Richard was a successful entrepreneur in the Upper Midwest of the United States
he broke away from a family business started his own business smart guy he
had a chain of started off as music stores and kind of expanded into
electronics TV stereo stuff like that he built his chain into he had eight or ten
stores the guys doing really good took him a while to figure out how to be
profitable but over time he had it the model was working he's making money life
is cool change came along and turned his guys world upside down not unlike what
you guys are experiencing now but this was a literal change that literally
turned his world upside down because the tornado came through this guy's town
came through Richards town damaged his largest most profitable store damaged a
lot of his inventory now this dude is in trouble his business could be going out
of business if he doesn't manage this thing correctly how he responded
summarizes everything I want to share with you guys this morning because
here's what Richard did Richard pulled his people around a table and he said
folks we've got a tremendous opportunity here now stop and think about that
there's your largest store it's a pile of rubble and and and you know a bunch
of your inventory is damaged and this guy saying they have a tremendous
opportunity so the people must said Richard what are you talking about
where's our opportunity he goes well this tornado is allowing us to do
something that we could never do before they're like Richard what are you
talking about man Richard says hey we can have a tornado sale we couldn't do
that before because there is no tornado but now we've had a tornado we can have
a tornado sale and I bet people said Richard what's a tornado sale and I bet
Richard said I don't know we've never had one before but together we're going
to figure it out so here's what they figured out they said we're going to
take all of our damaged inventory we're going to fix it up as best we can we're
going to have to discount it because it's been in a tornado somebody must
have said but Richard we can't let people in the stores too dangerous as to
you know it's too messed up somebody else must have said well the warehouse
is still standing just let Pete going to warehouse pick the stuff off
the shelves why not and then they took a risk you cannot get through the kind of
change you're facing without taking some level of risk well their risk was they
took their advertising budget for the rest of the year the entire budget for
the rest of the year and they plowed it into one sale and they just plastered
their town with signs and billboards and placards tornado sale high-end
electronics at a discount now the day of the sale comes Richard looks out on its
parking lot and what do you suppose he sees this is my question I used sort of
gauge the mindset of my audience because they usually get one of two responses
either a long line of cars which I go good or then my cynics I get another
tornado happily it was a long line of cars turned out to be the most
successful sale in the history of the company matter of fact the sale was so
successful they said you know what hey why we do this every year you know if we
don't have a tornado will have a tornado sale every year so they repeated a
couple of years every year the most successful sale the company Richard's
not a dummy he said you know what just because the way we've been doing
business up till now has worked doesn't mean there's not a better way and so
they permanently changed their business model after a couple of years from
selling a traditional store hi in and you know products margins to a
discounting permanently discounted warehouse a model they had of eight or
ten stores the chain is still around today the chain today has well over
1,300 stores eight to ten to thirteen hundred not bad growth all over the
globe and the name of the chain is best buy you could say that Best Buy got its
start because of this tornado but more importantly how Richard Schultz and his
team chose to respond to the tornado well guess what you guys got your own
virtual tornado right now don't you the Obama administration is coming in
and they're going to regulate out the wazoo on you guys you know