Image of an empty basketA couple years ago my wife Emily and I were preparing for a covered-dish dinner with friends from church.  As she was pulling the casserole out of the oven, she said, “Can you bring me the Longaberger basket in the cabinet above the refrigerator?” I pulled the basket out, thinking the last time I had seen it was about the same time last year. She carefully placed the hot casserole dish into the basket, and out the door we went.

As we were driving to our friend’s house, I said to Emily, “You have several of these Longaberger baskets, why don’t you use them anymore?” What I was really thinking was, “How much money have we spent on these baskets we don’t use anymore?” There was a time when she had several of those popular baskets, she seemed to use them for everything. “I don’t know,” she said. “They just don’t seem to be in fashion like they used to be. I don’t even know if the company is still around.”

I later realized the company had gone out of business in 2018. The company might be reconstituted in some form now, but its demise five years ago is a case study in how not to run a business. The founding patriarch, Mr. Longaberger, ran a very successful company selling baskets used primarily in the kitchen. He had a profound and positive influence over every phase of company operations. He drove everything, from design to sales to manufacturing. Under his leadership, the company flourished and was a great place to work. They were so into baskets, their Ohio-based headquarters building was designed to look like a basket! Incidentally, that basket-looking office building cost $34 million to build in 1997 was ultimately sold for $1.2 million.

The company had a unique distribution and sales model that drove fast and profitable growth. In the ‘80s and ‘90s, the company could seem to do no wrong, as it grew to almost $1 billion in annual revenue. My wife contributed to their success (if you get my drift). But I could do a series of articles on the mistakes that led to Longaberger’s demise. But the essence of their failure was their reluctance (inability?) to morph from isolated product sales to a business with multiple revenue streams.

It’s fun to work for a company fueled by the founder’s vision, creativity, and energy. Having spent six years at the executive level for the Walt Disney Company, I know what it’s like to have incredible respect for your company founder. But unlike Walt Disney, who had developed a number of stable recurring income streams for the company, Longaberger never broadened his company’s revenue beyond baskets. As it turns out, selling baskets is a trendy momentum business. A bad year or two, the bloom comes off the rose, and baskets become old news.

Mr. Longaberger died in 1999, and the company limped along for several years, primarily because of the strong brand identify created while he ran the company. Had efforts been made before his death to leverage the company’s core sensibilities and skills to develop broadened and sustained revenue streams, the building that looks like a basket might still be filled with productive employees.

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Tennessee Valley Group

Jim is an attorney (non-resident status with the Missouri Bar) and though he no longer practices law, he has read and negotiated enough legal documents to fill a cargo tanker. He has an MBA from Harvard Business School and knows how Wall Street and private equity operates. Jim is a Tennessee Supreme Court Rule 31 listed general civil mediator with tons of experience helping business owners (large and small) work through sensitive problems to achieve winning results. He is the author of "Home Run, A Pro's Guide to Selling Your Business, Seven Principles to Make Your Company Irresistible."

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