Changing the Future of Business: Slow Growth and Sound Financial Planning are the Secrets
- Christina Sjahli
- Jul 29, 2021
- 36 min read
Updated: Aug 18, 2021
- The Journey of Badger
A common misconception in business is associating slow growth with stagnancy. Many assume that low profits and no investors mean bad business. And since rapid growth and large profits sound tempting, we may forego making long-term decisions for stability. However, slow growth means directing your money and intention to your ‘why’, rather than growth at all costs. For example, you could be channeling profits into furthering your purpose. You might also be using your profits to increase your impact for good.
In today’s episode, we have Rebecca Hamilton, owner and co-CEO of Badger. Badger is a family-owned business that boasts success for the last 25 years. Rebecca shares how her family slowly but surely built up this business and continuously ensures its success. She also talks about the challenges she and Badger faced and some great insights on keeping a business stable. Specifically: the benefits of slow growth, financial planning, and a CFO.
If you want to scale your business through creative strategic and financial planning, then this episode is for you!
Here are three reasons why you should listen to the full episode:
Learn about Badger: its inspiration, growth, and advocacy.
Discover how Badger successfully grew into the business it is today through creative financial planning.
Get inspiration from Rebecca's process of transition of leadership.
Resources:
Visit Christina Sjahli’s website! Learn more about innovating and scaling your business through the Her CEO Journey podcast series.
Chat with Christina and set up a time here!
Try out the Cash Flow Conversion Calculator to determine if your business is experiencing a cash flow issue.
Connect with Rebecca: LinkedIn
Episode Highlights
[05:49] Badger’s Origins
Rebecca’s dad, Bill Whyte, was a carpenter who needed a balm for chapped hands. He decided to create a healing balm, and this became the foundation of Badger.
Rebecca’s family lived in a one-room cabin in New Hampshire. They are family-oriented and are focused on organic and sustainable living.
Her family’s values became the core of Badger. They wanted to produce organic products from high-quality ingredients for the community.
[07:52] Rebecca’s Background
Rebecca initially had no plans of joining the family business. She even left town to pursue other jobs.
She later gained an interest in ethnobotany. This field deals with using plants for medicinal purposes and the economic impact of plants on supply chains and products.
Rebecca then pursued a degree in ethnobotany at the University of Hawaii.
Rebecca then decided to go back to New Hampshire and run the business together with her family.
[13:07] Public Benefit Corporation Legislation
There are specific actions a company must take to get certified as B Corp. They need to pass an impact assessment and sign a declaration of interdependence.
They also need to change their articles of incorporation. However, there was no public benefit corporation legislation passed in New Hampshire.
And so, Rebecca connected with state legislators to push this. Eventually, it passed.
Badger and other B Corp hopefuls could then change their Articles of Incorporation.
[15:05] Badger Becomes B Corp Certified
B Corps are businesses meeting the highest standards of social and environmental performance.
Badger got certified in 2011.
Badger’s initial impact assessment score barely passed with 80 points.
Through company-wide efforts and strategic planning, they increased their assessment points to 140.
[19:01] Challenges During Badger’s Early Days
Badger views money as fuel and not a goal. They need profit to have a healthy business.
“We actually have written into our mission that money is a fuel and not a goal. And we put it there because having a healthy business does require profit.”
A significant transition phase for Badger was when they started to sell sunscreen.
A study by the Environmental Working Group revealed Badger’s sunscreen as the safest and most effective sunscreen. Sales have been steady since then.
Sunscreen manufacturing eventually became in-house, and margins improved.
[23:09] On Bad Margins
If you feel like you’re doing something important and different, then continue to make that product.
The right balance between ingredient standards and product viability in the market is critical.
Recognize where you are and take the necessary steps to achieve your aspirations.
“We have aspirations which are really high and mighty. And we have to recognize where we are, and do the best we can, and take it step-by-step moving toward that aspirational goal.”
[25:35] Balancing Product Complexity
In the early days, Badger’s products came from inspiration.
Use outward strategic visioning to make products applicable for all customers.
Create an assortment of products that meets the customers' needs.
“When we think about making a product for someone we love, I want to keep that intention. But I don't just want to make it for somebody who's right here in front of me. I want to make it for all of our customers.”
Produce product lines that are cohesive and communicate well to the customers.
[27:40] Finding Your Niche
Get feedback from your family, friends, community, and customers.
Research your market and the landscape.
Badger knows their strengths. Through this, they look for a market angle for something new and needed.
Badger also gives importance to knowing their financial information. They’re willing to balance out margins based on the need.
[29:07] Badger’s Secret to Profitability
Badger is fully family-owned without outside investments. The approach to their business is to grow it slowly.
Badger has no exit strategy. Instead, it aims to set up the company for generations to come.
Rebecca and her family get paid using the same salary structure as Badger’s employees.
“We're not looking to use the business as a tool for financial growth for the owners.”
[33:21] Badger’s Financing
Badger partnered with another B Corp to finance their power plant. They also got loans from a bank to build their manufacturing facility.
The bank that Badger gets loans from is B Corp certified. In fact, they helped this community bank become a B Corp.
Badger utilizes a short supply chain and values long-term relationships with its suppliers.
For international sales, they allow distributors to reach out to them.
