If you want
to succeed in business, you should study this man’s work. It was no accident
that he amassed a personal fortune of $100 billion dollars. Walmart has become
a worldwide business thanks to his drive and entrepreneurial tactics employed
during his tenure.
Sam Walton
is considered the greatest entrepreneur of the 20th century. In his
autobiography, “Made in America,” he shares insight and experiences that
allowed for him to build his iconic brand.
Learn to
Value a Dollar
Walton
learned how to organize Walton Enterprises into a partnership from his wife
Helen’s family farm business. Each of the family members had a partnership
status with regular payouts and voting rights as well as a vested interest in
the family business.
Over the
years the Waltons accumulated wealth through this partnership by starting
humbly with anything they could save to where they eventually compounded a fortune in Walmart stock in the partnership. Mr. Sam, as his associates
affectionately referred to him, reflects by saying, “we accumulated funds in enterprises rather than throwing it all over the place to live high.”
For those of
us who do not have a family business partnership there is still the option of investing in the stock market and participating in your company’s 401K program.
Think of both avenues as excellent wealth building tools to build your own
“enterprise.”
Using Scale
to Your Advantage
During Walmart’s early stages, Walton and his
associates would often travel around Bentonville Arkansas to size up the
competition’s prices. Through this process he found what he calls “the essence
of discount retailing.” That is, if your cost for an item is $0.50 and you
price it at $0.75 you can sell three times as much of it than if you sold it at
the competitor’s price of $1.00. Sam adds, “I might make only half the profit
per item, but because I was selling three times as many, the overall profit was
much greater.”
In other
words, reasonably undercut the competition’s price and you should generate more
total sales. Even though you sell more units with a lower profit margin per
sale, the total profits will be far larger.
How to
Bounce Back
Resiliency
is a common trait among all successful entrepreneurs. Despite his unparalleled
business achievements, Sam was no different from anyone else in experiencing
his share of bad business decisions. Fortunately, he took a tactical approach
to different revenue generating experiments.
David Glass,
former President and CEO of Walmart, reflected by saying the following about
Sam, “Two things about Sam Walton distinguish him from anyone else I know.
First, he gets up every day bound and determined to improve something. Second,
he is less afraid of being wrong than anyone I’ve ever known. And once he’s
wrong he shakes it off and heads in the other direction.”
If you do
not share Walton’s level of mental resiliency, being wrong can be a serious
blow to your ego. Some people may even continue to defend their position just
to prove a point, even though they know it is the wrong position to have. This
is a terrible strategy for any entrepreneur.
Instead,
emulate Walton and know that it is OK to be wrong, but not OK to stay wrong. As
Sam said, “When someone made a bad mistake – whether it was myself or someone
else – we talked about it, and then moved on to the next day’s work.
Learn to
Swim Upstream
Walmart
started humbly as a local family discount store with no clear edge among its
competitors. Sam reflects on the hardships in building his company by stating
that “after a lifetime of swimming upstream I am convinced that one of the real
secrets to Walmart’s phenomenal success has been that very tendency. Many of
our best opportunities were created out of necessity. The things that we were
forced to learn to do, because we started out underfinanced and
undercapitalized in rural communities, contributed mightily to how we’ve grown
as a company.”
Further, Sam
notes “one way we tried hard to make up for our lack of experience and
sophistication was to spend as much time as we could checking out the
competition.”
As an
emerging entrepreneur, use you naiveté to your advantage by studying individuals who are where you want to be. Be innovative in solving the roadblocks in your path and drive forward through each one.
Make the Customer
Number One
Contrary to
what most entrepreneurs do, running a profitable business revolves around
providing something of value to the customer. Too often business owners will
provide something they like or think people need. Walton advises that “the secret
of successful retailing is to give your customers what they want.”
Further, Don
Soderquist, former Walmart Vice Chairman, adds “you have to focus on something
the customer wants and then deliver it.” Simple advice that is often difficult
to execute.
Additionally,
Walton put customer service first as best as he could while managing Walmart’s
exponential growth. He reflects by saying that “I think that getting out on the
floor as a storekeeper and meeting every one of the customers are little
personal touches that are so important for an independent merchant.”
If none of
this advice resonated yet, take Walton’s next comment to heart as an
entrepreneur. He states “job security lasts only as long as the customer is
satisfied. Nobody owes anybody else a living.” Make the customer’s needs your
priority!
Despite his unrivaled
modern-day entrepreneurial success, Walton remained humble which may have been
another key to the advance of Walmart. Take time to reflect on his advice and
glean as much wisdom as you can from his experiences. Then apply it where you
can in your personal life, investing, finances, and business.
As always,
if you have questions or comments, feel free to send me a message. Thanks for
reading.
John
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