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Business Ideas – 3 Lessons from Herb Kelleher (Southwest Airlines)
Today we’re going to look at how a young lawyer who seemingly had it all bravely left his job to start his own business. He had to fight over 30 lawsuits and nearly went out of business but he stuck with it and created one of the most respected companies in America. This is the story of Southwest Airlines co-founder Herb Kelleher and the top 3 lessons that you can learn from his success.
“Your people come first, and if you treat them right, they’ll treat the customers right.” – Herb Kelleher
Herb Kelleher (born March 12, 1931) is the co-founder and former CEO of Southwest Airlines. After graduating from law school he did what every new lawyer dreamed of. He clerked for the Supreme Court Justice, joined a law firm, and became partner at a firm in his wife’s home state of Texas. He should have been on top of the world but he was instead itching for a new career as an entrepreneur. One evening Kelleher was having drinks with a client, Rollin King, and that night the two used a cocktail napkin to hatch a new business, Southwest Airlines.
Using Kelleher’s legal experience and King’s business background, Southwest Airlines was set up to run only in Texas to avoid having to follow federal price regulations. Kelleher had found a legal loophole and his competition didn’t appreciate it. Kelleher had to fight off over 30 lawsuits before Southwest Airlines was even able to get a plane in the air. But they prevailed and bootstrapped their way from a company with only 4 planes to being one of the most admired companies in America.
Southwest is consistently named one of the top five Most Admired Corporations in America by Fortune magazine, which also called Kelleher perhaps the best CEO in America. It has never experienced an in-flight fatality and continues to enjoy growing success. Southwest is also the only airline to have over 30 consecutive years of profit, despite the terrorist attacks of September 11, 2001, which threatened the rest of the industry. In 2001, Kelleher resigned as CEO and president of Southwest due to a personal battle with prostate cancer.
Action Item #1: Put Your People First
Action Item #2: Focus Everyone on Customer Service
Action Item #3: Hire the Right People
In the beginning, Southwest had just four planes and 70 employees. All of the legal battles had left the company on the verge of closing down. It forced Kelleher to make a difficult decision: he had to either sell one of the planes or lay off some of his employees. He chose to sell the plane. In return, Kelleher asked his employees to cut gate turnaround times from 55 to just 15 minutes. They pulled it off and Kelleher had clearly set the culture for his business.
“I learned it by doing it, and I was scared to death.”
“Sometimes you need a little courage too just to buck popular opinion.”
“The important thing is to take the bricklayer and make him understand that he’s building a home, not just laying bricks.”
Business Ideas – How to Create a Culture, Work Hard, and Make Customers Happy like G Steinbrenner
to accomplish everything you’d like to get done.”
“I detest bankruptcy. To me, it signifies failure — personal failure, corporate failure.”
“I haven’t always done a good job, and I haven’t always been successful, but I know that I have tried.”
Business Ideas – How to Sell Something Like P.T. Barnum
Evan Carmichael discusses how you can sell, promote, and showcase your business like America’s greatest showman, P.T. Barnum.
“Without promotion something terrible happens… nothing!” — P.T. Barnum
Phineas Taylor Barnum (July 5, 1810 — April 7, 1891) was an American showman, businessman, and entertainer. Above all else, P.T. Barnum was a salesman and promoter who knew how to get people talking. Today, the legacy of his work lives on in the Ringling Bros. and Barnum & Bailey Circus, still billed as ‘The Greatest Show on Earth.’
When P.T. Barnum first launched his business, there was heavy competition as many entrepreneurs had set up their own traveling road shows. He knew that in order for his circus to succeed he needed to get people excited about it by being extremely different from everyone else.
Action Item #1: Sell Something Unique
How do you really stack up against your competitors? Are you honestly that different? If you are an average company with an average product selling at an average price then guess what you get? Average results.
To be successful you need to have a point (or points) of differentiation. It has to be something that is noticeable to people who don’t understand your industry. In the circus business you have to get good performers and P.T. Barnum went out of his way to find the best. From the Fiji Mermaid to Siamese twins Chang and Eng Bunker to General Tom Thumb the Midget P.T. Barnum had a unique product that none of his competitors could match.