“We don't want to have somebody coming in and telling us we have to run it in a way that might go against what we think is most important.”
[37:38] Badger’s Strategic and Financial Planning
Badger foes strategic planning yearly. They make sure that their activities gear towards everyone understanding the company’s strategic priorities.
They either do financial planning after strategic planning or in tandem.
When Badger does financial planning, they start with each department’s wishlist. From there, they balance it with the sales forecast and make suitable adjustments.
[40:25] How a CFO Can Help with Financial Planning
CFOs bring in strategic financial planning and analysis.
CFOs give recommendations and help put together the budgets, projections, and ROI.
They can look at the overall health of the company. It can be from inventory management to budget flow to where the sales are versus expenses.
Hire a CFO, whether full-time or part-time, starting from day one if possible.
Letting poor financial planning go on for too long leads to poor foundations.
[43:09] Lessons from Transition
Even a subtle shift in leadership can make a big difference in a company.
There will be different perspectives from the previous leadership.
Officially transitioning permits you to seriously think about what future you want for the company.
Rebecca shares that change can be both beautiful and challenging.
About Rebecca
Rebecca Hamilton is the second-generation owner and co-CEO of Badger. Badger is a family-owned business of natural and organic personal care products. Their line of products includes balms and sunscreens made using high-quality natural ingredients. Guided by the UN Sustainable Development Goals, Badger continues to promote a healthier world. It cultivates goodness through ecologically and socially responsible business practices.
With a background in ethnobotany and chemistry, Rebecca contributes to Badger’s growing number of products. Meanwhile, her knowledge of supply chain management helps her navigate through the ins and outs of the business processes.
Rebecca continues to devote herself to Badger. She continues to ensure its commitment to the environment, climate activism, and regenerative agriculture. Badger became an FDA-registered drug facility under her leadership.
10 Powerful Quotes
“Running a business is challenging, and there's always changing environments and things that you have to address.”
“If a product is really important that we feel like we're doing something different and that we're offering the service, then that's something that makes a big difference in wanting to continue to make that product.”
“I think that a lot of what we've always approached things with is that we're not trying to grow quickly. We're trying to make decisions that will allow us to be successful. But we also are looking for decisions that are going to be successful for the long run.”
“I think a lot of times a mistake businesses make is to let poor financial planning go on too long and you set up the wrong structure.”
“You can't underestimate the change that shifting leadership will bring.”
Enjoy this Podcast?
Slow growth doesn't necessarily mean that your business is unhealthy. Instead, it can indicate a different, steady strategy. Rebecca shares why slow growth and good financial planning are helped Badger become stable. If you enjoyed today's episode of Her CEO Journey Podcast, then hit subscribe and share it!
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To fuelling the life you want to live,
Christina
Transcript
Rebecca Hamilton: I think that a lot of what we've always approached things with is that we're not trying to grow quickly. We're trying to make decisions that will allow us to be successful. But we also are looking for decisions that are going to be successful for the long run. I think that's been a lot of what's led our decisions and helped us to be stable throughout the years.
Christina Sjahli: Slow growth doesn't mean your business is not growing. Not receiving money from investors doesn't mean your product-based business cannot scale. For many mission-driven businesses that have a strong focus on impact and purpose, slow growth simply means directing the investment into the purpose and seeing profit as a tool to amplify its impact on people and the planet. Not having an investor means you don't have the pressure to grow 10 times bigger in a short period of time. At the end of the day, slow or fast growth, investor or no investor, that's your choice as the founder, no one else.
Christina Sjahli: Today's guest Rebecca Hamilton, co-CEO of Badger, a company started by Bill Whyte, Rebecca's father, with a simple idea: simple ingredients to heal his hands from crack and split into frigid New England winter. Twenty-five years later, their business has expanded from one product to hundreds of products in 20 countries. And they continue to be a family-owned, family-run, family-friendly company with healing products and healthy business for people, planet, and profit. In today's episode, you will learn the secret to their success for the last 25 years. Among others, you will learn how Badger stays focused on its values and mission, how to finance its business creatively without a single penny for any investor, how to include financial planning as part of the business strategic planning, how Badger's leadership team benefits from having a part-time CFO, what is the process to transition the leadership team from parents to the children.
Christina Sjahli: This is the last part of the three-part series in the Business For Good podcast series featuring female founders who are building businesses to create the future we want and the future we need. All of these female founders consciously choose long-term viability over short-term profits. They bootstrap the business and all of them are scaling and building meaningful profit. They also choose to be part of a global community of 4000 plus B Corp certified businesses. If you are not yet familiar with B Corp certification, in that case, I encourage you to listen to Episode 101 at christinasjahli.com/herceojourney where you can learn about B Corp, why it matters, and the certification process.
Christina Sjahli: You're listening to Her CEO Journey, the business finance podcast for mission-driven women entrepreneurs. I'm your host, Christina Sjahli. If you are new here, a big warm welcome. If we are not connected on LinkedIn, please reach out and say hi, because that's where I hang out and share my business finance tips. If you have been listening to this podcast for a while and you are a regular listener, I want you to know I appreciate you. My podcast won't be around without your support. This is a free weekly show where my guests and I want to inspires you to balance between mission and profit, to create an impact in this world, and to achieve financial equality through your business for good.
