With an estimated net worth of $85.6 Billion as of December 2020, Warren Buffett is one of the most successful, wealthiest businessmen and investors of all time. Like me, he wasn’t born into money, and he didn’t sign a fat contract for a book, a movie, a TV show, or a record deal. He did it the old-fashioned way, which in today’s world seems almost radical. Though he came from humble beginnings, Buffett is today the chairman, chief executive officer, and the largest shareholder of the multinational conglomerate holding company, Berkshire Hathaway.
warren buffett add this to your business
There is no doubt that we can all learn more than a few things about doing business and making wealth from this remarkable billionaire who’s been acquiring, starting. Growing businesses for longer than many of us have been alive.
His company, Berkshire Hathaway, owns and operates some of the world’s largest corporations, including Helzberg Diamonds, FlightSafety International, and NetJets.
Here are powerful lessons we can all learn from Buffett to succeed in business and life today.
Assess the risk involved.
Think about the worst and best possible scenarios and promptly make the most rational, progressive decision. The buffet can eliminate most of the risk associated with stocks by buying them cheaply enough that the speculations – and high prices – are completely squeezed out. Assessing risks carefully helps you see where you are struggling and can guide you to make smarter decisions.
“Risk comes from not knowing what you’re doing “ – Warren Buffet
Limit your borrowing.
You can never be very rich when you continually work or run your business on credit. It is like working for your creditors. Limit your borrowing by re-investing your profit and reducing the amount you borrow. Warren Buffet had never borrowed excessively, even when he was starting in business. He says, “Nothing sedates rationality like large doses of effortless money.” He has always negotiated with creditors to pay what he can, and when he is debt-free, he saved his money to invest. Living on handouts, loans, and credit cards will not make you rich.
Reinvest your profits.
For your business to grow, you need to reinvest your profits continually. Most entrepreneurs are always tempted to spend their first business profits. This is not a good idea if you wish to grow better than you were. For your business to grow, you need to reinvest your profits continually. Most entrepreneurs are always tempted to spend their first business profits. This is not a good idea if you wish to grow better than you were.
Warren Buffet and a friend bought a pinball machine in high school and put it to work in a barbershop. They bought more machines with the money they earned until they had eight of them in different shops. The friends later sold the venture, and Mr. Buffett used his proceeds to buy stocks and the rest to start another business. By the time he was 26, he had amassed $174,000, equivalent to about 1.4 million in today’s value.
Look broadly for investment opportunities and reinvest like you have a single lifetime “punch card” with only 20 punches—make each one count. Even a small investment can generate great wealth if you are diligent enough to favor substance over form.
Be consistent and patient.
Warren Buffett says, “Time is the friend of the wonderful business, the enemy of the mediocre.” The long and rocky road to success holds many valuable lessons and makes victory that much sweeter. So, be patient and keep pressing on. Don’t obsess over quick results and instant gratification. Success doesn’t come overnight—not even for Warren Buffett.
Whatever decision one take in business has its implications. If you sell bad ideas to make gains, you lose friends and future business contacts. To be very successful in business, one must consider what happens after today (sealing business/transaction). Be sincere in all your business dealings. Integrity gives you and your business a good name.
6. Be Persistent
Be determined to achieve your defined goal. Do not allow the success of your competitors and your slow move to affect your confidence. If you are diligent and committed, you will become a strong competitor in no time. Warren Buffett acquired the Nebraska Furniture Mart in 1983 because he liked its founder, Rose Blumkin, did business. A Russian immigrant, she built the mart from a pawnshop into the largest furniture store in North America. Her strategy was to undersell the big shots, and she was a merciless negotiator. To Warren Buffett, Rose embodied the unwavering courage that makes a winner out of an underdog.
Do work that you love.
Success comes when you do what you love. Warren Buffet lives by this rule and urges us all to live by it too. When you do what you love and are passionate about it, he says, you’ll never work a day in your life.
8. Keep a Low Profile
Just as Warren Buffett’s lifestyle is effortless considering his stature in the world, he also does his best to avoid the spotlight.
Sure, he’s a regular in giving an opinion on economic and public policy, but he avoids the outrageous behavior that has become symptomatic of the ultra-successful. But the success that he has is determined by his business’s success, rather than on his participation in out-of-the-box activities or inflammatory public comments, designed mostly to draw attention.
We can probably guess that this low-profile existence makes it easier to focus on Buffett’s business at hand. After all, if you’re running around acting wild and making divisive comments, you won’t need to be spending a lot of time on rear-guard strategies to cover your tracks.
Know when to quit.
Warren Buffet makes mistakes just like any one of us, but he learns from his mistakes and doesn’t repeat them. He recalls: “I bought a company in the mid-’90s called Dexter Shoe and paid $400 million for it. And it went to zero. And I gave about $400 million worth of Berkshire stock, which is probably now worth $400 billion. But I’ve made lots of dumb decisions. That’s part of the game.” He is, however, quick to add: “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
Know when to walk away from a loss. And remember, in businesses and people, better quality businesses are more likely to grow and compound cash flow; low-quality businesses often erode.
10. Never Lose Money
“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1. “– Warren Buffet
What makes it impossible to say that you are never going to lose money is that it would mean that you would never take the calculated risks that are necessary to make money in the first place. But that’s the whole point – taking calculated risks.
Buffett doesn’t take wild chances. He has specific criteria regarding any business that he will invest in, and this method keeps him from entering blind speculations.
If you use the never lose money mantra as a foundational strategy, it will positively affect everything you will do, whether it has to do with a business or with investing. Many of the lessons that will follow will outline exactly how Buffett avoids losing money in the first place.
The Bottom Line
Even if you are not investing, you can take all of these lessons from Warren Buffett’s life and apply them to your life and business and have positive results.