Proven business building secrets from one of the world’s most successful entrepreneurs
Samuel Moore Walton is the founder of the worldâ€™s largest and most successful retail business, Wal-Mart. With $25, 000 (of which $20, 000 was loan), Walton built his retail business that began in 1945 into a global giant with sales running into $256 billion in 1999.
He championed several innovations that have today become industry standards. These include discount merchandizing, which enabled him to buy goods wholesale at reduced price from wholesalers and also sell at lower price than other stores to customers.
Another of his innovations was to begin the practice of offering his employees profit sharing opportunity, which brought out unprecedented level of commitment from them; as well as sharing Wal-Martâ€™s sales data with its major suppliers through computer to ensure items were promptly replaced whenever they had been sold out.
All these innovations took Wal-Mart to the top of its industry.
From his 1992 book Made in America, here are â€œSamâ€™s Rules for Building a Business.â€
Rule 1 Commit to your business. Believe in it more than anybody else. I think I overcame every single one of my personal shortcomings by the sheer passion I brought to my work. I donâ€™t know if youâ€™re born with this kind of passion, or if you can learn it. But I do know you need it. If you love your work, youâ€™ll be out there every day trying to do it the best you possibly can, and pretty soon everybody around will catch the passion from you – like a fever.
Rule 2 Share your profits with all your Associates, and treat them as partners.
In turn, they will treat you as a partner, and together you will all perform beyond your wildest expectations. Remain a corporation and retain control if you like, but behave as a servant leader in a partnership. Encourage your Associates to hold a stake in the company. Offer discounted stock, and grant them stock for their retirement. Itâ€™s the single best thing we ever did.
Rule 3 Motivate your partners. Money and ownership alone arenâ€™t enough. Constantly, day-by-day, think of new and more interesting ways to motivate and challenge your partners. Set high goals, encourage competition, and then keep score. Make bets with outrageous pay-offs. If things get stale, cross pollinate; have managers switch jobs with one another to stay challenged. Keep everybody guessing as to what your next trick is going to be. Donâ€™t become too predictable.
Rule 4 Communicate everything you possibly can to your partners. The more they know, the more theyâ€™ll understand. The more they understand, the more theyâ€™ll care. Once they cared, thereâ€™s no stopping them. If you donâ€™t trust your Associates to know whatâ€™s going on, theyâ€™ll know you donâ€™t really consider them partners. Information is power, and the gain you get from empowering your Associates more than offsets the risk of informing your competitors.
Rule 5 Appreciate everything your Associates do for the business. A paycheck and a stock option will buy one kind of loyalty. But all of us like to be told how much somebody appreciates what we do for them. We like to hear it often, and especially when we have done something weâ€™re really proud of. Nothing else can quite substitute for a few well chosen, well timed, sincere words of praise. Theyâ€™re absolutely free and worth a fortune.
Rule 6 Celebrate your successes. Find some humor in your failures. Donâ€™t take yourself so seriously. Loosen up, and everybody around you will loosen up. Have fun. Show enthusiasm always. When all else fails, put on a costume and sing a silly song. Then make everybody else sing with you. Donâ€™t do a hula on Wall Street.
Itâ€™s been done. Think up your own stunt. All of this is more important, and more fun, than you think, and it really fools the competition. â€œWhy should we take those comballs at Wal-Mart seriously?â€
Rule 7 Listen to everyone in your company and figure out ways to get them talking. The folks on the front lines â€“ the ones who actually talk to the customer are the only ones who really know whatâ€™s going on out there. Youâ€™d better find out what they know. This really is what total quality is all about. To push responsibility down in your organization, and to force good ideas to bubble up within it, you must listen to what your Associates are trying to tell you.
Rule 8 Exceed your customersâ€™ expectations. If you do, theyâ€™ll come back over and over. Give them what they want and a little more. Let them know you appreciate them. Make good on all your mistakes, and donâ€™t make excuses â€“ apologize. Stand behind everything you do. The two most important words I ever wrote were on that first Wal-Mart sign, â€œSatisfaction Guaranteed.â€ Theyâ€™re still up there, and they have made all the difference.
Rule 9 Control your expenses better than your competitors. This is where you can always find the competitive advantage. For 25 years running-long before Wal-Mart was known as the nationâ€™s largest retailer â€“ we ranked No.1 in our industry for the lowest ratio of expenses to sales. You can make a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if youâ€™re too inefficient.
Rule 10 Swim upstream. Go the other way â€“ ignore the conventional wisdom. If everybody else is doing it one way, thereâ€™s a good chance you can find your niche by going in exactly the opposite direction. But be prepared for a lot of folks to wave you down and tell you youâ€™re headed the wrong way. I guess in all my years, what I heard more often than anything was: a town of less than 50,000 population cannot support a discount store for very long.
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