Business is like an avocado tree.
Current online business culture is focused on a lot of money, fast. They want to see enormous profit margins right away, and don’t care what they have to sacrifice to get it.
But if businesses are like plants, that would be the equivalent of an herb: grows fast, blooms, and then dies within a year.
We call that “bolting” when a plant starts growing so fast it can’t keep up with itself. Bolted plants are unnaturally tall, thin, lanky, can’t support their own weight, bloom quickly (which for an herb means it gets bitter and isn’t good for cooking), and wither away.
Herbs are great and should definitely be part of your garden, but if your entire garden is made up of herbs, you’ll be crazy busy trying to keep up with planting more, harvesting what’s growing before it’s too bitter, and watering, watering, watering.
Long-standing businesses (family businesses that get handed down through generations, or even large companies - although I think that the days of huge corporations are over) are like trees: slow growing but mighty, and able to thrive through centuries of growth.
Starting a new business is like planting a sapling.
Avocado trees take 7 years to produce fruit. Different kinds of trees have their own timelines.
Some trees will produce tiny fruit their very first year, but you can’t rely on that to feed your family. Best practice is to pinch off the fruit and place it under the tree so the plant can reabsorb it and focus its energy on growing.
If you encourage - or demand - fruiting in the first 3 years, the tree will be stunted and never produce to its full capacity.
“When you enter the land and plant fruit trees, leave the fruit unharvested for the first three years and consider it forbidden. Do not eat it. In the fourth year the entire crop must be consecrated to the LORD as a celebration of praise.” Leviticus 19:23-25 (NLT)
The Bible specifically gives instructions to let the tree grow for 3 years before counting on it for food, and to consecrate the fruit of the 4th year to the Lord in thanksgiving for his goodness in making the tree grow strong and bountiful.
The standard strategy in most business circles is to keep “reinvesting profits” back into the business in order to grow faster.
But this principle is saying that there is a strategy to it and a time limit.
When the tree is small, it needs time and space to grow. It needs you to take care of it without messing with it too much, and make sure it’s getting all the nutrients it needs.
If you’re counting on something for sustenance, you’re going to be constantly checking on it, watering it, giving it more fertilizer, and generally trying with all your might to will it to grow faster.
It is possible to drown a tree by watering it too much. It is possible to burn a tree by fertilizing it too much. It is possible to kill a tree by uprooting it every so often to “see how it’s doing on the other end.”
We can’t make it grow any faster by hovering. A watched tree never grows.
Different types of businesses have an established lifecycle (which are not necessarily a calendar year).
Generally speaking, you should plan for the first 3 “seasons” to put the profits back into the business. You should be taking a certain percentage as owner’s comp the whole time - that’s an operating expense of the business’s existence. Just don’t rely on that money to sustain you and your family.
Trees don’t grow upwards much in the first 3 years, because they’re working on sending their roots down deep. Without their footing, they wouldn’t last through a stiff breeze. Once they’ve gotten their foundation secure, then they put all the energy into growing upwards.
Bamboo especially grows its root system for YEARS before ever sending a shoot above ground. But when it’s ready, it grows at a galloping rate: some species can grow up to 3 feet A DAY.
In the fourth year, take the profits (again, not owner’s comp. PROFITS) and consecrate your business to the Lord by distributing them as you see fit. Donate to your church, to charities, to other businesses and organizations in your industry as a way of sharing the abundance with your community. This generosity will put you in the right perspective to really start growing (and will increase goodwill in your community so you’ll have a support system when you need it).
Starting in the 5th year of growth, you can take those profits for yourself. Owner’s distributions, nest eggs, investment capital for another baby business tree, whatever you want.
But the principle is clear: the tree should be self-sustaining by now. If it still requires you to “reinvest” the profits after 5 years, it isn’t reinvesting anymore. It’s self-cannibalism.
Also, now that the tree is bigger, the percentage you’ve been taking for owner’s comp should be enough to sustain your family on its own. Maybe you can increase your owner’s comp percentage because the operating expenses have been streamlined, or maybe the revenue has increased so much that the same percentage is now quite a chunk of change.
Either way, a business that is thriving after 5 years is something you can - and should be able to - count on to sustain you.
