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How A Small Business Becomes A Big Business

By Jay Goltz
December 22, 2010

Abt - Small Electronics

It didn't start with an ambitious business plan, venture capital or a new app. Actually, it started with a young Abt, David Abt. He was a 31-year-old in 1936, the year he borrowed $800 dollars from his new wife to open a store selling radios. He called it Abt Radio.

Flash forward 74 years. Abt Electronics, as it is now known, has 500 employees and 200 delivery trucks in one location, a 350,000-square-foot store on 37 acres in Glenview, Ill., a suburb north of Chicago. The store sells a range of goods like refrigerators and plasma TVs (you could argue that the Web site is a second store, a national one at that).

A customer for almost 40 years, I know the store well. I also know the story. As a young retailer in the 1980s, I looked to other retailers to learn and to get inspiration. Back then, there were four large privately owned retailers around Chicago that were leaders in their respective categories and that I watched and took cues from. Today, the other three are out of business — but that's another story. Today's story is, How did a business that was doing about $10 million in annual revenue when I started to shop there in 1970 grow to what the company says is considerably more than $300 million today.

The answer can be summarized in two words: math and service. Let's start with the math. If your company is doing $10 million today, and you grow 9 percent a year, you will be doing more than $300 million in 2050. If you grow at 10 percent a year, you will be doing more than $400 million in 2050. Don't grab the calculator, trust me. But keep in mind: 10 percent annual growth may not seem explosive, but doing it for 40 years is easier said than done.

Yes, it did help that Abt was in the right business at the right time — there has been one technological breakthrough after another. But that doesn't explain why the store has consistently grown while lots of competitors have gone out of business — large, well-financed competitors, with the advantage of buying power and numerous stores to share the advertising. Which gets me to the second word: service.

It probably sounds trite but it is not. Around here, people shop at Abt the way they go to their mother's for Thanksgiving. They just go. There is little reason to go anywhere else. The selection is wide and deep, and the prices are competitive. After shopping around a few times, many of us come to the conclusion that we are just wasting time.

The store's slogan has long been, "The answer is yes — to any reasonable request." I recently asked a retailer-to-retailer question of Jon Abt, one of four sons who are running the business along with Bob Abt, the family patriarch (and son of David): Do you lose money on some sales to pay off the "Yes" in your slogan? "Every day," he responded. I assumed as much. I don't believe you can promise great service and not lose money on some sales. It is the cost of doing business, or at least the cost of doing business well. To me it seems obvious that you can afford to lose some money on a sale more than you can afford to lose a customer.

I asked another question that I suspected I knew the answer to: Do you ever say no? "Absolutely," he said. An honest man. Here is a little known fact in these days of promotional books and press releases about "customer-driven" companies. Every company has to say no occasionally, because some customers make requests that are, as Abt suggests in its slogan, unreasonable. What's unreasonable? Bob Abt cites the example of someone who owns an appliance for five years and then decides to return it. If you find this hard to believe, you have never worked in retail. But again, that is another story.

While service is the key to success, the key to giving great service is a little more complicated. It requires hiring the right people, training those people and keeping those people — which requires a compensation program that works. Bob Abt told me that everyone at the company was on a bonus program. That surprised me. I would have thought that would be too hard to do with so many departments and responsibilities (I'm going back to the drawing board on my bonus plans).

One other thing: it truly is a family business. Bob Abt has never been the only Abt at the company. When he started, he worked with his father and mother. By the time his father retired, Bob's eldest son was working with him. Bob insisted that his sons work somewhere else for two years before they joined the business, if they chose to. It seems the sons work well together, or at least well enough. That is either a miracle, a facade, the result of some secret parenting formula, just plain luck, or some combination of all four.

Perhaps there is one other key to Bob's success, something he did not do: open more stores. There is something to be said for keeping everything under one roof, even if it is a very big roof.

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