The story of how Walmart became a billion-dollar company is highly inspirational, especially to independent entrepreneurs. The founder of Walmart, Sam Walton, has a rags-to-riches story that can motivate anybody looking to do something big in business. Sam Walton, however, did not plan to be the owner of the biggest chain of retail hypermarkets in America. He wanted to do good in academics and continue his higher studies and extracurricular sports activities like football. Financial instability forced him to start making his living too early in life.
Here is an overview of how Sam Walton turned his small business into what we know as Walmart today, the USA’s billion-dollar company.
The Early Life of the Walmart Owner
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Sam Walton began as a farm boy as he was born in Oklahoma to a farmer. His father, Thomas Walton, soon realized that it was becoming increasingly tricky to raise his kids by farming. So he decided to move with his entire family to Missouri and take up a farm loan appraiser job.
Sam knew early in his life that it was not going to be easy. However, this famous American businessman was filled with a remarkable sportsman spirit from the beginning. He started looking out for new business ventures. He was also excellent in academics and a champion in football during his school years. Later he took up a Bachelors in the subject of Economics at the University of Missouri.
As he had a knack for the subject, he wanted to specialize in Commerce from the Wharton School of Business. This is where life became tough for the future billionaire. He realized he could not afford further education, but Sam Walton was not the one to give up. He started trying his hand at different things. At first, Walton earned a job as a manager at the JC Penny store but soon resigned. His next move was to join the US military, where he served as a Security force for three years before leaving.
The Beginnings of Walmart
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After resigning from the military, Sam Walton moved to Iowa and then to Newport, Arkansas, with his wife, Helen. In 1945, he borrowed about $20000 from his father-in-law to buy a part of the Ben Franklin variety store on lease. During this period, he started gaining his first experience with retail market stores, which proved to be indispensable in his later years.
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He named this “Walmart Five and Dime” and targeted selling products at the cheapest rates to maximize profits and achieve a higher volume sale. His business philosophy was based on the idea that the larger the discounts, the better these variety stores could thrive in a moderately populated region.
This philosophy seemed to be working out for Sam Walton as in the first year itself, and he had a 45 percent profit with a revenue of about $105,000. The second-year brought him about $175000, and by the fifth year, he earned approximately $250,000. When the landlord found Sam Walton making such impressive profits out of a small variety store, he wanted to give the store to his son. He increased the rent for the lease, and Sam Walton had to sell it to him for about $50,000.
How Walmart became a Billion Dollar Company
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Losing his first economic franchise in Newport, Arkansas, was not a setback for Sam. It did teach him a few lessons on business. It made him realize that he should open a self-owned enterprise and then spend his heart and soul maximizing the profit margins so that nobody can ever take it away from him. Thus, his next move was establishing another store called Walton’s 5&10 in 1962, and he chose the downtown square in Bentonville in Arkansas.
The losing of the business enterprise in Newport, Arkansas, turned out to be a blessing in disguise for Walton. After opening his business in Bentonville, he had the freedom to expand, and within the first year, Walmart had 24 branches in different parts of the city. The sales had skyrocketed to about $12.6 million.
The unique tricks that turned Walmart into a billion-dollar company are part of Sam Walton’s legacy. For example, he treated customers with utmost importance and believed in leadership while offering one’s services. But it was not only the fantastic discounts and the human behavior that attracted customers and made this business grow. Sam Walton also believed in treating his associates right. To get them more involved and dedicated to the Walmart enterprise, he allowed them to be his partners and buy into the business.
Walmart now caters to about 200 million customers from about 27 countries. Sam Walton started as the most ordinary American boy from Oklahoma; today, he is the famous personality who established the billion-dollar company Walmart, which has an estimated annual revenue of about $548 billion. His net worth was calculated to about $60 billion in 2021.
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Source: Success Secrets TV, Evan Carmichael, Our History, LookAhead
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