In a time when we are drowning in the news of corporate greed and irresponsibility, lavish executive salaries, Ponzi schemes and general distrust of business, like a breath of fresh air along comes Jeff Benedict’s new book How to Build a Business that Warren Buffet Would Buy.
It is the story of how a farm boy, Bill Child, took a fledgling, one-room store, RC Willey, next to a cornfield in rural Syracuse, Utah and grew it into one of the nation’s leading furniture chains. As the story unfolds, you want to smile-because here is not only evidence of the American dream at work, but the power of the old-fashioned virtues to propel someone to success.
Can integrity, innovation, frugality, self-sacrifice, putting the customer first even when it’s not convenient or profitable really triumph in our jaded world? Yes, it can, says this story that also features the principles Bill Child embraced to create a business that the powerful Warren Buffet called a “jewel” and was willing to buy sight unseen.
I confess that at Meridian, we are more than a little partial to Bill Child, whom we have found first hand is everything this book describes him to be. When we were starting this magazine on the Internet ten years ago, we had no advertisers, no readers, but very lofty vision of what we hoped would become a blessing to Latter-day Saints. Bill Child believed in our purpose and RC Willey became one of our first corporate sponsors when the dollars and cents of it may have not yet made sense.
Still, it is not my prejudice that leads me to say this book is heartening. It is seeing virtuous principles succeed so well that made me want to cheer. I grew up with the television ads that reminded us to shop at RC Willey, which was then in some place obscure to me, called Syracuse, Utah, but I always resonated with the last words of the commercial. It told when they were open, but “Never on Sunday.”
Most recently he and his wife Pat have directed the activities of the Washington D.C. Visitors Center where he combined a natural, friendly way with people with an innovative spirit. The Church had tried for years to get a sign on the freeway near the temple, directing people which exit to take to get there-all to no avail. The state wouldn’t budge-until Bill Child took on the project.
With innovation and persistence and thinking out of the box-and I might add-infinite patience every time he was told no-he finally succeeded in convincing the authorities that we indeed needed a sign on the beltway directing people to the temple grounds. We teased him, “Signs follow them that believe.”
Taking on the Challenge
RC Willey was Bill’s father-in-law, a man he revered for his love of people and his willingness to go to great lengths to keep his customers happy in the little appliance store he owned. Bill had worked part-time for him in college, and they enjoyed each other so much that sometimes on a Saturday afternoon, they’d close the store to attend the local baseball game, leaving a sign on the door. “Gone to the ballgame.Come in and look around.”
It was not Bill’s intention, however, to go into the business. When he graduated from college in 1954, he had been offered a teaching contract at the local junior high. Before he could take that job, however, 54-year-old RC Willey was diagnosed with pancreatic cancer and died.
Just then things got worse for the business. An IRS agent showed up at the store to conduct an audit. Bill wasn’t certain what an IRS agent was. It had only been a year since the U.S. Treasury had created the name “Internal Revenue Agency”, but he was certain the call signaled trouble.
He assumed that there had been some kind of mix-up because RC Willey’s bills and taxes were paid by an outside accountant. He called the accountant and demanded answers. The accountant shirked; he had none. Instead, the accountant showed up at the Willey’s house when no one was around and dropped off the checkbook, the check register, and all financial records and invoices on the front step.
Not only had taxes not been paid, but Bill also found months’ worth of overdue notices. When he went to write checks to cover them, the bank told him that the account was in the red. The many deposits that Bill had made weren’t enough to fill the negative balance.
What to do? Benedict writes, “The store had no hard assets. The inventory was purchased on credit. There was no cash in the bank. Even the store’s showroom and warehouse couldn’t be counted; they were built as an attachment to RC’s home without a separate deed or title. The bank’s vice-president told Bill that essentially the only thing the company truly owned was the used pickup truck that RC had used for making deliveries.”
