Lessons from Evergreen Companies: Tenets of Business Growth

Lessons from Evergreen Companies: Tenets of Business Growth

I recently read “Another Way” by Dave Whorton. In this book, Whorton gives practical advice and real-world examples of companies going Evergreen. Several of the tenets of business growth he describes resonated with me and my experience growing a company in the distribution business.

Key factors

Whorton reports: “The key factors that determine success were/are service, mission, teamwork, and fun.”  During my career at a distributorship, I often couldn’t believe I was actually paid to do it. I really enjoyed the job. Of course, there were times of stress and frustration. It was not rewarding to lose a key account or feel we had been inattentive to a customer’s needs. We were able to overcome setbacks like these, however, because we focused on service, mission, and teamwork,

Paced growth

Our company followed what Whorton calls Paced Growth  — the discipline to focus on long-term strategy, and balanced short- and long-term performance. In this way, we grew steadily and consistently from year to year. I estimate that our compounded growth rate over the years I was with this distributorship was at 8% per year. Like many of the Evergreen companies Whorton reviews in his book, we believed that if we took care of our customers and employees first, the profits would follow. 

Four tenets

Here are four tenets that our company shared with Evergreen companies.

  1. Make sure customers have a good experience. When we added new accounts, we committed to becoming “partners for life.” We did this by introducing customers to our vendors, holding open houses and barbeques at their facilities, and other joint venture engagements. 
  1. Bring in the best people and give them the right tools to become your future leaders. This means providing employees with the latest digital technologies. According to a report by Tecmony, “58% of companies in the B2B sector actively use chatbots.” The rising generation of employees is already using AI agents. According to a Google survey, 93% of Gen Z respondents said they were using two or more AI tools per week. If your C-Suite is not training your employees with digital technology, your employees will more than likely find a company that will.
  1. Provide continual growth. This keeps everyone interested and engaged in the company. The best companies share their profit with their employees. In our distributorship, we returned 10% of the net profit to employees. We also had a 15% ESOP. Continual growth will come naturally if your employees feel they are shared owners.
  1. Maintain a reasonable bottom line while staying private. Make sure your company has the cash to grow without relying on outside interests. Employees who see consistent improvements will work harder to grow the business.

Follow these tenets

Make sure your customers have a good experience, and your employees are the best and the brightest. Provide continual growth and maintain a reasonable bottom line while staying private. Following these four tenets brings growth and employee satisfaction. When employees can say, “I can’t believe they pay me to do this”, success follows!

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Creating Unity

Creating Unity

A brilliant young business owner in our distribution vertical always has great book recommendations for me. I just read his most recent suggestion; “Another Way” by Dave Whorton. The book describes the leadership characteristics of what Whorton calls privately held Evergreen companies. These are businesses that build value for the long haul by creating unity. They do not follow the Venture Capitalist philosophy of getting-big-fast or growing at-all-costs to sell or go public. 

Evergreen principles

Here are just a few of the principles for creating unity within an Evergreen company.

  • Purpose – Whorton relates how Bill Hewlett and David Packard made a deep impression on him when he was sixteen and working in their Santa Rosa factory. “Hewlett and Packard were all about respecting the individual, treating people fairly, and encouraging them to explore their creative pursuits.” The best companies have caring leadership, not strategy, as their core purpose. They speak with one voice and don’t send mix messages.

Another powerful example of purpose in action is the success of In-N-Out, founded by Harry and Esther Snyder in 1948. They built the company on a clear, uncompromising mission: “Do one thing and do it exceptionally well.” Their focus was simple—serve the freshest, highest-quality hamburgers, fries, and shakes quickly, in a sparkling clean environment. Customers could see this commitment firsthand in the open kitchen, where a team of happy, well-rewarded associates worked with pride and enthusiasm.

  • Relationship – In Evergreen companies, internal relationships rest on simple truths. They address conflicts immediately, resolve issues before they grow, and operate with complete transparency. As my friend Abe Wagner says, “Say it straight or you show it crooked.”

