Monday, March 28, 2016

More Than a Hobby: The Story of Hobby Lobby

This past weekend, I finished reading the book More Than A Hobby: How a $600 Start-Up Became America’s Home & Craft Superstore. The book, written by Hobby Lobby Founder and CEO David Green, recounts the Green family’s modest beginnings in 1970, operating a miniature picture frame-making business out of their garage, and eventually turning it into Hobby Lobby Stores, Inc., a privately-owned arts and crafts retail giant that is today headquartered in Oklahoma City and operates over 600 stores nationwide.  

Understandably, for readers who are not arts and crafts enthusiasts, your only familiarity with Hobby Lobby may be its role as a defendant in the controversial Supreme Court case, Burwell v. Hobby Lobby Stores, Inc., which was decided in June of 2014. The Green family’s Christian values certainly influence Hobby Lobby’s business practices, including the chain’s retail hours of 9 a.m. – 8 p.m. Monday through Saturday, the closure of all stores on Sundays, and the full-time paid chaplain at corporate headquarters. But religion aside, certain of Hobby Lobby’s other business practices may prove influential to entrepreneurs.  

The company that became Hobby Lobby was your standard garage start-up. David Green and his then-business partner, both of whom were working full-time jobs in the retail industry, obtained a 12-month bank loan for $600 and quickly had orders for $3,500 worth of frames (which required another bank loan to fill). Today, Hobby Lobby is part of Forbes’ annual list of America’s largest private companies and carries no long-term debt.  While Green’s book is primarily tailored to entrepreneurs in the retail industry, some of his advice may be universally applicable: 

  • In order to succeed, you must truly love your work. Enough said.
  • Keep your ownership group small. In the case of Hobby Lobby, it remains a family-owned company. And while that may create unique challenges of its own, the message is that keeping your company close makes operational decisions easier.  
  • Focus on people more than money.  Without employees and customers, you’re going nowhere.  Make sure you never stop thinking about the customer’s perspective.” Regardless of whether your business is manufacturing a product or providing a service, the end goal is always the same: Provide value to the customer. Keeping not only those who work for you happy and engaged, but also keeping the needs of your customers front and center, will help you conquer the other obstacles along the way. And as Green would be the first to point out, never forget the most important people: your family. 
  • Start small and expand slowly. Hobby Lobby got caught up in the hype of the booming economy in the early 1980s and rapidly expanded its product offerings from arts and crafts to high-end cookware, gourmet foods, limited-edition artwork, and other upscale merchandise. However, as soon as the economy stalled, Hobby Lobby found itself unable to unload these high-ticket items and had to seek a bank loan to pay off its vendors. Hobby Lobby had quickly strayed from its core product offerings—which it found were selling fairly consistently, regardless of economic conditions—and in doing so, put its entire operation at risk.    
  • Guard your bottom line by controlling the cost of your product and your overhead expenses. Green tries to eliminate middlemen wherever possible and insists on a no-frills corporate office space: Ground level, no glass towers, and no reserved or executive parking perks. 
  • Consider whether meetings and committees add as much value as you think they do. Hobby Lobby claims that at its corporate headquarters, it holds just one day of meetings per month, concluding by mid-afternoon. Its view is that more work gets done by informal conversations among just a few people.  
  • If you employ family members, hold them to the same performance standards as everyone else. No favoritism or free rides.  

Of course, we all know that every business is unique, and what works for one entrepreneur will not always work for another. But perhaps there are some elements of the Hobby Lobby story that resonate with your entrepreneurial endeavors.

1 comment :