Think about if a potential customer found your website and five of your competitors’ websites. Would they get the feeling that you are very different from the others? Be honest with yourself and if the answer is “not really” then it’s time to get to work on creating an offering that is truly unique in your industry,
Action Item #2: Promote, Promote, Promote
You can have the greatest product or service in the world but if nobody knows about it, your business won’t last very long. Whatever market you’re selling to is likely full of competitors. Even if you have a better quality product or service, your competition can get more business than you if they promote themselves properly. To be a successful entrepreneur you need to both provide an outstanding offering (Action Item #1) and promote it so everybody knows about it.
One of my favourite quotes from P.T. Barnum is “Without promotion something terrible happens… nothing!” If you’re not out promoting and selling your product then your competitors are taking your customers from you even if you can provide them with a better option. If you’re not out promoting then you lose and your customers lose.
Promoting your business doesn’t have to be expensive and you don’t have to be a great people-person. You just have to do something unique to stand out. According to the New York Times the average person in a city sees 5,000 ads per day. Unless you’re very very unique and different with your promotion people are going to ignore you. They’re not trying to be mean, we are all just trained to filter things out unless we have a reason to pay attention. Give them that reason and with your next promotion ask yourself: “What would P.T. Barnum do?”
Action Item #3: Showcase Yourself
People like to buy from people, not from companies. Think about your own buying experiences. Would you buy from someone who you can see their picture, learn about their story, and relate to their experiences? Or would you rather buy from ABC company who uses the same stock photography and boring mission statements as everyone else?
P.T. Barnum did a great job of not only promoting his business but himself as a part of it. He was the creative founder who everyone was talking about and wanted to learn more about.
You don’t have to be a daredevil like Richard Branson and balloon around the world (although P.T. Barnum would be proud!) — but it can really help your business if you showcase yourself so that your prospective customers feel like they’re buying from a real human being. Put your picture on your website and in your marketing materials. Tell a brief story as to why you started your business and the problems you’ve been able to help solve for customers. Explain why you’re so proud of your business and what makes you different. It will have a tremendous and long lasting impact on your company’s growth.
Business Ideas – Business Lessons from Jenny Craig (food & service entrepreneur)
Today we’re going to look at how a gym manager mortgaged her house to start a business because she saw a need, moved to Australia, and later sold her business for $600 million. This is the story of Jenny Craig and the top three lessons you can learn from her success.
Action Item #1: Promote, Promote, Promote!
Building a better mousetrap is not enough anymore to get a company off the ground. You need to aggressively promote your business to make sure your customers know that you exist. From advertising and public relations to search engine optimization and social media marketing, you have many opportunities to spread the word about your company and you should never take your foot off the gas!
In the company’s early years, Craig made sure that exactly ten percent of sales was directed back into commercial advertising each and every year. Individual franchises were also expected to spend ten percent of sales, or at least $1,000 a week, on local advertising for their own centres.
They used traditional advertising on television programs, leveraged celebrity endorsements, and created direct mail campaigns. But they also tried many offbeat approaches. As one example, Sid got the company a lot of publicity during one televised international cricket match, where cameras picked up on a sign in the crowd directed at the captain of the English team that read: “See Jenny Craig. Quick.”
Action Item #2: Offer Products and Services
I believe the best way to build a business is to start a service – it’s low cost and gets you close to your customers. Your chances of survival are much higher and you learn what future services and products your clients need. Once you’ve established a base of customers and know exactly what’s missing in the marketplace, you can create your products. You’ve got cashflow from your service business to keep the company running and you’ve got a loyal group of clients who are ready to buy!
Jenny Craig had the same philosophy. Her business started with Jenny Craig centres where they would help clients establish a workout program, offer nutritional guidance, and also give motivational services. Her business grew every year as she added more centres and people to her team. It was a very successful service based business.
