Thirty-One Gifts and Cindy Monroe ride a wave of rapid growth

 

It was like drinking out of a fire hose. That’s how Cindy Monroe, founder and CEO of Thirty-One Gifts, describes a decade of high-octane growth.

She started the direct sales company that offers totes, purses, accessories and more out of her Chattanooga, Tennessee, basement, just over 11 years ago.

“I really was starting it just to make a little extra money to help out with vacations and those extra things that we enjoy — and I was hoping that for other women as well,” Monroe says.

With the party-plan model, other women would be able to earn some extra money so they could pay cash for Christmas, payoff credit cards or go on Disney vacations with their families.

The concept took off, as Thirty-One parties swept into living rooms across the country.

The company moved from Chattanooga to Columbus in 2008, and Monroe says they were shipping and doing all their operations themselves.

“I don’t think that I ever expected that I would be this multimillion-dollar organization and, you know, I had to grow quite a bit,” she says.

“Every year, it was just constant growth to be able to keep up with that size of a company. Because running a business from a startup to even hitting $50 million or $100 million, it was always evolving. And it gets more complex as you grow the business because the stakes are higher and you have more people involved.”

Monroe crammed with business books as much as possible, but these books aren’t written for multimillion-dollar organizations. She says after a certain point, you have to surround yourself with people who have been there and done that.

She also held herself accountable for both personal and professional growth.

“The whole time I was telling my executive team and my board, ‘At any time, if I’m not keeping up, I want somebody to be honest with me and let me know because I really want the consultants and the Thirty-One family to continue growing,’” Monroe says.

Today, the growth has finally flattened out as Thirty-One Gifts hit $750 million in annual revenue last year. Monroe and her team are taking advantage of the opportunity to focus on getting back to the basics.

Looking into the crystal ball

Forecasting growth is one of the most difficult things any business does. It’s even more difficult when you’re growing 200 or 300 percent a year and don’t know when it’s going to slow down.

Monroe says the day-to-day of getting orders out was a feat in itself, and the company was constantly monitoring trends to try to project inventory. They tried to predict when the growth would level off so many times, because they knew it had to at some point.

“We went through season after season of running out of products and backorders and things like that,” she says. “It was just a real headache for our sales reps and our customers.

“At one point, we had to actually tell our consultants, our sales reps, that they could not recruit anyone on their team for about three months because we had to slow the growth down.”

That was a difficult decision that cost the company a lot of money. But Monroe felt that if Thirty-One Gifts couldn’t provide the service levels that people expected, it would hurt its overall reputation.

“I think as a leader you always have to choose where you’re going to invest your money and invest your time,” she says, “and sometimes if you’re investing in your reputation, it doesn’t pay off immediately but it pays off long term.”

Juggling investments

When you’re growing at an extreme pace, you must continually invest back into the company. Sometimes it’s hard to determine where, such as when to hire executives.

Monroe says you cannot hire someone for where the company is at today because the business will outgrow them quickly. Instead, you must hire someone before you’re actually ready for him or her, which she calls a juggling act.

“The hard part about that is getting them to believe in you and your company so that they actually want to come work for you based on this potential forecasted growth that you’re sharing with them,” she says.

In hindsight, Monroe says she would have hired some managers and executives sooner to give them more runway, which would have prevented a few mistakes.

For example, she says she and her team were nervous about the growth, and afraid to invest in that growth. Therefore, they made some costly decisions about buildings and leases.

Monroe says that cash can be hard to come by when investing in new leadership, IT resources, operational racking and more, as required by high-growth.

She had to make tough decisions about where Thirty-One Gifts was going to get that cash and how much it would cost, while educating herself to fully understand the options and risks. Monroe and others also kept a close eye on the cash flow.

Over the past couple of years when the growth did begin to slow, Monroe made another tough decision. She had to downsize and let employees go — in order to right size the business.

She says her CFO and executive team supported her and helped recommend where to cut expenses, whether that was people or other areas.

“(It was) some of those nice-to-haves that, you know, are really great when you’re growing and you’ve got that extra cash coming in,” Monroe says, “but you have to tighten down sometimes.

“We’re very healthy financially as a company, but it’s because we made some of those difficult decisions.”

Managing with precision

Every business has its highs and lows, and at Thirty-One Gifts the growth has slowed to a more manageable level.

With that change Monroe says she had to shift into a different way of leading her team, getting them excited about slower growth that’s very achievable with just a few tweaks to the key performance indicators.

“I don’t expect, or I don’t even desire, to ever be growing at 200 and 300 percent year over year again,” she says. “It’s kind of nice to be able to say, ‘OK, let’s plan a 15 percent growth, and to really be able to manage it.’”

She wants to get back to the basics that helped drive the growth in the first place — the passion, building relationships with the sales force and marketing.

With so much momentum, Thirty-One Gifts didn’t have to do much marketing, so now Monroe wants to be strategic about where they focus and grow.

The company recently bought a jewelry line that it will integrate into its product package, and is expanding in Canada.

A data warehouse management system now provides better intelligence. The company is making sure it has people who can not only pull that data, but also help analyze it to dig into trends and what’s really driving the business.

Monroe says they are also outsourcing more tasks that are only required occasionally, like extra marketing during a catalog changeover, which provides more flexibility.

“They say don’t build a church for Easter Sunday,” she says.

From an inventory standpoint, Monroe says they are now able to meet weekly or every other week to examine the products they are purchasing. They can look at products that have a longer lead-time for developing, when to exit products and how to segment them.

They can better understand the evolving needs of their core customer, as well as solutions that will appeal to a broader demographic. A president’s advisory council of the top consultants also gives opinions on any new product ideas.

With increased business intelligence, segmentation is being used with their sales consultants and sales forecasting, as well. They can understand how a sales representative who has been with the business for one month, six months or 18 months can be expected to perform.

“Now that we’ve got that data, we can start segmenting the data and segmenting our products for planning inventory,” Monroe says. “Then we can also segment our sales reps of where she is in the life of her business, to be able to help forecast our growth a little bit better.”

 

Takeaways:

  • Slowing rapid growth invests in your long-term reputation.
  • Hire for where you’ll be, not where you are now.
  • Take time to compile and analyze business intelligence.

 

The Monroe File:

Name: Cindy Monroe
Title: Founder and CEO
Company: Thirty-One Gifts

Born: Chattanooga, Tennessee
Education: Business degree with a focus in marketing from University of Tennessee at Chattanooga.

What was your first job and what did you learn from it? I worked for a retail place that taught me customer service, but I didn’t have a really great job in high school that helped me.

After college, I worked for an insurance company in Chattanooga. I was able to move around to a couple of different roles there and get into product development and work with the executives across the business. It was probably my best experience that helped me be a leader today.

I learned how to pull a team together from the different parts of the business. We didn’t like to outsource operations. It helped me understand how the different departments come together — how they set out an objective, actually execute a plan, understand all the state regulations and understand the business side.

Was that the job that had the most influence on you? For my professional growth that was the biggest influence as far as helping me professionally set a bar for myself and see how people start to function as an organization.

I’ve learned so much from just doing and reading different books on how to be a leader, organizational effectiveness, the strength of an organization and so forth.

You’ve mentioned business books a couple of times. If you could tell people to read one business book, what would it be?  It would probably be ‘Drive: The Surprising Truth About What Motivates Us’ by Daniel Pink. That is my one book that I love, and I reference and I go back to.

There’s also Jim Collins; he’s got the new one, ‘Great by Choice.’ There are so many good ones out there, but the one that a lot of people may not be as familiar with that has really had an impact on me would be ‘Drive.’