Warren Buffet's 10 Rules to Success
- Post By: Greg Crumpton
- Date:
- Category: Blog
I like to follow Warren Buffet. He is a quirky, funny and great guy. While he operates in an entirely different stratosphere than our company does, these rules seem to work for many different sized enterprises. They are a good read and good things are bound to happen when you implement as many of them as you can. He appears to have a great time in life and hangs out with some “fairly” successful folks as well.
So here they are, as he presents them:
1. Reinvest Your Profits. This makes sense not only in the stock market, but in a small business as well. Entrepreneurs who bleed all the profits out of a business find that they may struggle to grow the business into something larger and more valuable.
2. Be Willing to be Different. Buffet didn’t make his fortune by following the crowd. Instead, he invested when everyone else was panicked, and sold off when everyone else was buying. That strategy always beats the market. Doing what everybody else is doing – the same way they are doing it – is the recipe for becoming average. Nobody pays extra for “average.”
3. Never Suck Your Thumb. After you gather the information you need, make a decision. To Buffet, any time wasted to get to a decision is just “thumb sucking”. Success comes from immediately grabbing every opportunity that you can recognize.
4. Spell out the Deal In Advance. Your bargaining position is never stronger than before you are committed. So, advantage of that opportunity to spell out the details and specifics of any deal before you start. This is especially true when working with friends or family.
5. Watch Small Expenses. In the investment world, this translates into watching not just the returns offered by investment funds, but also the fees charged by the fund managers. This is so true in every aspect of small business and personal finance, as well.
6. Limit What You Borrow. Buffet claims to never have borrowed a significant amount of money. His advice is to remain debt-free, and then save and invest money. This is a very counter-cultural (see #2) contrast to those who preach getting rich using Other People’s Money.
7. Be Persistent. This is an advantage that the small entrepreneur has over larger, more established competitors. Persistence and ingenuity can, and often does win against large odds. If you’ve done your research, taken care of the details, watched your expenses and stayed out of debt, your success through persistence may only be a matter of time.6. Limit What You Borrow. Buffet claims to never have borrowed a significant amount of money. His advice is to remain debt-free, and then save and invest money. This is a very counter-cultural (see #2) contrast to those who preach getting rich using Other People’s Money.
8. Know When to Quit. Don’t throw good money after bad. Resist the temptation to salvage a bad deal with a last-minute home run.
9. Assess the Risk. Buffet recommends thinking through both the best-case and the worst-case scenarios. This helps clarify the risks and rewards for any venture, which is critical to the decision making process.
10. Know What Success Means. Buffet doesn’t measure success in terms of dollars. As he says, “When you get to my age, you’ll measure your success in life by how many of the people you want to have love you actually do love you.” Here is wisdom.
