Edited by Laura Byrne
If I could meet any entrepreneur, whom would I select? Of course there are many – but Sam Walton of Wal-Mart fame would be on my list after living in the USA for eight years. He will, certainly, be remembered as one of a very select group of entrepreneurs that have had the greatest impact on business history.
Let me make my case for why this is.
Who is Sam Walton?
Samuel Moore Walton (1918-1992) was born in Kingfisher, Oklahoma. His first Wal-Mart store opened in Rogers, Arkansas in 1962. Today, the company employs 2.3 million people worldwide, and for the fiscal year ended January 31, 2016, Walmart’s total revenue was $482.1 billion. And also today, Walmart operates more than 11,500 retail “units” under 63 brand names, in 28 countries [source for all stats in this paragraph: Wal-Mart].
But enough about the company’s success – let’s go back to Sam.
Sam Walton exhibited many characteristics of an entrepreneur. He was smart, astute, self-motivated, proactive, courageous, dedicated, resourceful, adaptable, and energetic. Of special note, he was ambitious and competitive from an early age; in particular, when he was playing high school football.
Sam was also hardworking; he worked multiple jobs, including being a waiter and a lifeguard, while obtaining his business degree at the University of Missouri.
Wait, there’s more! He was a risk-taker; he borrowed liberally when starting his businesses (Zellner, 2004). And, he had a passion and love for retailing from the beginning, even though he stumbled into the area. Sam believed he could learn from others; in particular, he intently studied his competitors (Tedlow, 2001).
Discount Selling: The Unique Differentiator
Let’s now hone in on the single characteristic that distinguishes Sam Walton from his entrepreneurial contemporaries: his business concept of discount selling. This later became inherent in the Wal-Mart catchphrases, “We sell for less” and “Everyday low prices”.
Sam used to travel all over the country, and later overseas, identifying less expensive suppliers. Rather than sell the cheaper products at higher prices, he passed along the savings to the consumer. His strategy was to make profit on volume rather than margin.
As Sam (1992) himself explains, “Say I bought an item for 80 cents. I found that by pricing it at a dollar I could sell three times more of it than by pricing it at $1.20. I might have made only half the profit per item, but because I was selling three times as many, the overall profit was much greater.”
Another key strategy used by Sam Walton was to build stores in small towns that other companies were ignoring. He would often fly over potential locations and identify the best piece of land based upon traffic flows and town growth (Walton, 1992).
Perhaps the greatest hurdle Sam faced was the loss of his first store.
He signed an agreement with Butler Brothers in 1945 to franchise a Ben Franklin store in Newport, Arkansas. The store was a “second-rate store in a second-rate town” (Tedlow, 2001). Walton’s first mistake was agreeing to pay five percent of sales for rent. After signing the agreement, he learned that nobody else was paying this much in rent for a variety store. Despite this, Sam turned the store into an extremely successful store.
Yet Sam’s fatal mistake came in 1950 when he realized there was no renewal clause in the lease agreement. He had to give up his store and start again. He described this time as “the low point of my life” (Tedlow, 2001). Sam blamed himself for the mistake, but he learnt from the error, didn’t quit, and looked towards the future, rather than dwelling on the past.
In true entrepreneur fashion, though, Sam’s greatest professional accomplishment may then have arisen from this hurdle. Against all odds, and with no business experience, he was able to turn a second-class store into the leading variety store in the region. Within the first year, sales had increased more than 45% to $105,000. Five years after taking over the store, Sam posted a 28% compound annual growth rate in sales (Tedlow, 2001).
From these beginnings, Sam never looked back. On his death, he was the richest man in America (Huey, 1998).
Impact on History
Sam Walton has made a huge impact on business history. His business model has changed retailing in the way Americans, and others around the world, shop. Consumers now shop with low prices in mind as a result of his high volume, low margin strategy.
He changed business philosophy in America, “shifting power from manufacturer to consumer” (Huey, 1998). Wal-Mart’s buying power allows them to dominate agreement terms with manufacturers.
Of special note, Sam Walton also contributed significantly to society through the charitable initiatives of Wal-Mart.
Impact on My Career
While personally, I have learned many things about being an entrepreneur from Sam Walton, what stands out the most is his ‘Ten Rules of Business”, which I have applied to my own business decision making, countless times:
1. Commit to your business. Believe in it.
2. Share your profits with all of your associates, and treat them as partners.
3. Motivate your partners.
4. Communicate everything you possibly can to your partners.
5. Appreciate everything your associates do for the business.
6. Celebrate your successes. Find some humor in your failures. Have fun. Show enthusiasm.
7. Listen to everyone in your company.
8. Exceed your customers’ expectations.
9. Control your expenses better than your competition.
10. Swim upstream. Go the other way. Ignore the conventional wisdom.
In addition, I have taken to heart two key principles from Sam.
Firstly, focus on your customer’s needs, as he describes in his guiding principle, “give your customers what they want” (Walton, 1992).
Secondly, listen, communicate, motivate, and appreciate your employees. By taking care of your employees and the customers, business should then take care of itself.
While I’ll never have the chance to meet Sam Walton, his business leadership continues to inspire me.
Huey, J. (1998). Sam Walton. Time, 152(23). Retrieved September 25, 2005 from Business Source Premier.
Tedlow, R.S. (2001). Sam Walton: Great from the start. Retrieved September 25, 2005 from http://hbswk.hbs.edu/tools/print_item.jhtml?id=2375&t=bizhistory
Walton, S. (1992). Sam Walton in his own words. Fortune, 125(13). Retrieved September 25, 2005 from Business Source Premier.
Zellner, W. (2004). Sam Walton: King of the discounters. Retrieved September 25, 2005 from http://www.businessweek.com/print/magazine/content/04_32/b3895024_mz072.htm?chan=mz