This is Thanksgiving week in the USA. Let’s take the opportunity to highlight one of the many things to be thankful for. I am thankful for historical models for us to learn from. Once again, IBEC Board member and entrepreneur, Dave Kier, shares some interesting stuff.
Larry Sharp, Director of Training, IBEC Ventures
Larry.Sharp@ibecventures.com
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In 1917, a young married Russian-Jewish couple left Russia for the USA. Their immigration papers said they had to go to Fort Dodge, Iowa, which they did but there wasn’t a Russian-Jewish community there. Thus, they moved to Omaha, Nebraska. Rose, the wife, couldn’t read or write English until their school age daughter taught her after school. Rose was an enterprising young lady who in 1937, opened up a furniture store in the basement of her husband’s secondhand clothing store. To buy inventory, she borrowed $500 from her brother, which they later had to sell their home furnishings to pay off the loan. She had bigger competitors who had better buying power, but she wouldn’t give up. She lowered her prices and offered better customer service to then pour herself into the business.
She became known as Mrs. B. (for Rose Blumkin), and quickly grew by expanding her furniture choices while being determined to remain customer focused. With a $2,500 investment, she took the leap of moving to a larger location that became known as “Nebraska Furniture Mart”. Mrs. B steadily grew her business, never taking her eye off it. She told a New York Times reporter her credo was “Sell cheap, tell truth and don’t cheat anyone.”.
Warren Buffet tells that Mrs. B. took the $2,500 initial investment and never added $1 more to build up the business, which in 1993, Buffet paid between $50 and $60 million to buy 90% of. Her family forced her to retire at the age of 95, but she was never content. She recalled not signing a non-compete agreement with Buffet to then open a “Mrs. B Clearance and Factory Outlet”, which Buffet ended up also buying.
Buffet spoke warmly of her because she was not only one of the most honest business persons he met, but was also the epitome of customer service. Buffet tells that he bought the company on a handshake as Mrs. B. trusted him, and he her. He didn’t audit the inventory nor the books. He knew she was precise in all she did and wouldn’t tell a lie. You can tell the admiration Buffet had for her as he tells the story. Today, Nebraska Furniture Mart has stores in Des Moines, Kansas City, Dallas-Fort Worth, and has also expanded the Omaha location.
Buffet tells his audience that to be successful, you need not see how much capital you can obtain, but to start small, learn how to operate profitably, and then sink all profits back into growing the business. Most importantly, know the customer, and take care of the customer. Her competitors never understood how she could amass such large sales on low margins. She would say to keep overhead low, know your costs, be efficient, and constantly work your business. She would also say you must develop a culture people want to come and do business with. People from all around the Midwest came to her store for their furniture, and later, also electronic needs. Even in her later years, they would see her on her electric scooter moving about the store while greeting customers. She remained a fixture in the store until her death at 104.
Buffet’s lessons from Mrs. B. are for any business of any type and size. Was she just “lucky”? “Luck” comes to those who work the hardest and smartest. Too often, business leaders want to see how fast they can grow. They will take on as much debt as they can acquire. They will embark on growth before they have the fundamentals in place. Fundamentals such as tight and accurate financials, an understanding of how to be efficient, and a culture that has high regard for others, whether they are customers, co-workers or suppliers. All of these traits are wrapped in unquestionable integrity. Customers travelled many miles to do business with Mrs. B. because they trusted her and her company. Trust – you must build your reputation on trust and remember, growth and success are results of doing the right things, the right way, for the right purpose.
“In all labor there is profit, but mere talk leads only to poverty.” Proverbs 14:23 NASB®
Image Credits: https://dailycitizen.focusonthefamily.com/mrs-b-the-russian-immigrant-who-sang-god-bless-america-every-night-before-dinner/