10 Rules for Your Family Business
If you are involved in a family business, or maybe trying to encourage the next generation to start one, you may be looking for some guidance. A few years ago, I read the autobiography of Sam Walton (Sam Walton, Made in America – My Story). In it he laid out his 10 rules for running his business.
Walton, as you probably know, was the founder of Walmart. He developed a billion dollar fortune via his discount retailing endeavors. He started with a Ben Franklin franchise in Newport, Arkansas. He and his brother made it profitable but lost the lease on the space and had to start over. That is when he bought a store in Bentonville, Arkansas and started his first self service store.
By 1990, Walmart was the world’s largest retailer, with 1528 stores and doing a billion in profit every year. Sam and his family (he made them all partners in Walton Enterprises early on) were noted by Forbes as the richest in America from 1982 – 1988. As of September 2012, the combined heirs to the Walton fortune were worth over 107 billion dollars, a lot of it still in Walmart stock.
In his autobiography, Walton notes:
“These rules are not intended to be the Ten Commandments of Business. They are some rules that worked for me. But I always prided myself on breaking everybody else’s rules, and I always favored the mavericks who challenged my rules.”
Sam Walton’s 10 rules for building a business.
Commit to your business.
Believe that your business will succeed and just keep learning, growing and pushing to make it so. Starting a business and not putting your whole self into it will not get the job done.
Share your profits with ALL your associates.
Ownership gives people incentive. Incentive helps them become better business partners with you. Share ownership in your company with each of your associates.
Motivate your associates.
Encourage competitions between different parts of your business. Walton did so between departments and stores. He didn’t hesitate to have upper management exchange jobs/positions. He once lost a bet that stores wouldn’t make a certain sales figure one year and had to do a hula in a grass skirt on Wall Street in broad daylight.
Communicate frequently, openly and freely with your partners.
Sam believed that the folks on the front lines are the ones that make or break a business. Listen to the front liners in your business, talk to them one on one. Walmart stores were one of the first to have dedicated satellite communications. When Walton died, the very day, it was communicated simultaneously to all stores.
Show non-monetary appreciation to your associates.
Let them share their accomplishments, tell what works and what doesn’t. Walton did so in the Saturday morning meetings in Bentonville. He brought folks in from Walmart’s around the country to tell about a particular promotion or event or process that worked especially well.
Celebrate your successes.
Sam initiated a carnival like atmosphere in some of his earlier retail ventures and led cheers at Walmart meetings! Don’t get all uptight, loosen up and have some fun.
Listen to everyone.
Get out on your company’s floor, go where the work is being done. Talk to your employees and customers. Sam spent time in the truck driver’s break room having coffee with them. He knew he could count on their fiercely independent viewpoint to tell it like it was – and not be impressed with the fact that he was Same Walton.
Check out the competition. Walton spent his life visiting competitor stores, even when he found out he had bone cancer.
Exceed customer expectations.
Walton continually drove everyone to get to that lowest price for the customer, whacking out the middlemen and overhead whenever and where ever possible.
Make your operation as efficient as possible. For 25 years, Walmart had the lowest expense to sales ratio of any in the industry.
Do the unexpected. Don’t let other people’s expectations define your actions, do what is right for your business.
Walton’s rules may sound like the oft repeated ones you hear about in school, but the trick, he says, is to find ways to keep executing the rules, over and over again, under changing circumstances.
Would your family business benefit from executing some of Walton’s rules?