Christina Sjahli: No matter how long you have been in business or whatever the stage of your business, cash flow will always be one of the critical components, and you cannot take your eyes off cash flow. And once you don't have the capacity to monitor and manage your cash flow, make sure you have a business finance expert who can handle this process for you. One of the quick tools we suggest for a founder to have is the cash flow conversion cycle. That's why we create a cash flow conversion calculator to help you determine if your business is experiencing a cash flow issue. This simple tool can also pinpoint where is the problem. Any type of business can use this tool. You can find a link to the calculator in the show notes.
Once you use the calculator and you feel you need further help in figuring out your business finances, remember that we are here to partner with you. We understand business finance can be confusing, but it doesn't have to be complicated. You want someone who is as passionate as you are and takes your business to the next level. Once we show it to you, you will understand and trust your financial number. We make sure you are making business decision with your purpose front, and center. Connect with us at christinasjahli.com/let-s-chat. Now, let's find out Rebecca's CEO journey. Rebecca Hamilton, welcome to Her CEO Journey. It is a pleasure to have you here today.
Rebecca Hamilton: Hi, Christina. Thanks for having me.
Christina Sjahli: Yes, I'm very excited to speak with you. Badger was founded by your dad, Bill Whyte, back in 1995. He was a carpenter, needed a product to heal his hand. Twenty-five years later, it's still thriving and still continue to be a family-owned. So I'm curious about your own journey just watching your dad in the kitchen. And now, you are the co-CEO of Badger. If you can share your journey with my audience, that will be set up the stage for our conversation.
Rebecca Hamilton: When I grew up, we live with our whole entire family in a very small one room cabin out in the woods in New Hampshire. We had no running water. We had an outhouse. And we had bucket showers on the porch. And my sister and I would have to collect water from a stream down the road. I was there until I was about eight. At the time, my parents didn't have a whole lot of money. But at the same time, they really were committed to things like organic food, and healthy living, and spending a lot of time with family. And so, we ended up having a lot of food that came from gardens. They volunteered at the local co-op. And so, we had organic food from there, really only rice, beans, and oatmeal. But we had really nice food. And so, that was kind of a lot of the family values that I grew up with. We're connected to simple living from the land and caring for good quality food, and then products.
Rebecca Hamilton: And so, when my father started Badger, he wasn't really thinking about creating a business that would be a social enterprise or a mission-driven business. He wasn't thinking about being part of the natural products industry, or making organic products. He was just thinking about making a product that healed his cracked hands. And then being a serial entrepreneur, every idea turned into a business. And so, then he thought, "If there are other carpenters out there who have cracked hands, they might need something like this. Maybe I could sell something to them." But Badger really became what it is today, because the foundation of it is the family values that I grew up with, and that both of my parents had. Over the years, Badger has really morphed into, what I think it was always meant to be, which is a really strong leading social enterprise that has a really strong focus on organic ingredients and high-quality ingredients. And to all of these things that we are today come from that origin story.
Christina Sjahli: When did you start thinking of joining your dad?
Rebecca Hamilton: Well, I did not think I was going to join the family business at first. I was the one who is gonna leave Gilsum. Gilsum is a town of 718 people that I–
Rebecca Hamilton: –was literally born in, homebirth here. So I left, went to boarding school when I was a teenager. And then after that, I went to work on sailboats out in the Caribbean, traditionally-rigged educational boats where we took college students out on semester at sea programs. And I was doing outdoor education and a whole lot of things that weren't coming back to work in the family business. And in my mid-20s, I decided I was going to go back to school. I was actually inspired to go back to college because I decided I'd learned about ethnobotany: the study of how people use plants for healing purposes, and also the economic impacts of plants being used in supply chains and products. And I got really interested in that. I went to India because I'd heard about an ethnobotany project. And I thought, "I can just go and show up there, and volunteer there, and I'll work for free. And they'll teach me about ethnobotany." So I had another connection in that town in India. So I went over to Oroville, showed up at the project and they basically looked me up and down and said, "Well, you don't speak Tamil. You don't know anything about botany, ethnobotany, anthropology. We don't have time to have you even volunteer. Go away."
Christina Sjahli: That's small. Oh.
Rebecca Hamilton: So I was totally flat out rejected and so that, "Well, I guess I should go back to college if I actually want to do anything with this. I went to the University of Hawaii, which is one of the few places in the country, or in the world that actually have a program in ethnobotany. Probably a lot of your listeners have no idea what that is because it's pretty obsure.
Christina Sjahli: I don't know what that is either.
Rebecca Hamilton: Yeah, it is obscure. It's basically it's the interaction between plants and people. And so, there's a few different areas you can study within ethnobotany. One of them is traditional uses of plants for healing purposes. One of them is the economic impacts of plants being used in supply chains, like for products. And then another one is the ecological impacts of product plants being used for economic purposes. You might think from the outside that there's a clear connection to ethnobotany and a company that makes healing products using agricultural ingredients. But at the time, I didn't see that connection. I thought that I was going to go travel the world, that I would be doing something in academia, that I would have nothing to do with businesses.
