Struggles of Starting a Business From Nothing | Sam Walton

Hi, I'm Evan Carmichael, and welcome to another edition of Modeling the Masters. I believe that the fastest and most effective way to grow your business is to model the strategies of people who've already done what you're trying to do. So today we're going to look at how a farm boy from Oklahoma wanted to continue his education and get a master's degree but couldn't afford it, so he was forced into entrepreneurship, opened up his first retail store, and went on to become the richest man in North America. This is the story of Walmart founder Sam Walton and the top 3 lessons that you can learn from his success.

Sam Walton is an American entrepreneur that built Walmart, the largest retail chain store in the world. He started out as a farm boy and became the richest man in America in the 1980s. From the farmlands of Oklahoma, Walton began his journey in life. His father, Thomas, was a farmer that felt he couldn't raise his family on the money being brought in from the farm, so he'd pack everybody up and move the family to Missouri. There, Thomas would become a farm loan appraiser. Even though this job meant that the Walton family would travel all over Missouri, Sam Walton would not be discouraged. He would also excel at academics and sports, leading his high school football team as quarterback to the state championship. From high school, Walton would attend the University of Missouri and achieve his bachelor's degree in economics. While getting his bachelor's degree, he would also become interested in commerce. This would make him want to enroll in the Wharton School of Business, but he couldn't afford to attend. He would find a job with JCPenney as a manager just 3 days after graduating the University of Missouri, but would eventually resign this job so he'd be able to join the US military. After serving as a security officer in the US Army Intelligence Corps for 3 years, Walton would resign his captain's commission. In 1945, Walton would ask his father-in-law for a loan of $20,000 so he could buy his first retail store, a Ben Franklin variety store. This would start a journey that would help him discover many of the techniques he would implement in his Walmart chain of stores. These remarkable chains of events would make Walton worth more than $23 billion in the 1980s. And today, Walmart brings in more than $300 billion annually, along with the Sam's Club franchise Walton started, which brings in more than $40 billion annually.

Forced into entrepreneurship because Sam Walton couldn't afford to continue his education, he went from Oklahoma farm boy into the richest man in North America.

To help you transform your business, here are the top 3 action items you can learn from Sam Walton. Action Item #1: Treat the customer as the boss. Sam Walton was a true believer that the customer was his boss. This idea made Walton implement many services and customer-friendly activities that were designed around the attitudes of small-town America. From the "greeter at the door" of every Walmart to the "satisfaction guaranteed" signs he had placed on his first Walmart store in 1962, Walmart would distinguish itself from other retailers by maintaining the philosophy that the customer was always in charge. According to Walton, "There's only one boss: the customer. And he can fire everybody in the company from the chairman on down simply by spending his money somewhere else. The two most important words I ever wrote were on that first Walmart sign: 'Satisfaction Guaranteed.' They're still up there, and they've made all the difference." The secret of successful retailing is to give your customers what they want. And really, if you think about it from the point of view of the customer, you want everything: a wide assortment of good quality merchandise, the lowest possible prices, guaranteed satisfaction with what you buy, friendly knowledgeable service, convenient hours, free parking, and a pleasant shopping experience. Action Item #2: Success Depends on Employees. Walton was a firm believer that the employees were key to the company's success. By listening to his workers and their ideas, he could stay on top of his game. Walton wanted every employee to think of him as a partner, not a boss. In order to pass this along to his employees, Walmart would be one of the first organizations to offer his employees a profit-sharing plan where the employees would benefit from the success of the company. It would make them co-owners, stockholders of the company. In order to keep morale levels high, Walton would challenge his employees through a variety of competitions, giving outrageous payoffs to the winners. He wanted to make sure all of his employees knew that they were appreciated. According to Walton, "The folks on the front lines, the ones who are actually talking to the customer, are the only ones who really know what's going on out there. This really is about total quality. 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. Money and ownership alone aren't enough. Set high goals, encourage competition, and then keep score. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They're absolutely free and worth a fortune. Action Item #3: Embrace new technology. Before the age of the internet and instant e-commerce, stores across America were relatively low-tech. It wasn't until a select few entrepreneurs, including Sam Walton, decided to push the boundaries of the retail industry that new technologies began to be embraced. He went to the IBM School in upstate New York in 1966 to find the best technology students so Walmart would always be on the cutting edge. As an example, Walmart became one of the first stores to develop universal barcodes and was the first retail chain to use electronic scanners as cash registers. Not only did the cash register scan the individual items, it was networked to the inventory control computer so the stores would know when stock was running low and reorder was necessary. This allowed the stores to always restock with the items that sold the most. By implementing and embracing new technology, Walmart Walmart could grow faster and maintain a competitive edge. According to Walton, "I've always been driven to buck the system, to innovate, to take things beyond where they've been. A computer can tell you down to the dime what you've sold, but it can't never tell you how much you could have sold." Sam Walton started his first retail store right after serving in the military, a Ben Franklin variety store chain. However, after making it very successful, the owner of the building would not renew his lease, wanting to take the franchise over and make the money Walton was making. Walton would be pushed out and eventually sold the Ben Franklin store to the owner of the building for $50,000, which Walton would say was a fair price. This would teach Walton a lesson that he'd never forget: own the land and building you're building your business on when it starts to become successful. This would lead him to open the first Walmart Discount City in 1962 and concentrate on owning the building and the land as well as sell American-made products. "I had to pick myself up and get on with it, do it all over again, only even better this time," Walton eventually said. Walton proved that being underestimated by others was no obstacle to achievement.

Thank you for joining me for another edition of Modern Masters. If you liked the video and want to see more, please give it a thumbs up below. I'd also love to hear what you have to think if you want to leave a comment under the video, and stay tuned for the next episode.