What You Can Learn From The Death Of An Organic Popsicle
In 2006, Jim Picariello started Wise Acre Frozen Treats in the kitchen of a school. His product was organic popsicles. After a year and a half, he had hired a single employee. But just six months later, Picariello had 15 employees and had moved into a 3,000-square-foot manufacturing facility. By the end of the year, Wise Acre was forced to declare bankruptcy.
Picariello’s entrepreneurial dream was to grow his business. And he did it. Yet, he went bankrupt.
“One of our biggest problems was that we didn’t raise the money we needed before we hit milestones like getting distribution throughout the East Coast,” Picariello said in an interview with CBS news. “We went from eight stores to dozens, then hundreds, immediately. We were burning through about $30,000 a month at our peak, but we didn’t have the capital in place to back it up.”
Picariello’s dream grew quickly. Too quickly. He wasn’t personally prepared. His organization wasn’t prepared. And He didn’t listen to wise investors who told him to slow down.
Here’s the upside down business idea: Growing your organization too fast can kill it.
This isn’t a new concept.
The wise king who wrote Proverbs gave the same warning thousands of years ago.
“Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” (Proverbs 13:11)
There is something enticing about exponential growth. And in truth, there is nothing immoral about it.
But it would be a foolish leader that thinks fast growth solves more problems than it creates. Research from California State University shows companies with fast revenue growth performed worse, long-term, than their slow-growing counterparts.
How do you know if your business is growing too fast? How do you know if you are putting too much money into your business?
The answer is certainly more complicated than one email can handle and involves unique factors in each case.
But the Scripture is not without guidance on the matter. “One pretends to be rich, yet has nothing; another pretends to be poor, yet has great wealth.” (Proverbs 13:7)
The crux of this counsel is is key.
Fast growth can tempt you to pretend your organization is ready for more than it is.
Hiring too many employees. Buying cutting edge technology too soon. Opening a second location. Adding on non-essential expenses that are flashy and trendy. Taking on too heavy of a debt burden before your organization is prepared to sustain such exposure.
While meteoric growth is possible and not necessarily bad, it is always risky.
It may be better to “pretend” to be poor and show patience.
Err on the side of “little by little.”