What is an Evergreen Company and How Can You Build One? - Acquira

What is an Evergreen Company and How Can You Build One?

What You’ll Learn
  • How to future-proof and recession-proof your business
  • How to build a business that outlives you
  • Give your company a meaningful purpose in the world
  • Use your core values to steer the direction of your business
  • How innovation can help your company stay relevant for many years

Introduction

Less than 1 percent of the 30 million small businesses in the US are publicly traded on major stock exchanges.

Although the overwhelming majority of US businesses are privately owned and do not get the Wall Street-like headlines, their impact on society and the economy are nonetheless significant.

Just one look at the Forbes list of America’s largest privately-owned companies is enough to establish the existence of some big sharks in this sea.

Evergreen companies make a small but high-value subset of these privately-owned companies. Instead of near-sighted growth and profiteering, the evergreen companies are in for the long haul by focusing on long-term benefits for business and society. 

In this article, we’ll show you the 7 characteristics of evergreen companies and how you can steer your business in that direction.

What is an Evergreen Company?

One of the best definitions of an evergreen company is the one by Dave Whorton, the CEO of The Tugboat Group.

He defines the idea of evergreen companies in the following words:

It is not about making money. It is not about trying to get money at high valuations. It's about building something of impact—a business with deep purpose—bringing human beings together to do something really important in service of customers, suppliers, the communities, and their families, and of course, they are going to get extremely wealthy in doing this but that is just a by-product.

7 Qualities of an Evergreen Company and How to Build One

The Tugboat Institute lays down the following 7 P’s which lie at the heart of the evergreen philosophy.

1. Purpose

An evergreen business makes a long-term difference in the world.

This turns the conventional definition of success upside down. Instead of defining it in terms of profit or sales indicators, financings, or high-valued exits, success is redefined by how well an organization can achieve the purpose for which it came into being.

There is an interesting story featured on Inc. of a Utah-based food distribution company that discovered its unique purpose 80 years after it was founded. They incorporated this purpose into a thoughtful mission statement. And reaped the dividends of it.

Remember, people don’t buy what you’re offering, they buy why you’re offering it. Your purpose of existence should:

  1. Resonate with your ideal customer
  2. Differentiate you from your competitors
  3. Add value to the lives of your customers, employees, other stakeholders, and your environment

Your brand heart—your mission, vision, purpose, and core values—should all have the same message, so ask yourself:

  • Why do we exist? What missing piece are we filling with this company? (Purpose)
  • What future do we want to create through our company? (Vision)
  • How do we go about creating that future? (Mission)
  • What values do we hold close to our hearts that we will never compromise on? (Core Values)

Think long term, be considerate and inclusive and set firm beliefs that you and everyone and in your company can relate to and work towards.

In Acquira, our core values spell out “SERVE”. Broken down, that is:

  • Systematic Excellence
  • Empowered Stewardship
  • Respect & Integrity
  • Voracious Learning
  • Energize Lives

Those are strong principles we abide by in all our dealings. It’s a lifestyle that permeates the fabric of our organization. Without these, we’re just another investment and training firm.

But with this, we have the direction and culture that sets us apart and guarantees Acquira’s long-term meaningful survival.

2. Perseverance

Perseverance means to not give up in the face of difficulties; to see what you started through to the end with resilience.

Communities are aware of the companies that offer security. They ride with those businesses for the long-term as opposed to exit-oriented companies.

So how does a company persevere?

  1. Be adaptive
  2. Don’t chase “fast results”
  3. Learn from disappointments
  4. Don’t try to multitask, stay focused
  5. Be sure of the path you take — running in the wrong direction or multiple directions is draining

3. People First

An evergreen company always put their people first by ensuring they have good compensation, purpose-driven work, and enough motivation to follow it through.

This means their employees feel heard and cared for, which encourages them to internalize their company’s mission and participate more actively in its realization. This, in turn, creates higher value for their customers, suppliers, and community.

