They did it so can you
The following case studies show what is possible from small beginnings. You should have heard of most or all of the companies involved. Whilst these massive successes are not "normal", if you never start a business you cannot ever hope to replicate their success. We hope that these stories will encourage you to read more, and ultimately to try something yourself.
Wal-Mart,
McDonalds,
Amstrad,
KFC,
Hewlett Packard,
Virgin,
Best Buy
Wal-Mart
After graduating, Sam Walton joined JC Penney as a management trainee; he
resigned shortly before being inducted into the army for WW2 and worked briefly
at a munitions plant where he met his future wife.
In 1945, after leaving the military, Walton opened a variety store. He borrowed
$20,000 from his father in law and added $5000 he had saved from his time
in the Army. Walton purchased a Ben Franklin variety store in Newport, Arkansas.
The store was a franchise of the Butler Brothers chain.
Walton made sure the shelves were consistently stocked with a wide range
of goods at low prices. His store also stayed open later than most other
stores. He also pioneered the practice of discount merchandising by buying
wholesale goods from the lowest priced supplier. This allowed him to pass
on savings to his customers, which drove up his sales volume.
Higher volumes allowed him to negotiate even lower purchase prices with the
wholesaler on subsequent purchases. Walton's store led in sales and profits
in the Butler Brothers' six-state region.
Due to the variety store's enormous success, the landlord refused to renew
the lease when it expired. He wanted to pass the store onto his son. Before
moving out in 1951, Walton arranged for another location for a new store.
Unable to find a new location in Newport, Walton located a variety store
in Bentonville, Arkansas which he would open as another Ben Franklin franchise,
but called "Walton's Five and Dime."
Walton went on to found another variety store in Fayetteville, Arkansas in
1952. It would share the same name as the store in Bentonville but was not
a Ben Franklin franchise. It went on to become as successful as the original
Five and Dime.
Walton went on to undertake the following activities which are attributed
to his success: -
"Nosing around" other peoples stores looking for talent
"Profit sharing"
"Centralising cash registers" which until that point had been scattered around
the stores
"Ensuring stores were clean, and well lit"
"He offered limited partnerships" to managers, which motivated them to create
stronger profits
The first true Wal-Mart opened in 1962 in Rogers, Arkansas. Wal-Mart eventually
became the world's largest retailer. In 2004, more than 1.5 million people
were employed by the Wal-Mart Corporation.
McDonalds
The original McDonalds was owned and operated by 2 brothers but discovered
by Ray A. Kroc, a 54 year old milkshake machine salesman. Ray was intrigued
when the McDonald brothers ordered 8 shake machines for the small restaurant
and decided to go and visit. The following year (1955) Ray became a joint
operator and started his push for expansion.
In 1961 Ray A. Kroc purchased the trade mark privileges from the McDonald
brothers for US$2Million. The company went on to list in 1965 and began its
international expansion in 1967 when they opened the first store in Canada.
McDonalds put their success down to Simplification, Standardisation, and
Specialisation (the three Ss) and to the management of Quality, Service,
Customer experience and Value (Q,S,C&V).
Amstrad (Sir Alan Michael Sugar)
Alan Sugar started out selling vegetables out of a van he had bought with his savings of £100. He went on to selling electronics on a similar model and is now estimated to be worth around £800 million. Despite being best known as a technology businessman, most of Alan Sugar's wealth today comes from property speculation rather than through his various business ventures.
KFC (Kentucky Fried Chicken)
Harland Sanders opened a restaurant in his hometown of Corbin (Kentucky)
in the 1930's. He later opened a gas station, where he experimented with
different snacks that he sold to travelers.
In 1939 Sanders visited a pressure cooker exhibition and was hooked. He developed
a special recipe using 11 spices and his pressure cooker. The resulting batter
was popular and the Secret recipe was born. In the 1950¡¦s the new interstate
did not pass through Corbin so Sanders sold his properties and decided to
sell his chicken recipe. At this stage he was already 66 years old.
Sanders literally started to drive around the US in his 1946 Ford and went
from restaurant to restaurant pitching his chicken. The deal was simple;
he would earn 5C for every piece of chicken sold. In 1952 the first dedicated
KFC was opened and in 1964 (just 12 years later) the business was sold for
US$2 m¡llion..back when US$2 million was a lot of money!
HP (Hewlett Packard)
Hewlett and Packard first met as undergraduate students at Stanford University. After graduation in 1934, Hewlett went to MIT to earn a master's degree in electrical engineering, while Packard worked at General Electric. Both returned to Stanford, Hewlett for an Engineering degree and Packard to start a fellowship. The two were invited to contribute to the foundation of a technology community in the area now known as Silicon Valley.
In 1939 HP started in Packard's garage, with US$538 and 2 employees. The name of the company was decided with a coin toss. Their first product was a resistance capacity audio oscillator, based on Hewlett's graduate work, which Walt Disney Studios purchased to help produce Fantasia.
Today the company has evolved into a $25 billion business with over 98,000 employees and offices in 16 nations.
Virgin (Richard Branson)
Branson was educated at Scaitcliffe School (now Bishopsgate School) until the age of 13. He then attended Stowe School until he was 15. Branson
suffered from dyslexia and had a generally curious spirit, resulting in him
not being a good student. He was the captain of football and cricket teams,
and by the age of 15 he had started two ventures that eventually failed:
growing Christmas trees and raising budgerigars.
At 16, Branson decided to quit school and move to London, where he began
his first successful entrepreneurial activity setting up Student magazine.
When he was 17, he opened his first charity, the "Student Valley Centre".
Branson started his first record business after he traveled across the English
Channel and purchased crates of "cut-out" records from a record
discounter. He sold the records out of the boot of his car to retail outlets
in London. He continued selling cut-outs through a record mail order business
in 1970. Trading under the name "Virgin" he sold records for considerably
less than the so-called "High Street" outlets. At the time many
products were sold under restrictive marketing agreements which limited discounting,
despite efforts in the 1950's and 1960's to limit so-called resale price
maintenance. In effect Branson began the series of changes that led to
large-scale discounting of recorded music.
Branson eventually started a record shop in Oxford Street in London and,
shortly after, launched the record label Virgin Records with Nik Powell.
Branson had gained enough profits from his record store to purchase a country
estate, in which he installed a recording studio. He leased out studio time
to fledgling artists, including multi-instrumentalist Mike Oldfield.
Virgin Records' built a reputation for signing unconventional artists including
Mike Oldfield, the Sex pistols and Culture Club. Branson went on to found
a number of companies collectively known as the Virgin Empire. He sold the
record business in 1992 to EMI in order to keep the Virgin airline afloat.
He has since re-entered the music industry with V2 Records.
Best Buy Records
Richard M. Schulze opened Sound of Music, an audio specialty store, in St. Paul, Minnesota in 1966. The company expanded to nine locations by 1980. In 1981, the flagship store was wrecked by a tornado. Schulze ran a clearance sale using the large selection of stock and heavy advertising, which was a runaway success. Similar "Tornado Sales" became an annual Sound of Music event.
The company changed names to Best Buy Co. Inc and moved its focus to consumer electronics in 1983. The lessons learned in the audio business were replicated and form the base of the modern day company.