Jenny Craig’s big break came when she started offering prepared food products as a part of her offering. She brought on board a highly qualified staff of dieticians, psychologists, and physicians to help her create a menu that was healthy and nutritional. In doing so, Jenny’s Cuisine became a central component to her program. All of her clients were required to purchase these portion and calorie controlled foods, which included over sixty different breakfast, lunch, dinner, dessert and snack options. Jenny’s Cuisine proved so popular that the company’s gross revenues from food sales increased to 91 percent by 1993.
Action Item #3: Never Give Up!
Just like I discussed in my last post, it’s important as an entrepreneur to never give up on your idea. Every business owner will face a moment of crisis which forces you to think whether it’s all worth it – the long hours, the mounting debt, the personal sacrifices. These moments will help define you as an entrepreneur. It’s the founders who stare those moments square in the face and keep on building who go on to be the ultra-successful entrepreneurs.
From losing weight, to starting her own business, to not being able to run her business in America, Craig has proven that with perseverance anything is possible. When the Craigs first sold their chain of Body Contour gyms, they did so in agreement to a non-compete clause. They were not allowed to set up shop again anywhere in the U.S. for two years.
And so, refusing to wait two years before they made their next move, the couple went on a search for their next destination. Where could they begin their new line of fitness centres? What country was similar to the U.S. in terms of diet and fitness levels but presented no language barrier? The Craigs decided on Australia. Their friends thought they were “nuts” but the couple never gave up and turned their new business into a company that sold for $600 million.
Business Ideas – How to Narrow Your Market, Innovate, and Be Efficient like Dov Charney
Today, we’re going to look at how a Canadian entrepreneur went from getting arrested for bootlegging t-shirts to being the largest t-shirt manufacturing in the United States. This is the story of American Apparel founder Dov Charney and the top 3 lessons that you can learn from his success.
“I knew I could do it differently, and I knew I could turn it around. And I knew there was a solution and there was no way, that kind of passion or can-do spirit; I said there’s no way I’m stopping now.” – Dov Charney
Dov Charney (born January 31, 1969) was born in Montreal, Canada to Jewish parents, but was sent to Wallingford, Connecticut to attend a prestigious prep school to control his behavior. Charney was a self-described hyperactive child and was frustrating his parents with his behavior. He would focus on just about everything else, but the school he was attending. While ignoring school work, he would find a money-making opportunity by purchasing t-shirts at a K-Mart and taking them across the border to Canada, where he would sell them for a profit.
Charney would then close a large order for t-shirts, but the order went south and he would eventually lose more than $100,000. This business disaster would make Charney quit the t-shirt business for a while and go to college. He found that the t-shirt business was calling him again so he dropped out of Tufts University in his senior year to follow his passion. After moving to South Carolina, and getting a $10,000 loan from his father, Charney would start a new t-shirt business in 1989, American Apparel.
Today, American Apparel has over $500 million in revenue and over 11,000 employees. It’s the largest clothing manufacturer in the United States and has almost 300 locations worldwide. In 2004, Charney was named Ernst & Young’s Entrepreneur of the Year and he’s made quite a return for himself on that initial $10,000 startup loan!
Action Item #1: Narrow the Market
Action Item #2: Innovate, Don’t Exploit
Action Item #3: Efficiency is the Key
Dov Charney was such a hyperactive child that his Canadian parents sent him to a prep school in Connecticut. There he would see many of his classmates selling t-shirts on school grounds. This gave Charney an idea of buying t-shirts from the local K-Mart and taking them across the border into Canada to sell for a profit which happened to be against the law.
During one of his bootlegging excursions he was arrested. “They took me down to Station 10, which doesn’t exist anymore, and after a couple of hours of me yelling, ‘Monsieur, monsieur!’ they let me out and gave me back my cash and my shirts,” recalls Charney. “So what did I do? Headed straight for the Cock ‘n Bull to try and unload the rest of them.” Even getting arrested did not deter Charney from selling his t-shirts.
“America doesn’t need another faceless, institutional apparel company. They need an apparel company that gets it and does it right.”
“Look, I’m not that ethical, but you don’t have to be the most ethical person to know that slavery was wrong.”
“What I’m talking about is the exploitation of human potential instead of the exploitation of humanity.”