Whorton explains that one principle that separates Evergreen companies from others is a People First management program. At a distributorship I was part of for 34 years, we reviewed sales, expenses, and gross and net profit with our employees quarterly. Moreover, since the employees received 10% of the annual net profit with payments distributed each quarter, this was an important way to establish good relationships.

  • Self-finance – Evergreen companies operate at a self-financeable growth (SFG) rate, a concept that every entrepreneur should know. Since many Evergreen companies were initially built by founders who didn’t feel they would qualify for loans at the local bank, SFG is a familiar concept in this arena. The SFG philosophy holds that “If you don’t have the cash to buy it, wait until you do”. With slow but steady SFG growth, many Evergreen companies have realized several hundred thousand dollars in annual revenues.

Create unity

In conclusion, these are principles important to independent distributors. I will share more in future articles. In the meantime, keep your business Evergreen by creating unity in your business, following your purpose, building solid relationships, and pursuing self-financeable growth rates. Fantastic results will follow. 

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“Whos” Can Help?

“Whos” Can Help?

Getting unstuck

I work with distributors that know they need to move forward on their digital journey but can’t seem to get to the next step. Others want to add another branch store. They can’t decide on a location, when to add additional personnel, or where to find the right people. How often have you wasted time on a big project that never got completed?

It is often a problem to move forward, before you identify the “Who” you need to make sure you are invested in achieving well defined goals. Dr. Benjamin Hardy, an organizational psychologist and bestselling author, states:  “Who can help me achieve, may be a stretch, if you’ve never truly committed to huge goals.”

Choosing a Who

In their book, Who Not How, Dan Sullivan and Benjamin Hardy suggest the formula for achieving bigger goals is to aggressively use teamwork. They ask, “Do you have “Whos” that give you the perspectives, resources, and ability to go beyond what you could do alone?” To reach a higher level of achievement you need many people in your life to help solve problems.

Recently, a third-generation distributor/owner contacted me for help. His grandfather and father had built a successful small business but their expertise and age was limiting their future growth. His goal was to continue to build the distributorship. He was looking for insight from someone who had a track record of growing businesses in his particular vertical. But, having just retired from a much larger business in that industry, I was a natural “Who”, that could provide him with a “How“.

Cultivating more Whos

“Whos” can help. To achieve your goals and meet project deadlines more efficiently, identify helpful individuals and actively cultivate those relationships.

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Understand your customer

Understand your customer

Building trust in customer relationships is critical to a successful sales cycle. To establish trust you need to understand your client’s needs and always keep their welfare in mind. Your ability to enter their world and understand it requires that you have a genuine rapport with them. Without heartfelt rapport it is difficult to develop trust and influence. People don’t care how much you know, until they know how much you care.

Listen

Listening is the fastest way to gain understanding of your customer’s background. If you are successful in encouraging your customer or prospect to talk about themselves for 20 minutes, they will bond with you. This requires strict adherence to the 80/20 listening rule. That is, the customer talks for no less than 80% of the time: you actively listen for 20% of the time.

Here is a series of questions to ask that will help you understand your customer’s background.

  • How long have you worked here?
  • What are your responsibilities?
  • How long have you lived in this area?
  • How do you get to work?

Note behavior

Another way to learn more about your customer is to note their behavioral mannerisms. You should mirror and match their body language, tonality, and words.  Phrases like, “I see what you mean,” “I hear what you are saying,” or “How does that make you feel,” let your client know that you are emotionally engaged.

To be better prepared to understand your customers’ behavior, I recommend you take a DISC assessment (discprofile.com/what-is-disc). It will determine if you are a Dominant, Influencing, Steady, or Conscientious communicator. Along with learning your behavioral style, invest time in learning the characteristics of the other three styles. Your goal is to explore how to meet your customers halfway between your style and theirs.

Understand your customer’s needs

Once you have your customer’s trust and a good understanding of their background, you can identify their needs and propose solutions. Your sales cycle is on the success track!

Get tips and tricks like the above in The Art of Sales books. Or subscribe to the FREE monthly articles here.