could see firsthand when the company lost money, or we had to make sacrifices to keep operations going. This instilled loyalty and trust. As a result, we have zero turnover. Instead of keeping the team lean, we continued to hire the pivotal roles which would bring in more revenue. Over time, the team was able to see the sales and gross margin improvement, which in turn resulted in a profitable company as a direct correlation of their efforts. This made them feel valued and part of a larger movement.
Related: 3 Ways to Ensure Your Outsourced Team Feels Just as Valued as Your In-House Team
3. Move incentives closer
Once you make your key hires, if your growing team is underperforming and struggling to hit their KPIs, consider making the bonus thresholds more frequent. Even in a market downturn, we wanted to set our team up to win. Whereas many companies have annual bonuses for hitting benchmarks, we created quarterly bonuses to keep our team in momentum. The bonuses are structured to incentivize the different departments to work well as a team. We want to hit the objectives consistently throughout the year so the company grows healthily and sustainably. We also incorporated an additional "stretch bonus," which rewarded high performers.
If you are wondering whether you will have to cut back or close up shop in the coming months, lean into the power of your team. Let them into the challenges you currently face, the ones you anticipate on the horizon, and allow them to be a part of the solution.
