Sam Walton was a product of the Great Depression; his experiences at this young age played a large role in shaping his approach towards business as well as managing his own personal finance.
Recently, while reading the The Book of Business Wisdom by Peter Krass I came across Sam’s rules for building a successful business. As I read through each one I couldn’t help but reflect on how these same principles could be applied to one’s personal life.
Rule #1 – Commit to your business – “I think I overcame every single one of my personal shortcomings by the sheer passion I brought to my work. I don’t know if you’re born with this kind of passion, or if you can learn it. But I do know you need it.”
My thoughts – Nobody is going to care about your money more than you. You must commit to learning as much as you can about wealth management and focus your attention on making the best decisions today for the good of your financial future.
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.”
My thoughts – Unless you are single, your spouse, children and dependants all play a part in your finances. Engage them as partners; elicit their help in making the right spending and/or investing decisions.
Rule #3 – Motivate your partners. “Set high goals, encourage competition, and then keep score.”
My thoughts – This works. We read to our kids daily from the time they were infants. We challenged them to read along with us before they could talk. As a result they were reading Harry Potter at age 4. Are they a genius? Not by a long shot! We just set high expectations and provide encouragement. The same works for savings goals.
Rule #4 – Communicate everything you possibly can to your partners. “The more they know, the more they’ll understand. The more they understand, the more they’ll care. Once they care, there’s no stopping them.”
My thoughts – I grew up in a family that kept money secrets. I grew up financially illiterate. The more you involve your spouse and kids the more empowered they will be to help achieve your mutual goals.
Rule #5 – Appreciate everything your associates do for the business. “Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free – and worth a fortune.”
My thoughts – You know how motivating it is when someone genuinely appreciates your efforts. Recognizing the efforts of your family will keep them motivated to continue making good choices.
Rule#6 – Celebrate your successes and find humor in you failures. “Don’t take yourself so seriously. Loosen up, and everyone around you will loosen up.
My thoughts – Celebration of your successes is motivational to continue. But not all decisions are going to be right. When you make a mistake, don’t dwell on it, learn from it and move on.
Rule #7 – Listen to everyone in your company and figure out ways to get them talking. “The folks on the front lines – the ones who actually talk to the customer – are the only ones who really know what’s going on out there.”
My thoughts – Two heads are better than one. Use the combined knowledge to your advantage. Understand there are many hours your family and you are not together, their experience can be leveraged.
Rule #8 – Exceed your customer’s expectations. “Make good on all your mistakes, and don’t make excuses – apologize.”
My thoughts – Your family and you are your own customer. Laying blame and pointing fingers only creates friction in relationships. It’s a waste of time, effort and energy. If there has been a mistake or a communication error, just apologize and move forward.
Rule #9 – Control your expenses better than your competition. “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 you’re too inefficient.”
My thoughts – Spending less than you earn is the only way to build wealth over time. Unless you hit a lottery or receive an inheritance, frugalily is the only way.
Rule #10 – Swim Upstream. “Go the other way. Ignore conventional wisdom.”
My thoughts – Since the average person’s retirement savings is less than $90,000, taking a different approach is probably a good thing!