What are things needed to build a successful company from scratch?
How can someone become a billionaire from scratch?
Well, if you will like to get answers to the above questions keep reading post as I share to you the five business lessons from Warren Buffett, the world’s richest investor and CEO Berkshire Hathaway.
Who is Warren Buffett?
Warren Buffett is one of the richest investors in the world, Forbes Magazine regards him as the man who made his fortune from trading stocks.
7 Best Business and Investment Lessons from Warren Buffett
1. Understand your business to the core
“Never invest in a business you can’t understand.” – Warren Buffett
There is nothing Warren Buffett understands better than his business - Berkshire Hathaway, because he is highly experienced in the financial services industry and run his business with the knowledge he acquired.
There was a time when dot com was booming and various entrepreneurs were dumping their companies to start a web-based business but Warren Buffett refused to follow the crowd because He doesn’t have much knowledge about the technology industry. He stood with the industry he’s very vast in – financial service industry.
“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. Keep proper books
“Accounting is the language of business.” – Warren Buffett
It is often said that “money is the life blood of business” As a businessman you must make sure that the day-to-day transactions reflect in the books of account.
Not that alone, you must understand the books so as to be able to manage your business cash flow.
Put simply, Warren Buffett stresses that financial literacy and accounting is quite crucial to have maximum control of your business. This is one of the things that have helped him in keeping the business’s financial position strong, even when there is economic recession.
3. Management is vital to running a successful business
Starting a business successfully can be easily done by an entrepreneur but sustaining and growing it requires competent management team. When Warren Buffett wants to buy a business he looks out for the management because he believes profitability is guaranteed when there is a sound management.
“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
4. Think long term
One of the reasons why small businesses fail is the fact that the entrepreneur only focuses on the short-term rather than long term. Warren Buffett has already drawn a long term plan which will serve as a guidepost for his company - Berkshire Hathaway will fall even after his death.
Warren Buffett don’t just invest in any business, He only invest in the ones with long term plan. Businesses with short-term focus don’t usually survive when the chips are down.
5. Know Yourself
“It takes 20 years to build a reputation and only five Minutes to ruin it. If you think about that, you will do things differently.” – Warren Buffett
One thing about Warren Buffett is that he places premium on integrity and will not compromise for any reason. Integrity is one of the common cores of the evergreen companies we have around. Integrity is transferred into the business by the owner; if the entrepreneur has no integrity the business can never have it.
If you truly value integrity, it will be seen in your company’s culture.
These are the lessons I learned from Warren Buffett, the richest investor on earth. Which of these lessons do you find interesting?
Let me know via the comment box.