The Battle for Independence: Overcoming Franchise Challenges

What I learned from reading Les Schwab Pride In Performance: Keep It Going! by Les Schwab. 

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16 ideas from the book: 

Intensity is the price of excellence —Warren Buffett

I am 68 years old now. And I've run it in overdrive my whole life. I've always wanted to be the best tire dealer, not necessarily the largest tire dealer.

The people serving your customers are the most important people in your company:

We have had over the years some people in the office that sometimes think they are more important than the stores. The office serves only one purpose, and that is to serve the stores. Some of our office people sometimes wonder about this. But I’ve warned them, don’t bitch to me because that is the way I want it. If you want to go out and start at the bottom changing tires and work into a manager job, then hop right to it. If it weren’t for those men in the stores working their butts off in all kinds of weather, missing meals, God awful hours, etc. you wouldn’t even have a job.

If you’re not serving the customer, or supporting the folks who do, we don’t need you. —Sam Walton 

Let the people at the store level and your manager know you are behind them. They are the ones who make you successful, not the person in a nice office who has nothing to do today but to send out another damn directive. If it doesn't help the store, tear it up and tell the store to tell the office to go to hell.

There are no shortcuts around quality, and quality starts with people. —Steve Jobs

People are the success of our company. Most anyone can sell tires. The only difference between a Les Schwab Tire Centre and most any tire dealership is the people working there.

Sharing profits with your employees is a way to build people. Be unselfish for good reasons.

We share 50% of our profits with all the employees in the store. My thinking has always been if I give away half the profits I still have half. If I share $10 million with people I still have $10 million left over. I don’t understand why businessmen can’t do this. It is being unselfish for good reasons. It helps a lot of people.

Helping others succeed provides deep satisfaction:

Success in life is being a good husband, a good father and you end up being a second father to hundreds of other men and women. Last night I attended a wedding of a young man from our office. This young man told me that two men had influenced his life, his father and me. That’s worth more than money.

Promote from within —There’s no problem you can’t solve if you know your business from A to Z

In our 34 years of business, we have never hired a manager from the outside, nor have we ever hired an assistant manager directly to that job. Every single one of our more than 250 managers and assistant managers started at the bottom changing tires. They have all earned their management jobs by working up.

Most businesses are poorly run. If you are on the ball you can beat them.

We are different from most American corporations, as we think the most important people in the company are the people on the firing line; the ones who sell, do the service work and take care of the customer. Most American corporations have the fat salaries for the top people and treat the people at the end of the line as peons. I guess that is why, if you are on the ball, you can beat them on any type of fair competitive basis.

Decision making should always be made at the lowest possible level:

A company starts, it grows, and as it grows, more and more of the decision making moves to the main office. And this is one hell of a big mistake. The decision making should always be made at the lowest possible level. Give your manager the authority to make his own daily decisions, under certain guidelines of course, but let him run his show.

You can innovate by doing the exact opposite of your competitors

Most tire businesses had a small showroom and all the tires were hidden in the warehouse. My thinking was to reverse —to make the showroom the warehouse.

“Never, ever, think about something else when you should be thinking about the power of incentives.”—Charlie Munger One benefit of sharing profits with employees —less theft from within:

Now that we share with all people, if any one employee sees another employee steal they are a weak kitten if they don’t report it. Why? Because this man is stealing from them, from his children. If he won’t fight for his children, he can’t be very much. For a company as large as ours we have very little dishonesty.

Pay the highest wages possible

The company paid low wages and had a lower overhead. The flaw was they didn’t get —with the low pay— near the quality of employees we had.

Get out of your office

If the store manager runs his store right, he doesn't have to spend hours and hours looking at the office reports; if he's doing okay the records will show it. In fact if he spends too much time in his office reading the mail, it is a sure thing his store will suffer. Sell tires, give service, keep expenses low, make sure everything is billed out, keep good communications with employees, be careful with credit, watch for leaks —do these things and you'll come out all right.

Stay out of your office

Stay out of a store for 30 days and you've forgotten 50 percent of what you know.

Once you get on the ball, stay on the ball. OR as Sam Walton said when asked how he built Wal Mart. “We just got after it and *stayed* after it.”

If we think there is a free lunch, if we rely on last year's results and ask for pay for non-productive items, then this company will turn the corner, too, and then we too will start down the hill. And once you start down, it is mighty hard to turn around. If we become complacent, brother it's all over with.

There’s a rule they don’t teach you at Harvard Business School. It is: If anything is worth doing, it’s worth doing to excess. —Edwin Land

Whatever you do, you must do it with gusto, you must do it in volume. It is a case of repeat, repeat, repeat.

Time Stamps: 

[0:01] I hope to pass on some of my theories of business. Should we fail to follow these policies, I would prefer that my name be taken off the business. 

[1:55] "If you want to read one book that will demonstrate really shrewd compensation systems in a whole chain of small businesses, read the autobiography of Les Schwab, who has a bunch of tire shops all over the Northwest. And he made a huge fortune in one of the world’s really difficult businesses by having shrewd systems. And he can tell you a lot better than we can.” —Charlie Munger  

[8:55] The meeting between James Sinegal (the founder of Costco) and Jeff Bezos in 2001 and how it changed Amazon. 

[13:23] Les Schwab’s early life/ his father’s alcoholism / on his own at 16 

[18:10] How Les Schwab made more money in high school than his principal. During the Great Depression! 

[21:00] Runnin' Down a Dream: How to Succeed and Thrive in a Career You Love by Bill Gurley 

[25:55] How Les Schwab starts his business at 33 years old 

[28:22] Les Schwab’s unique ideas on profit sharing / being good at sales is like being a magician 

[34:45] I had made up my mind to do it differently 

[36:30] Determined to be independent / early days full of struggle / modest initial goals 

[39:09] Cap your downside and don’t build a business on someone else’s property 

[45:20] My thinking was to reverse it. / The idea of a tire showroom  

[48:28] How to get the incentives right 

[57:03] Be kind. We are all temporary. The death of his son. 

[59:30] Falling out with his partners over money 

[1:02:44] Unselfish for good reasons 

[1:06:00] Life is hard for people who think they can take a shortcut 

[1:09:17] The company isn’t for sale. The stock will remain in the family / What would I do with the money? 

[1:11:55] Success in life is being a good husband, a good father and you end up being a second father to hundreds of other men and women. Last night I attended a wedding of a young man from our office. This young man told me that two men had influenced his life, his father and me. That’s worth more than money.

[1:15:00] Most companies put the emphasis on the wrong part 

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