Rebecca Hamilton: And about halfway through my college education, I found myself having started what we call, our Lady's Lotion Night, which is a group of ethnobotanist, all women. And we were making skincare products for each other. Just like for fun, we would go make little lotions, and balms, and oils, and lip balms, and the medicinal things because we were all in medicinal plant classes. And I started thinking about actual legitimate career opportunities, and realized that really the best career opportunity for an ethnobotanist is to work at a natural products company, doing product development, or supply chain management, and thinking about the impacts of a company and how that, when we use our agricultural products, looking at how do you have equitable supply chains? How do you create healing products based on traditional knowledge? And so, I decided to come back and work at my family's business.
Christina Sjahli: It's right in front of your eyes, right?
Rebecca Hamilton: At that point, I changed my degree around, decided to focus it more on exactly what I'd be doing. So I created a degree that was a combination of the economic botany supply chain management. I did a whole special project on fair trade, and how we could have equitable trade. And I studied chemistry, and medicinal plants, and marketing, and business for the natural products industry, so a wide range of things. And so, I was in my third year of that, or maybe fourth year, and my parents asked me to come back. They said, "We're ready to retire in three years. You and your sister need to be back at the business." That was like–
Christina Sjahli: No argument?
Rebecca Hamilton: Fifteen years ago, I don't think that... My mother hasn't retired yet. And my father only retired two years ago. So it was maybe a little bit earlier than they were actually going to retire. But that was another instigator to draw me into the business. And so, for the first 10 years that I was here, my sister, my father, and my mother, and I all co-led the business together.
Christina Sjahli: I know that Badger was involved in basically, the law surrounding public benefit company in New Hampshire. Is that correct?
Rebecca Hamilton: Yeah, absolutely. When we became certified B Corp in 2011, when you become a B Corp, you have to pass a certain score on the impact assessment. That's the first thing. Second thing is you have to sign a declaration of interdependence saying that you're in a community of other social businesses that are trying to be a force for good. And the third thing is that you need to change your articles of incorporation so that your purpose for being in business is not just to maximize earnings, or maximize profits and return earnings to shareholders, but that your purpose is actually a combination of making profits along with your social environmental mission.
Rebecca Hamilton: And what I was really shocked to see in New Hampshire is not only did we not have Benefit Corp Legislation passed, but in the state of New Hampshire, we legally couldn't change our purpose for being in business, that all C Corps are in business to maximize profits and return earnings to shareholders. And so, that felt disingenuous to me in terms of how we actually wanted to describe our purpose for being in business. So I pushed, I actually connected with a legislators, State Senator Molly Kelly at the time, and asked her she would help me to push this legislation forward. And so, we got support from other community members and got it passed in New Hampshire. So that Badger, along with other companies could rewrite our Articles of Incorporation.
Christina Sjahli: When you decided, or when Badger decided to become a B Corp, was it your idea? Was that your family idea? I know the foundation was already there, but I know B Corp certification is also make it more formal. There's got to be a process. There's got to be a documentation because if not, you're not going to get that 80 points, at the minimum. And then now, you guys are at 140.
Rebecca Hamilton: So it was my idea. Because I was in the position that I was pushing for new certifications and standards, and how can Badger be up at this higher level of quality and excellence. That said, at the time, I wasn't actually looking at becoming a certified B Corp. So we're in the process of breaking ground on building this new beautiful building that my father was designing. And my mother had just done this whole process with the family to really distill down what our mission is and our principles. And I had this question of like, "What happens as you transition? How do you build your mission and principles into the DNA of your business as you grow?" Because we were in a rapid growth period at that time as well. And so, I wanted to take the impact assessment to measure where we were and understand where our path is for becoming a better business and where we are currently. And in the process, we actually were able to just barely sweep by 80%, which we were, of course, appalled by because at the time were like, "Well, we're this great mission-driven business, how can we be at the bottom of all B Corps?"
So to be fair, at 80%, 80 points is really hard to get. But a lot of times when small businesses first take the assessment, there is a huge difference between your vision, and your intention, and what's living in each individual owner or maybe, in some of your top leadership. And then taking that mission and putting it into your standard operating procedures so that it's enduring as you grow, that every new employee that comes on can repeatedly enact that mission in all of their work. And so, that was the work that we really need needed to do to get us from 80 points to 140, was we need to look at every aspect of the business and not just have an aspiration of how we're going to be mission aligned, but actually have the nuts and bolts of it written out in a way that it could be carried out at every level of the company.
We have one person who takes the actual assessment. So who coordinates the efforts, who gathers data and information from each department. But it's really a company-wide effort to be able to get the points because you can't just have a living in as a responsibility of one person. Every single person in the company needs to hold their piece because what's really powerful about the assessment is that it is looking at the entire company. And so, the way that we've actually worked with it is that we start at our annual shareholder's meeting. We bring a gap analysis from the last impact report which shows areas for improvement. We vote on which ones we think are most core for the business or which ones we want to focus on. And then we bring it into our strategic planning with our leadership. And then we do strategic planning with our entire company. And that's where we build out action plans each department can take. And then that gets brought back to when we recertify.
Christina Sjahli: I got to go back to the strategic planning later in our discussion because I'm curious about the whole process of taking it strategic planning with the entire company. And then really...
Rebecca Hamilton: It's fresh on my mind right now because we have a retreat in next week.
Christina Sjahli: Okay, good.
Rebecca Hamilton: In one week, I can say that for sure.
