Balancing growth and doing business that doesn’t compromise people, pets or the planet

Many of us dream of having it all – a business that rewards us personally, makes a better product, does no harm along the way and lifts up the competition around us. Established companies like Patagonia, Bellroy, Who Gives a Crap through to younger startups taking on traditional harmful industries like Nightingale (Housing) or my own Scratch (dog food) are showing that it can be done, writes Mike Halligan.

However, building a business with purpose is not easy. Building a business that survives those high-risk formative years, but puts in place principles and structures to prevent avoidable harm to people and planet (or in our case, dogs), requires deliberate thinking and a business model that gives you room to move.

There are several things that I look at to see if building impact into a business is even possible:

1. How price sensitive is your market? If you’re running on the smell of an oily rag, you’ll either fold (not good for you or your impact) or not be able to afford to make the change you intend.
2. How much of your market is looking for more sustainable options? Impact is generally expensive – whether you build donations into your business model or limit yourselves to working only with suppliers who do things with strong environmental standards. You need customers who value that and seek it out.
3. How much is enough for you personally? Now we get personal. Are you motivated to be the biggest, or is small-scale more your thing?

The question of scale is one that all founding teams need to have. It determines everything – from the types of investment you seek and the partners you work with, to the team you build and what sacrifices you’re willing to make to achieve that.

We decided early that being the biggest dog food company sounded awful and didn’t suit our values. We set out to be Australia’s most trusted dog food company. Yes, that means that we’d prefer to be $50m than $100m.

If our goal was to be much bigger, we would have pulled back on our impact work when things got hard in order to sustain that ambitious level of growth.

When COVID was at its menacing worst (at least for Australia’s delivery network), we had to ditch Aus Post, hire vans, hire drivers and code up delivery software so that we could keep getting food to our customers’ dogs when they needed it. We lost around $100,000 dealing with the postal nightmare, but by knowing that we were happy with our scale and believed in our business long-term, we kept donating whilst we were losing money.

Small scale means less influence and impact, but it’s easier to carve your niche and build a solid business. Chasing growth means a rockier ride, and generally taking a little collateral damage to shoot for the stars. As we see now in the tech industry, when the money dries up it’s people who are hurt. For many industries, cost-cutting and ‘streamlining’ means further delays to environmental impacts and doubling down on what’s cheaper.

Really, so much of it comes back to good old fashioned business principles. If you build a business that customers value, you’ll be able to charge a fair price to them, keep enough to operate well and even give back along the way. If we’d chased growth, Scratch would likely be bigger and maybe I’d be wealthy (at least on paper), but building a sustainable business has meant that we’ve never fired a staff member, delayed wages, gone back on promises, cheapened our product or any of the many sacrifices businesses have to make with a purely for-profit motive.

So, I guess my message is – be willing to give up some growth to have a business you can be proud of.