FREE TRAINING: 3 Keys to Sell Your Business with Confidence

A Sad Empty Basket

As my wife Emily (her real name) was pulling the casserole out of the oven, she said, “Can you bring me the Longaberger basket that’s 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 to attend our Bible study class’ covered-dish Christmas dinner.

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?” 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.”

Her comment reminded me that I had recently read a story in the Wall Street Journal about the demise of the Longaberger Company. The next morning, I found the article and showed it to Emily. The tragedy of the Longaberger Basket Company is a case study in how to not run a family business. The founding patriarch ran a very successful company. Their Ohio-based headquarters building was designed to look like a basket (per the picture above). Incidentally, the basket-looking office building cost $34 million to build in 1997 and recently 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 $1billion in annual revenue.

This week’s blog does not provide sufficient space to detail all the mistakes that led to Longaberger’s demise. But the essence of the failure was the company’s failure (inability?) to morph from isolated product sales to a business with recurring revenue. The founder, Mr. Longaberger, 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.

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, and selling baskets is, best case, a trendy momentum business. A bad year or two, the bloom comes off the rose, and baskets become old news.

It’s entirely possible the Longaberger Company might have failed had the patriarch founder lived another 20 years. I think the basket trend hit a peak about the same time he died. But had efforts been made before his death to leverage the company’s core sensibilities and skills to develop sustained revenue, the building that looks like a basket might still be filled with productive employees.


JIM CUMBEE is President of Tennessee Valley Group, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. Jim is the author of Home Run, A Pro’s Guide to Selling a Business. .  He has a wide range of corporate and entrepreneurial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee. 


The following two tabs change content below.

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."

Latest posts by Tennessee Valley Group (see all)