Christina Sjahli: In every interview that you spoke to, you talk about business can actually do good for people and a planet. But you need profit. Profit is not the ultimate goal, but it's the tool to get you to amplify this mission of doing good for people and the planet. What were the challenges that Badger faced during its early days?
Rebecca Hamilton: So I would say that we actually have written into our mission that money is a fuel and not a goal. And we put it there because having a healthy business does require profit. It does require money. If we want to have organic lunches for our employees and pay our employees well, and have high-quality ingredients, all of those require being successful. So I think that there's been ups and downs throughout the entire history of our business because running a business is challenging. And there's always changing environments and things that you have to address. So in the early days, it was just being able to sell enough products to be able to expand, and to be able to take on whatever is next, or to be able to go from, say, regular extra-virgin olive oil to organic extra-virgin olive oil, and to certified organic product. And so, I think that had certainly ups and down to get there.
A big transition period for Badger was when we launched sunscreen. And sunscreen really transformed the business. We had an employee at Badger who had been diagnosed with skin cancer, and was told by her doctor that she had to use sunscreen every day of the year. And she had brought into work her sunscreen and it was a oxybenzone-based sunscreen. And my father had recently read about some of the potential health concerns which now are much more prevalent, even the FDA has it under review, and there's a lot of concerns around that ingredient. But at the time, it was pretty new that there were concerns and he felt that to have a person that was told that they need to protect themselves from the sun using a product that contains an ingredient that might be harmful that was, didn't seem right.
And so, we created our first sunscreen, which is a zinc oxide, really simple ingredient sunscreen that was in a balm base like our other products that had only organic ingredients and zinc oxide. And we thought, "Well, this is going to be something that only the far, far, far left of anybody would ever use because it's thick, and it's whitening, and it's greasy, but it's going to be safe, and it's going to be effective. And that's the priority." And so, we came out with that product in 2005. And we, of course, barely sold any, terrible margins. It was just not a great product for us. It was okay. We felt like it was a product that just should be out there.
And then in 2006, the Environmental Working Group released a pretty striking study where they said one in four sunscreens don't provide adequate UVA protection. And many of them are containing these potentially harmful ingredients. And they just blew this whole issue out of the water with this study that they released. And then what they also did was they listed, I think, 700 sunscreens that were out on the market, based on safety and efficacy, and enlisted Badgers as number one. And that was picked up by Good Morning America and all these other things. This is one where we're quite a small company at the time. And so, we sold out of a year supply in about a week. And then what happened from there was we started seeing steady growth in our mineral sunscreens. At the time, there was maybe one or two other mineral sunscreens in the US market. It was just not a big thing to have zinc oxide sunscreens. And so, that's really been catapulting our growth all these years. This business is always an interesting challenge to balance out in terms of profit and how to run your mission-driven business.
Christina Sjahli: So just take an example from the sunscreen. It's one of your best seller, likely, in the business. But at the very beginning, it was a bad margin. How did you even overcome that feeling? Thinking that, "Oh, man. This is a bad margin. Should we continue doing this?"
Rebecca Hamilton: Well, I think it's always a blend. We had... A couple years ago, we were really excited to come out with a new bug spray, bug and tick repellant. And we're hoping to have one that was EPA approved. And there's a limited number of ingredients that you can use for EPA approved bug sprays. And we found one that we were really excited about. We had almost a year's worth of development working with that, before we were able to dig far enough to see how much animal testing was required for it. And so, we ended up choosing not to release that product because it didn't meet our mission principles, even though I am certain that it would be among our top-selling products had we gone forward with it. And so, we've had a number of those times where we've had to stop. And we've not chosen to make the product because it didn't meet our ingredient standards. We've also looked at really trying to understand what those ingredients standards mean, and make ones that feel the right balance of a product that is going to be the best on the market and being able to create that product.
If we held ourselves to 100% perfection, we would have no products. We are moving out of plastic and as many products as we can, but we still have some products in plastic. And we recognize that it's a journey to get to where we want to go. And the same is with everything that we're creating is that we have aspirations which are really high and mighty. And we have to recognize where we are, and do the best we can, and take it step by step, moving toward that aspirational goal. And so, with products, there are products that have been good products that have low margins that we've discontinued. But if a product is really important that we feel like we're doing something different and that we're offering the service, then that's something that makes a big difference in wanting to continue to make that product. And in the case of the sunscreens, we eventually took it in house. We manufacture it ourselves. We were able to improve the margins and make it something that's viable.
Christina Sjahli: Okay, so at the very beginning, it was manufactured somewhere else, then?
Rebecca Hamilton: Yup.
Christina Sjahli: Now, your product is ranging from one to hundred over the years. How do you balance that complexity? Is it just an idea that just come up like with the sunscreen, and then you just give it a try, and then you just pass the market, and then see how it goes?
Rebecca Hamilton: Well, I would say that in the early days, that's exactly what we did. Because all the products were just coming from inspiration: a friend or a family member which I really need. I had sinus infections when I was younger and my dad made an aromatic chest rub. My mother said that she wanted something to help her changing and evolving body and so he made the, he called it, wrinkle-crinkle-shrinkle care, like evolving body balm. It's a rose beauty balm, whatever we want to call it to help your changing and evolving skin. So a lot of those early products were just based on women inspiration.
