August 31/September 7; Volume 30/Number 6
By Lisbeth Calandrino
Many of you are thinking I’ve become a traitor, but 25 years ago—when Home Depot was just beginning to be a force in the marketplace—I learned a big lesson.
The original Home Depot no longer exists, but what made it great sill works. It’s all about understanding your competitors and getting out of your comfort zone. Your competitors will show you where you need to be.
Built from Scratch, a book about how Home Depot evolved into the successful giant it is today, telling the story of two unemployed buyers who had a dream to create a new type of business. It started with two words in 1978: “You’re fired.” This phrase haunted Arthur Blank and Bernie Marcus up until they sold their business. Devastated by this, they swore they would never treat their employees the way they were treated in the past.
In order for your business to grow, your mind has to be open for change. If you haven’t read Built from Scratch, you are missing out. Here are some valuable concepts I learned that still work 35 years later:
- Change applies to every business and starts with owners. Many businesses talk about training their salespeople to change, but change has to start with owners and managers. Entrepreneurs tend to have strong opinions that often make them resistant to change, but if you really want to be more profitable, you have to stay away from thoughts about how you’ve survived before, “This too shall pass,” or “I just need more sales to make more profits.” I make it a point to read books and articles about businesses that started with one entrepreneur and eventually grew to have thousands of employees and billions of dollars in sales.
- Know your core values and keep them at the forefront of your business. Marcus and Blank’s first value was taking care of employees. Those who were willing to go out on a limb for them were all guaranteed a large stake in the company.
- Build strong relationships with customers, vendors and your community. Building partnerships with suppliers and the community was essential for Marcus and Blank because of the lack of capital. From the day they opened, and even when they had little money, they gave back to the community.
- You must continually respond to changes in the marketplace. When we think about retail, we worry there are too many things we can’t control. Something as simple as the weather can wreck all of your plans. Retail is not stable—in fact, it is always shifting. To be successful you must be willing to stick to your core values and realize the world will change. Go with it.
- Hire the best people. Consider payroll as an investment, not an expense. Like any other investment, as long as you are getting a return, leave things the way they are.
- Ask your vendors to spend time in your stores and talk to your customers and employees. Instead of trying to sell you products they think will sell, have vendors verify it with the two customers that really matter: your consumers and employees. Continually improve your product mix to accommodate the customer’s needs.
- Evaluate all of your employees, including yourself. When was the last time you were evaluated by someone? When were you questioned as to why you made certain decisions? Owners need feedback and an opportunity to know what is working. It can be risky for your business if you think everything you do is perfect. It’s better to gain constructive criticism before your customers evaluate your business with their wallets.