Walton's 10 Rules of Business Success - Rule 9 - Control Your Expenses
This is another one of those understatements that sound so simple and is heard so often that its power is ignored as far as it being practiced.
One of the great misunderstood concepts of competitive advantage is in how a business handles its money. What's great and positive about handling cash flow so well? It gives you a lot more leeway for experimentation and trying different things; contrary to popular opinion.
Walton said this about his Rule 9:
"Control your expenses better than your competition. This is where you can always find the competitive advantage. 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 are too inefficient."
This isn't blowing smoke. I've seen business that took in money hand-over-fist and could have been powerhouses in their markets, but they instead spent the money just as quickly as it came in on things that they had no reason to spend it on ... other than that it gave them status.
Many in management and business think that controlled spending and close watching of expenses is something for yesterday, and isn't of much consequence to day other than paying bills on time. The real truth is that companies that are the most successful aren't afraid to spend money, it's that they know the difference between what's important to spend it on and what's not.
The result is that when opportunities arise, mistakes are made, or money may need to be put into operations, among other things, efficient running of the business can be the difference between failure, growth and streamlining operations.
Walton felt so highly of it for Wal-Mart (WMT) that he considered it one of the key competitive advantages to any company. I would say that he should know.
Other Walton Sources:
The Most Underrated CEO Ever The legendary Sam Walton
Sam Walton: The Power of Persistence
Sam Walton Business Quotes for Ya
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