I would say that today, I am thinking about it in a much more strategic way because we're in a different landscape. It's not as much of the Wild West. There's a lot more products on the market. And so, what I've been really thinking about lately is what are Badger's strengths? What do we do really well? What can we offer to our customers? When we think about making a product for someone we love, I want to keep that intention. But I don't just want to make it for somebody who's right here in front of me, I want to make it for all of our customers. And so, it's a little bit of a more outward strategic visioning.
So I've been actually doing a lot of work, right now, on looking at each of our lines. And over the next few years, we're doing a lot of work on figuring out do we have the right products nationwide? Maybe in some lines will discontinue some products and add some other products. We want to have an assortment that really meets our customers needs in a way that, I think, are a bit of our entrepreneurial hodgepodge product development process hasn't done in the past. It has built really loyal following because we have some very unique products. And I want to continue to keep those really unique products, and go deeper on the things that make Badger unique, or that we really excel in. And I want to have it really be cohesive and and communicate well to our customers.
Christina Sjahli: When you say you're looking at the product and you're trying to find a niche, what type of information are you looking at to help you making those decision?
Rebecca Hamilton: We still talk to our friends, family, community. We talk to our larger community: our customers, our social media community. We have a group of customers who are very avid customers who have agreed to give us feedback. And we look at market research. And we look at what the landscape looks like. We know what Badger is good at and we know where our strengths are. Is there a place in the market where we can create something that's different and needed? I don't really want to create a widget. I don't want to create something that we're just pushing sales on. I want to create something that there actually is a need for it.
Christina Sjahli: So do you look at any financial information at all when you are making this decision, or it's more towards the market research and the customer who needs it and all that stuff?
Rebecca Hamilton: We do have to look at financial information for sure. We do look at margins and we balance out the margins based on the need. But we'll be willing to take a lower set of margins if we think it's more important product, but we were looking at viability. So first we want to look at what are we inspired by? What product do we think we want to create that we think there's a need for that we do really well and it's mission-aligned? And then we look at the feasibility of it. Can we make it? What are the margins? What's the cost? Where are the ingredients coming from? What's the feasibility of actually making it happen?
Christina Sjahli: So over the years, how long did it take your parents to get Badger to profitability? Can you share that journey?
Rebecca Hamilton: Yeah, I think Badger was profitable from the beginning. We had a very small amount of profit. So when we were a million-dollar company, we had profit, but it was just a very small amount of profit. We've only had a couple of years where we weren't profitable. I would say we're modestly profitable. We're not raking in the profits. But we've been able to maintain the values that we have as a business and continue to grow, being completely and totally family-owned without taking on outside investors.
Christina Sjahli: That is where I'm getting at. Because I know you are still family-owned, but the innovation that you guys are doing is huge. So to see how Badger is growing slowly but surely without losing any sight on what truly matters. You guys purchase a land and building manufacturing facility. You are exporting to 20 countries. And then the most recent one: you basically built solar power plant completed in eight months in the middle of a pandemic. There's got to be something that you are doing right because it's 25 years later, it's profitable, and you still care about your employees. What's the secret?
Rebecca Hamilton: Oh, gosh, that's a good question. I mean...
Christina Sjahli: To be able not to go out there and be intrigued to raise fund from outside the business, it's something.
Rebecca Hamilton: I think that a lot of what we've always approached things with is that we're not trying to grow quickly. I remember my first entrepreneurship class in college. And the first day of the class, the lesson was on exit strategy. When you start a business, know your exit strategy. And I was like, "Wow, that is so different from the business that I grew up in." Because we don't have an exit strategy. Our plan is just to ideally, we keep it in their family for generations to come, or we're not looking to use the business as a tool for financial growth for the owners. We, as owners, we just take salaries like everyone else. We don't take dividends. We don't pay ourselves a different amount. We've set a salary structure. We pay ourselves within the salary structure that we set for everyone else.
So what that does is when we make decisions for the business, we're trying to make decisions that lead towards stability. We're trying to make decisions that will allow us to be successful. But we also are looking for decisions that are going to be successful for the long run. So an example might be in our building where we have one of the largest posts and beam buildings in New England. And we built this building to last hundreds of years. And that's because we have no intention of moving Badger from here. And so, that's the mentality that we've had with the decisions we make.
I remember when we first went to sell in Target. They had been approaching us for a couple of years. And we said no to begin with, because we didn't feel like we're at the place to expand a lot and be able to handle it if they didn't continue to take our business. And so, when we actually did go into Target, we have exactly that happened. We started out with the wrong set of products. And we asked them to only take it in our core natural sets that they did. And then it didn't do as well as it needed to. And so then they took it out. But we were, that didn't impact us very much one way or the other because we went into it so cautiously. So now, we can approach it again while we're at a more stable place in terms of we were in transition from our manufacturing being external to internal. And so, now we're at a really solid place where we could look at it again. And so, I think that's been a lot of what's led our decisions and helped us to be stable throughout the years.
Christina Sjahli: When Badger purchased the land and built the manufacturing facility, is it all coming from organic profit, there is no external financing?
Rebecca Hamilton: A lot of it was just our own financing, but we did take bank loans, but no investment outside of bank loans.
Christina Sjahli: I also know for your solar power plant, you actually work together with another B Corp to finance it.
