Adaptability is the Key to Entrepreneurial Success
Posted by Trevor on 19 August 2013 | 3 Comments
A popular rags-to-riches story tells us that in the spring of 1891, 29-year-old William Wrigley Jr. of Wrigley Chewing Gum fame moved from Philadelphia to Chicago with only $32 to his name. We love reading these stories because they seem almost impossible. In 2011’s money, however, that $32 is worth $780. Okay, that is still not a lot of money, but it was plenty to get started in business back then, and more than most people had in their pockets. Some of you reading this could probably use that amount of cash. Interestingly, it is still more than three times what you need to start a company of your own in America today.
Wrigley’s father was a soap manufacturer, so Wrigley Jr. started his new business in Chicago selling Wrigley’s Scouring Soap. Demand was slow so, to encourage merchants to stock the Wrigley brand, he offered free baking powder. To his initial surprise the incentive was more popular than the soap so he adapted his business model to selling baking powder. Because incentives had worked so well before he made an offer to every baking powder customer of two packets of chewing gum with each can. It was not long before the incentive again became the more demanded product so he adapted again and focused on sales of chewing gum. When he arrived in Chicago two years earlier this idea would have seemed preposterous.
In 1893 he started selling his own brand of chewing gum and the same year offered several flavors. 1893 was during the worst depression in US history up to then with unemployment over 10% and the country paralyzed by violent strikes, but as with all businesses there is never a bad time to start.
Wrigley’s company experienced bumpy times and according to the company’s own historical description came close to bankruptcy several times over the next few years. What saved Wrigley was his pioneering approach to advertising. He was one of the first to use newspapers and magazines to sell a product and drive customers to his store.
Wrigley went public in 1919 when the United States was in turmoil. The huge number of returning veterans from WWI could not find work. Massive strikes disrupted major industries of steel and meatpacking, and violent race riots dominated the media headlines.
None of this distracted Wrigley from building his chewing gum business. A globally-distributed brand, Wrigley is one of the largest gum companies, and one of the most successful businesses—in any industry—in the world. In 2011, Wrigley posted revenues of more than $5 billion, gross profits of 57% and EBIDTA at 22%. Nice numbers by anyone’s measure.
The take home message from Wrigley’s story is the ability to adapt to changing markets. As I have mentioned in Three Simple Steps, a mentor once told me that the secret to business success was to get started. He said, “You never know what business you are in until you get into the business.” Wrigley’s story is a good example, and my own business experiences also back up that advice. All the planning in the world cannot prepare you for what to expect because no day in the life of an entrepreneur is predictable.
Every week I receive emails from readers of Three Simple Steps in which they outline their great plans for their business. My advice to everyone is the same. Business plans are an important tool for the entrepreneur to get a deeper understanding of their market place and customer characteristics, but they do not influence the success of a business. Most business plans become irrelevant the day after the business is launched.