Founders, Read This Before You Coast on Profitability

What a rare CIM taught me about sustained growth—and why product and sales can’t stall.

I've read a lot of CIMs over the years. Most of them are overly optimistic—always hyping future profits and featuring questionable add-backs to boost EBITDA. Rarely do you come across a CIM that's refreshingly modest yet actually delivers exceptional financial performance. But that's exactly what happened with a recent investment memo I reviewed.

This company impressed me with its consistent profitability—20% net profit year after year for the past five years. Add-backs brought that up to 25%, and for once, they seemed completely legitimate. No inflated promises or unrealistic future projections—just solid, verifiable numbers.

The company operates in a specialized niche: precision manufacturing of consumable products mainly sold to pharmaceutical companies. What's great about their business model is the incredible customer diversity and the fact that most of their revenue is under stable commercial contracts. The pandemic drove a temporary peak in their business, but even post-pandemic, the company is back on a solid growth trajectory. Another huge advantage? Everything's made in the USA, eliminating tariff risks completely.

There's an old saying I love: "If it ain't broke, don't fix it." This business perfectly embodies that idea—no need to overhaul what's clearly working. But even companies firing on all cylinders can't afford to rest on their laurels. So, what should the leadership team be focused on?

From my experience working closely with founder CEOs, when you're under 100 employees and below $100 million in sales, two things are always critical: sales penetration and product innovation. Even when your current customers keep coming back, complacency in sales and innovation can stall your long-term growth.

Let's talk sales first. Right now, this company has nailed its relationships in pharma. Great. But there are clearly adjacent markets they can break into. Here's how I’d approach it using the Apex CEO playbook:

First, clearly map out potential markets adjacent to pharma, such as biotech, medical devices, diagnostics, or even specialty food packaging. Each market has slightly different needs, but they're close enough to leverage existing expertise and reputation.

Next, build a dedicated sales initiative targeting these sectors. Don’t leave this to chance—assign accountability, set specific KPIs for outreach, and track progress weekly. With existing case studies in pharma, you already have credibility, but you still need a laser-focused sales effort. Start small, pick a target vertical, and make it a goal to win at least one or two marquee accounts within six months.

Once you break into a new vertical, you're perfectly positioned to innovate. This brings me to the second critical focus area: product development. In my experience, the best companies never lose sight of why they exist in the first place—the product. Staying relevant means constantly improving existing offerings and thoughtfully creating new ones.

Here's a simple roadmap from the Apex method:

• Engage closely with your new customer segment to understand exactly what they need.

• Set up a feedback loop that gets real-time insights from customers directly into product development.

• Rapidly prototype and test products tailored specifically to this new customer base.

• Use incremental innovation—small improvements can often lead to outsized results.

Yes, it's true—this company's current product and model aren't broken, so there's no reason to fix them. But that's precisely when leadership teams need to double down and drive disciplined growth efforts.

Consistent profit can lull teams into comfort; the best way to avoid stagnation is to continuously push into new customers and leverage those new relationships into new products and solutions.

Bottom line: keep the foundational success intact but never ease up on sales penetration or product innovation. Great businesses maintain momentum by continuously moving forward—even when things already look great.