Bill was 22 years old, trained as a teacher, not a business man. It may have been tempting to dump this little business, but he knew what he had to do. The Willey family depended on the income from this store. “Yes, RC Willey’s business was in debt,” wrote Benedict, “But on the flip side, the company had a loyal customer base and a stellar reputation. With some financial discipline and sustained hard work, Bill was convinced the company could turn a profit.”
How Bill turned this little store into a business with $257 million in sales a year is spelled out in detail in this book, but it came in large part because he adopted some core philosophies, a sampling that we describe here.
1. Treat every customer the way you want to be treated.
“If we had made an error or failed to meet a commitment,” Bill said, “I felt it was necessary to go to any extent to satisfy the customer.”
After the first two years of fighting to pay off debts and break even, it looked like RC Willey was about to have a year of profitability when something happened that would challenge this philosophy. Hotpoint had introduced a new automatic washing machine which for customers was like going from a horse and buggy to an automobile. Everybody wanted them and Bill singlehandedly sold 400 of them, outselling every store and retail salesman in the state of Utah.
Less than a year later, however, customers started to report that the spin cycles on these machines were gradually slowing down, leaving their clothes sopping wet. Bill’s repairmen soon discovered that the part was faulty in the new machines, and while Hotpoint would replace the part, they would be giving customers a defective part to replace another defective one.
Bill complained to Hotpoint, but the company insisted they could do nothing. He immediately stopped selling the Hotpoint product, but the prospect of his first year of profitability evaporating, after his tireless work to pull the business out of debt, made him reconsider whether he wanted to abandon the business.
That would mean, however, abandoning all his customers and he said, “That’s not the RC Willey way.” Bill decided to cover the cost of repair of every washing machine that came back with a defective spin mechanism, a decision which set him back but endeared him to his customers.
His motivation was excellence, and the profits followed.
2. Little things make all the difference.
Too many businesses are guided only by expediency; they have a corporate mindset based on profit alone. Bill decided that the little gesture, the common courtesy-even if it took more time-was the way he wanted RC Willey to run.
Benedict said, “It’s not uncommon to see an RC Willey delivery truck parked alongside a road while two deliverymen assist a stranded motorist with a flat tire or dead battery. The effort might make for an occasional late delivery, but Bill didn’t mind. [He] liked the sight of a company employee providing service to members of the community.”
Bill created an environment where employees learned to express appreciation to the customers, often gave a complimentary gift to them as they came into the store. Often, for special occasions, the store would sponsor a barbecue in the parking lot and give free hot dogs. Bill said, “You don’t have to do extraordinary things to get extraordinary results.”
He said, “You have to pay attention to details. To borrow a phrase from Warren-“In retail you need to be good every day.”
3. Don’t follow the herd.
Make decisions with an eye to the future, not just what is good for today. In his quest to bring really quality products to people at a price they could afford, Bill was willing to be creative and explore new ideas.
In 1975, RC Willey became one of the first retailers in the furniture industry to issue its own credit cards on a major scale. By self-financing, RC Willey eliminated a third-party lender and could charge lower interest rates.
Long before many furniture companies were using much television, Bill tried another innovation-extensive TV commercials. Bill had paid attention to KSL television’s programming and noted how many were filled with advertisements for their own shows.
Bill proposed that he would buy the unsold spots for $50-spots which normally sold for $250 to $1,000. The station agreed because the shows had to go on whether the spots were sold or not. The store’s image continued to improve.
Living the American Dream
As RC Willey continued to grow, Bill applied these principles and many more. His decisions and directions were almost uncannily right on, and more than 40 competitors came and went as his business flourished to become a household word in Utah.
When he made errors, such as in advertising, he corrected quickly. He was prayerful about his work and principled in his approach. He had foresight. He sought to save his customers money. He worked hard and hung on even through the early years when things were sometimes very difficult.
“A lot of our success,” he admits, “boils down to steady adherence to some simple management principles.”
It is that idea of adhering to principles that makes this story so refreshing. Monday, we’ll share the story of just how far Bill Child was willing to go to maintain his Sunday closing policy. It’s a story you won’t want to miss.