Warren Buffett is regarded as the richest stock investor in the world. In fact, Forbes magazine regards Warren as a man who made his wealth from the stock market although his success actually came from selling businesses.
Warren didn’t become rich by selling stocks but became a Billionaire by buying and selling businesses. I call it, ”Berkshire Hathway”. In fact, Warren is not interested in the price of stocks but in the value of businesses. It takes determination and business intelligence to buy and sell businesses; that’s why I regard Warren as an entrepreneur as much as an investor.
In this article, I’ll be sharing with you, 4 business lessons from Warren Buffett. You can easily apply these principles in your own business.
1. Understand your business
Just like Warren Buffett would say, “Never invest in a business you can’t understand.”
As a business owner, if you understand your business, you’d hardly encounter costly investment mistakes. When the Internet business boom began, a lot of entrepreneurs and small business owners jumped into starting their own web business but Warren continued in the financial industry.
Here’s my advice to you: Don’t invest in a business because you heard it’s profitable; rather, invest in a business you have a clearer perspective on.
Let me give you an example: Don’t invest in the real estate industry because you heard Mr. A and B are making a killing from it; rather, invest in a business you understand.
“If you understood a business perfectly and the future of the business, you need very little in the way of a margin of safety.” – Warren Buffett
2. Management is vital
“Somebody once said that in looking to hire people, look for three qualities; Integrity, intelligence and energy. If they don’t have the first, the other two will kill you. You think about it; it’s true. If you hire somebody without the first, you really want them to be dumb and lazy.” – Warren Buffett
The reason why 50% of new businesses fail every year is due to the lack of proper management. It takes an entrepreneur to start a business and it takes a reliable and competent management to run and manage a business.
If there is anything you need to work on in order to grow your business, it’s good management.
Management is one of the key features Warren Buffett looks at when buying a business. If Warren Buffett takes management as a key feature when buying businesses, it means it’s an important factor you must consider before buying a business.
3. Who is your business partner?
“It is better to hang out with people better than you. Pick out associates whose behavior is better than yours and you will drift in that direction.” – Warren Buffett
Choose a trusted business associate. This is why some businesses become multi-million dollar firms within a short span, while negligent businesses struggle to remain in business.
Who is your business associate? Is he reliable, competent and ready to supplement your weaknesses?
Is he resourceful and honest? If you find anyone that meets any of the above qualities, form a bond with them.
What some business owners don’t understand is that entering into partnership is synonymous with choosing a life partner. It’s for better or worse. So, if you’re thinking of collaborating with someone to start a small business, pick a partner with a positive mindset.
Pick someone whose strengths supplement your weaknesses and someone who shares your beliefs.
4. Be smart – think long term
“Focus on your customers and lead your people as though their lives depend on your success.” – Warren Buffett
Warren Buffett is a visionary entrepreneur who doesn’t invest in a business that has a short term plan. So, why would you invest in a business with a short term plan? If someone like Warren Buffett can think long term, why shouldn’t you?
The reason many promising businesses fold up after a short period is because their management is short term focused. Businesses or entrepreneurs that think long term re-invest profits and stand the test of time.
Pro tip: Don’t start a business because you quickly want to make a buck off of it. Start a business because you want to impact someone. Think long term – not short term.
These are 4 business lessons I learned from Warren Buffett; the richest investor in the world. Meditate on these lessons, imbibe them, and key into Warren Buffet’s point of view concerning business investment and enjoy the yielding results.
About The Guest Author: Daniel Adetunji is a freelance writer and professional guest blogger who help startups and online businesses generate leads and drive traffic through guest blogging. You can check out his premium guest blogging services at Infowland.
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