How to implement a people-first culture in your company:

  • To paraphrase JFK, “Ask not what your employees can do for you — ask what you can do for your employees.” A people-first company also thinks about what value can the company add to their employee’s life and their career.
  • Create leaders. Empower your employees to make important work-related decisions and take ownership of their work.
  • Recognize their efforts and make sure they feel appreciated.
  • When employees have a complaint or give feedback on something, make sure they feel heard. Other than reassuring them that their complaints will be resolved, develop solutions that incorporate that complaint when possible.
  • Make sure you give your employees the confidence to approach anyone in the company with any problem they have.
  • Make employees feel safe and taken care of when they’re having personal issues.

4. Private

The number of publicly listed companies dropped by 52% from the late 1990s to 2016, which is a significant indicator of the fact that fewer companies are going public.

One interpretation of this could be that the entrepreneurial spirit has taken a hit. But that is not the case. Global Entrepreneurship Index (GEI) enlists the United States as the country with the most favorable economic situation for entrepreneurs.

This only leads to one conclusion. Companies now realize and appreciate the immense potential for growth when they’re free from stakeholder expectations.

Forbes makes a remarkable observation in its list of top private US businesses. 15 out of 20 of them were on their inaugural annual list in 1985. This shows that these companies prefer to remain private.

Remaining private gives you freedom from stakeholder’s quarterly earnings expectations and reporting requirements. You can reserve those resources for delivering more value and growth.

That’s probably the reason private companies spend approximately double what public companies spend on growth annually.

5. Profit

Though the evergreen philosophy dictates that an organization’s purpose, not its target revenue, should dictate its direction, profits matter in business. You can be people-focused and profit-focused at the same time.

Profit is an important metric of success. It shows the value delivered and gained and ensures that your business can sustain itself. An evergreen company makes a profit without compromising on its values.

6. Paced Growth

Paced growth means having the discipline to favor long-term strategy over short-sighted benefits and grow steadily.

Many businesses struggle to scale as they lack the strategic management to pursue a full-blown offensive target at a steady growth.

But you can overcome that by:

  1. Setting long-term goals
  2. Taking calculated risks
  3. Developing and improving your product offering or diversifying it
  4. Investing in market research
  5. Making sure everyone believes in your strategy
  6. Constantly measuring inputs and outputs
  7. Running (sometimes daring) experiments

Paced growth does not involve neglecting the company culture, overworking your employees, or making rash decisions.

In Acquira, we incorporate that in an easy-to-understand strategy that we call the Acquira Flywheel. It keeps us focused on the few items that push the ball further towards achieving our goal of building a world-class investment fund and accelerator.

7. Pragmatic Innovation

Innovation brings continuous improvement based on significant but calculated risks. The goal is to be delivering value. It’s an indispensable tool in your business survival toolkit.

While there is no debate on the need of adopting innovation as a business policy, it sure is difficult to define an innovative method that delivers its promise. There are such a plethora of buzzwords around it and software tools in the market that it’s easy to get bogged down in the details.

Experts say that the most successful methodology of incorporating innovation in business is incremental. There are two ways to incorporate innovation in your business.

First is the use of tools and technologies that promote efficiency like SaaS (Software as a Service). COVID-19 led to its widespread adoption and the results have been outstanding

The other way is to incorporate subtle changes like tweaking organizational structure to improve communication lines between different business units to facilitate collaboration and sharing of ideas.

Key Takeaways

To sum it all up, being an evergreen company has tremendous long-term personal and financial benefits

  • Your business can stay focused on value and continuous improvement instead of only quarterly earnings
  • You can recruit and retain top talent who are increasingly seeking purpose-driven work these days
  • Develop a loyal customer base and attract supplier investments, and
  • Create a positive impact in your community

What is the first you will implement today to set your business on the path to “evergreenness”? Tell us in the comments below.

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