“It takes the right talent, culture, vision and strategy to make positive progress, and we work hard to get it right more than we get it wrong. We believe that what we do, and why we do it, makes a difference in the world.”– Kris Maynard, Co-Founder and CEO, Essential Ingredients
Industry: Chemicals distributor
Ownership structure: 100% ESOP
Number of employees: 80
Revenues: $114 million
Essential Ingredients (EI), a chemicals distributor to the cosmetics industry, launched in May 1996 in a small office incubator in Augusta, GA. “Actually,” says CEO Kris Maynard, who started the company with co-founder Chris Gerlach, “saying we started in an incubator is a stretch. We couldn’t afford a ‘real’ incubator office, so the owner of the building agreed to rent us the server closet for $125 a month. The space was just large enough for a desk and a sample shelf.”
Gerlach came from a chemical distributor and Maynard came from a chemical manufacturer – this combination gave them a unique insight into the need of both customers and suppliers. Their approach to business was propelled by a relentless focus on making others successful – “others” being their customers, suppliers and employees. Maynard and Gerlach believed that if they focused on the success of these other stakeholders, their own success would follow.
That belief proved true. Over time, the business grew and hired more people, added suppliers, and expanded to new geographic regions. By 2010, EI’s founders were receiving multiple buyout offers from competitors and private equity firms. Maynard and Gerlach were thrilled by the success but troubled by the thought of what selling would mean to their employees. “I envisioned lying in my bed at night with a lot of money in my bank account and a lot of my people with no jobs,” says Maynard, who is now the CEO. After consulting with some advisors, they decided on a different path instead: employee ownership.
The company created an employee stock ownership plan (ESOP) and has been 100% employee-owned since 2011. And their successes continued: EI now has over 80 employee owners and over $114 million in annual revenues. The initial stock price was around $2 per share in 2011 and is over $80 today. In 2017, the company was recognized by Forbes as a “Small Giant,” one of the best 25 small businesses in the country. And in 2018, EI’s open-book management practices resulted in a 35% increase in revenues and a 27% increase in profits before tax. The financial success was one of the reasons that EI was recognized as an All-Star by the Great Game of Business.
Staunchly independent, EI continues to grow in both geographic and market reach. Within its sector, it is now the largest privately-held specialty distributor with a national footprint and provides materials to clients in every corner of the USA. “Our long-term success,” says Maynard, “is to be the first thought in specialty ingredients, service and innovation. Innovation in our world is not necessarily limited to product innovation, but includes process or cultural or service innovation. We are always looking for a better mousetrap!”
Through it all, EI has worked hard to maintain that same ‘others centered’ culture that has defined the company since the very beginning. Central to that effort is the company’s statement of core values:
- We act with integrity and respect
- We strive to be a blessing to others
- We achieve excellence through teamwork
- We provide opportunities for growth
- We foster a fun and enjoyable work environment
The company makes a point of using these core values as a compass for everyday decision-making. “As an employee-owned company,” says Maynard, “our core values are practical. We frequently push decisions down in the organization to the people who really do the work. The core values ground us and help every team member make good decisions, on a daily basis, that are consistent with who we are.”
“While EI is far from perfect,” Maynard concludes, “it is a very special place. It takes the right talent, culture, vision and strategy to make progress in the right direction, and we work hard to get it right more than we get it wrong. We’re driven by this purpose of ‘being a blessing to others and inspiring others to be a blessing as well,’ and we intend to remain independent and live out this purpose for decades to come.”