In 1942, Warren Buffet, then aged 11 years, used his savings of $ 114.75 to buy three shares of stock in a gas and oil company. Recalling the memory, Buffet notes that it felt good to become what he called a capitalist.
In a letter to the shareholders of Berkshire Hathaway, the company he has headed for 54 years, Buffet says that no economic success or failure is made in a vacuum.
Buffet is clearly taking about an effort outside his immediate orbit – he does not believe in limiting his company’s future to the US alone; rather looking broadly to the entire world for investment and growth.
In his letter, Buffet referred to himself and his partner Charlie Munger and how ’young’ they both still are , as far as investments go – he is 88 and Munger is 95 –their pulses still race, it seems, when they talk of a great investment and a huge purchase.
Buffet has seen it all ; from corporate bad behaviour to things going wrong. Which is why he says they prefer quarterly reports over monthly ones and why they do not have a company wide budget. He says it is a part of the company culture to hold back pressure to meet arbitrary marks that can lead to dishonesty.
So what lessons can Buffet teach the entrepreneurs who have the flair and the courage to take on the world?
Take calculated risks –
Buffet made his money the old fashioned way – he is no Kardashian. He still believes in adding value instead of taking short term risks. His way of doing business is to take calculated risks – not the wild card type of investments that can backfire. So the lesson is for you to be aware of what you are going into – remember that calculated risks are always better to take and safer too.
Keep tight control over your living expenses –
In other words, do not live beyond your capacity. Buffet still lives in the modest house he purchased in 1957. He has not gone in for flashy cars or luxury apartments – he can afford it but he has chosen to live the same way he has always lived. Living beyond your means is almost a fad today – but a bad one to follow if your intention is to invest in your business and build your company.
Avoid fads –
He does not believe in doing the fashionable thing. He does not run with the herd ; he believes in being consistent and being sure of what he is doing. The fad maybe attractive but it is not always long lasting. Warren Buffet has been around long enough to know why fads don’t stick. So remember, not fads but go in for things that last – that will stay on long after the fad is gone.
Keep a low profile –
Unless your business demands it, keep a low profile. They need to see and experience your company, your level of service – not you the person. In these days of celebrity endorsements and high profile personalities, it is hard sometime to resist the urge to confuse your own personality with that of the company. Stay sober and stay low – let the work you do shine when your business succeeds.
Invest in quality –
Buffet believes in investing in quality. There is a clear difference between quality and what is perceived as quality. As an entrepreneur, you should know what level of quality you are seeking for your business venture. Do not compromise on quality – adding value through enhanced quality is always important than going for low quality short term solutions.
Are you an entrepreneur? We would love to share your story. E mail us at email@example.com