Rebecca Hamilton: Yes. Yeah. We worked with ReVision Energy. We put together, basically, we purchased our own right. So each, we pay each month as if we're paying our regular electricity bill, but that's paying toward the bottom line. And eventually, we'll be able to purchase it and own it.
Christina Sjahli: I find those, those are like creative solution where you don't need an investor to do that. And you can do it project by project. For example, for the land purchase and the building the manufacturing facility, you said you get a bank loan is also using the organic profitability.
Rebecca Hamilton: And our bank that we got the loan from is actually also a B Corp.
Christina Sjahli: Ah, okay. So what has been your experience dealing with another B Corp in this type of financing? What is the process?
Rebecca Hamilton: Well, we always try and work with other B Corps if there's an option to because knowing that someone is a B Corp in business, a B Corp means they have a baseline alignment in terms of mission and values. And that's something that's really important to us. For banking, we've always banked with the same community bank. We help them to become a B Corp. So that was we just have a really strong long-standing relationship with them and that helps both for getting lines of credit. If we need to weather the ups and downs of the year or if we want to make investment in the future. They've been a really good partner. And we've gone that route rather than getting venture capital investors or someone who might want to have an impact and how we run our business. Because we don't want to have somebody coming in and telling us we have to run it in a way that might go against what we think is most important.
Christina Sjahli: Did anybody ever approach you guys and then offer some investment?
Rebecca Hamilton: I get emails every week.
Christina Sjahli: Did you ever feel intrigued?
Rebecca Hamilton: I mean, I probably should be nicer and respond to more of them. But my father, actually, when he was CEO, he used to respond to them because it would be interesting to have conversations. And so, every once in a while, I'll respond and set up a call and like, "I think it's nice to hear how somebody is evaluating your business and what they see your strengths or weaknesses. But it's just not something that we've had an interest in."
Christina Sjahli: What about exporting to 20 countries? How did you finance that process? How do you manage this whole process, making sure that you are still using the same ingredients, but still profitable?
Rebecca Hamilton: I would say for the ingredients, one of the big values we've had is to have short supply chains with long-term relationships. And what that does is it helps us to have a better knowledge, both of the ingredients, and then a strong relationship that helps us to weather ups and downs, whether it's a drought somewhere or something financial where we partner with that supplier, and they can help us if we're in a downtime. We can help them if they're in a downtime.
And then on the other side in terms of having international sales, we've, for better or worse, it's taking a little bit of a let-them-come-to-us approach, which is that when we go to trade shows and other places like that, we'll have distributors who reach out to us, and come visit us, and say, "We would like to bring your product to this country." And then if it's a country that's on our list of what we want to expand into them, we'll start interviewing them and seeing if they're a good partnership. But the distributors take along a lot of the responsibility of bringing it into the new country.
Christina Sjahli: Slow growth is really, doesn't mean you're not profitable, doesn't mean that you don't have a healthy business. Slow growth can mean that you are just being strategic. You just finished the strategic planning with the entire company. Can you share the process? What exactly, as the leadership team, how do you guide the employees and the entire company in this whole strategic process?
Rebecca Hamilton: Each year is a little bit different. And this year, we've taken three strategic priorities. And we're separating the company into three groups. And we're running them through sessions on each of the strategic priorities. And the sessions are going to be a combination of presentations, and interactive workshops, and activities that will help for each of the team members to understand what the strategic priorities are, and then understand how it might impact them in their department. Usually, the actual department strategic planning comes afterwards where they've held this piece of where the company is going as a whole. These are our priorities that are going to impact every single department. And so, that's where it brings it to this company-wide strategic level. And then each individual can take time after that to think about how it impacts them in their work.
Christina Sjahli: And where is the financial planning fit in in this whole strategic planning picture?
Rebecca Hamilton: Typically, we would do the financial planning after the strategic planning, or we will do it in tandem. So when we're doing the financial planning, we usually start with each department leader brings a combination of their wish lists: things that they think they need to spend for the company and things that they would like to spend for their area department. Then we do forecasting and budget flow forecasting. And then we layer them all together to see whether we think our budgeted revenue is going to match up with what we see our expenses are. And then we adjust it.
Christina Sjahli: You adjust that throughout the year because...
Rebecca Hamilton: We adjusted throughout the year, but we adjusted, we balance the budget to begin with. So we'll look at it before we started the year. We'll have come with the whole wish list of all the things that our departments want to spend money on. And then what we think our sales projections are. And then if it doesn't match up, then we either cut costs, or we reevaluate whether or not we think that we can be less conservative if it's important for some expenses, or it's really that balancing act. And then throughout the year, we'll regularly finesse if we need to.
Christina Sjahli: Now, in a small business world, I understand that financial planning or having a strategic financial partner like a part-time or full-time CFO is considered a luxury. But in order for business to be profitable, there is a need for have a strong financial planning process. Who takes on the role for this at Badger?
Rebecca Hamilton: So we do have a part-time CFO, and we have an accounting team with a controller. My sister and I decide on the final budget, but we have people who are more experienced than we are in finance to give us recommendations, and to help put together the budgets, and help us with projections, and ROIs if we're making investments, and all that.
Christina Sjahli: So what help that you get from the part-time CFO, Rebecca?
