A small business implements risk strategy and grows following a crisis
You don't have to be a family business to turn crisis into an opportunity to address a company’s weak points. For Chris Mittelstaedt, CEO of The Fruit Guys, a fruit-delivery subscription business, his response to crisis was the making of his company and risk management model.
Mittelstaedt started his business out of his San Francisco apartment in 1998. The business quickly took off, with many clients in the booming technology community, and hit US$1m in sales in 2000. “What I missed seeing at the time was a worst-case scenario perspective,” he says.
In 2000, the dot-com crash cut his business in half. Suddenly his young company was overleveraged after he’d borrowed US$85,000 from the bank to purchase a fleet of refrigerated trucks to expand the business. His wife had also recently given birth to twins. Mittelstaedt went back to barebones.
“I went from growth CEO to a route driver,” he says.
By experiencing hard times, he was able to see the risks he didn’t appropriately consider. Among them, the company didn’t possess the infrastructure to expand beyond the local region. Also, the company relied too heavily on the surrounding local economy, so when that became troubled, the business did too.
One of the strategies he put into place following the dot-com crash was that he avoided further bank debt – Mittelstaedt borrowed from his family to keep the business afloat. He also expanded his company’s market across the country so that his business wasn’t solely dependent on the health of the local economy.
To amplify his revamped risk strategy further, after mainly having won business clients in the private sector, Mittelstaedt diversified his client pool by going after institutional clients with different budget cycles. To date, his company is stable and growing, with 135 employees across the country.
Risk: an opportunity to grow
“Blessed fire,” Bofill marvels, looking back. The 2010 blaze was a pivotal moment in the remaking of Carozzi’s risk strategy and ability to scale. “How we put a lot of additional strengths into our culture [after] this fire was incredible … people wanted Carozzi to be different. Today we are a very profitable and solid company.”