Rebecca Hamilton: We have our monthly financial meetings where we'll look at the health of the company, and he has indicators on the health, everything from inventory management to budget flow to where we are on our sales versus expenses. And so, he has a pretty robust set of things that he's bringing to us for discussion. He helps with the budgeting process in the beginning of the year. If we have an investment that we want to take on, then he'll do ROIs on the investment. If we are looking at wanting to make improvements in process, he'll do analysis on that, or he'll look at an analysis of inventory or out of stocks and what potential sales we could have for that. Or if we're going to create new products, and we have to discontinue something, he might help us with analysis of that. So it's really strategic financial analysis.
Christina Sjahli: So at what point you think it makes sense for a business to have a part time CFO?
Rebecca Hamilton: I think that on day one, unless you're a financial person, you should have, at minimum, some financial support, somebody who can guide you through making sure you're properly doing the books, and properly doing payroll, and properly doing all the different aspects through to taxes. And then, I think, within the first few years, even just having a financial advisor who can meet with you quarterly, I think is valuable for anyone. I think a lot of times a mistake businesses make is to let poor financial planning go on too long and you set up the wrong structures. Even from day one, I would recommend you talk to somebody who has that you trust as good financial expertise who can look at your business plan. I don't think it's too early. It's just a matter of how much you need them. So day one, it might be one meeting. Year one, it might be two meetings a year. Year two, maybe it's quarterly.
Christina Sjahli: Last question for you: can you share any important lesson that you have gained since you took over the company together with your sister?
Rebecca Hamilton: One lesson that I've had, this come to mind recently, is that when we took over the company, we had been co-leading the business for years with our parents. And so, we went around each department and individuals to talk about this transition in leadership. And we said, "Well, nothing's really going to change. It's all going to where it's just going to be a smooth transition of leadership." And what we very quickly realized is that that wasn't true. That even though we continue to have all four of us in leadership in the company, that subtle shift in who is really leading the future made a big difference. And that my sister and I being the future of the company is in that next generation. So we have a different way of looking at things that our parents did. And so, that's made a big shift in the company. And so, I think I see that you can't underestimate the change that shifting leadership will bring.
Christina Sjahli: Did it create any issue with the employees or the culture of the company?
Rebecca Hamilton: Well, I think it's hard to really tell because we shifted into the leadership position. And at the same time, we started manufacturing sunscreens, became an FDA facility. And then we had a lot of changes out in the marketplace that changed our business model. And then we had a pandemic. So it's been a lot of learning and a lot of change and shifting. And I don't... It's hard to identify which parts of that come from the shift of leadership or which parts of that come from responding to what's going on out in the world.
Christina Sjahli: I know that sometimes in a family-owned business, it's hard to let go for the parents because I've seen it with some of my clients. Where is your parents right now, in terms of are they completely retired or are they still involved in some part of the operations?
Rebecca Hamilton: My mother is very much involved. She has shifted into a role of being our Chief Mission Keeper, which is pretty amazing to have her in that role. Because over the years, she has been really the family member that's held a lot of the community aspects of Badger: the lunch program, the gardens, the babies at work program, and a lot of these things that have made Badger unique. And so, she's shifting into that role and holding that along with a lot of our sustainability initiatives. And my father is retired, but he'll still come and sit-in our weekly strategy meetings.
My father was CEO until about two years ago. But two years before that, we expanded our manufacturing facility, and he loves being part of building and getting new machinery and things like that. And so, he took on working on that project, and then took on as general contractor for the new building. So he really was just focused on the new building. And then when he was done with that, he decided to build another house for himself and for my mother. So then he wasn't really coming to work at all. Then about halfway through the year that he wasn't coming to work, we said, "Are you retired or on sabbatical?" "Just sabbatical." "Okay." So then another year goes by, or another half year goes by, and he's like, "This title of CEO, I don't think it really suits me. I'm really not here very much. So I think I'm ready to move into the founder role.
So that what was interesting about that–and this is why I said it was such a learning for me to realize how much change happened when my sister I officially took over–is that we were running the company for three years in that interim where he was really not as present because he was focused on these other things. But we were holding that space for him. And so, when he officially made that transition, it gave us permission to really think about what is the future of the company that we want to see. And that led to us reevaluating how we're running the business and if there are things that we felt like needed to be changed, and, of course, also responding to all the other things going on. So there's... It's been a both a really beautiful time of change, and also a really challenging time of change.
Christina Sjahli: Yeah. I can imagine that. A lot of my clients experienced similar things that you just explained so I get it. Rebecca, it has been a pleasure. So where can my audience connect with you and the Badger community?
Rebecca Hamilton: They could connect with us certainly, in social media: on Instagram, or Facebook. Or when the pandemic is officially over, you can come to Badger and get a tour with my father.
Christina Sjahli: Rebecca, thank you so much for being here.
Rebecca Hamilton: Thank you, Christina. It's a pleasure to be here.
Christina Sjahli: And that brings us to the end of another show. Thank you so much for listening to another episode of Her CEO Journey, the business finance podcast for women entrepreneurs. If you want to create a proactive financial plan and process for your business, so you are ready to weather the financial storm over the next few months, let's chat and see what's possible for you. Book in a time to speak with me at christinasjahli.com/let-s-chat.
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