What Small Business Owners can Learn from Buffett

Business Principles that Small Business Owners can implement today

As an independent business entrepreneur my entire adult life, I have often admired fellow business operators’ management of their companies. Even today when working with small businesses, I am amazed at the various methods folks use to tackle and solve business issues.

I often ask myself: what is their secret sauce?

What causes them to react and manage in the way they do? My passion is helping business owners prepare themselves and their businesses for the passing of the torch. Understanding how and why owners act and react the way they do is a measure of how their inherent abilities have attributed – or not – to their success. An article in the May 2-3, 2015 Wall Street Journal, “Lessons From 50 Years of Buffett,” really caught my attention.

Warren Buffett is probably the most written-about businessman in the world. Understand that Warren Buffett didn’t start out as a big-time investor/owner. He was a small business owner, just like you and me. He perfected his business DNA in small business.

The article spoke to Buffett’s business principles and how he looks at issues. I found these ideas fascinating and simple and I need to share them with you.

Mr. Buffett has always invested sensibly, without answering to impatient clients or what others are doing.

Read: don’t overreach; control the process so you can play your own game, mind your own business, and don’t worry about keeping up with the Joneses.

The gaming reference is used extensively with Mr. Buffett. I agree, business is a game like checkers, chess, Battleship and other games of strategy. How do you apply your strategy to win the game? In Mr. Buffett’s world, the game is described as “the pursuit of unchanging goals, through ever-changing means.” The objective remains the same, but you will need to alter course from time to time to reach the destination.

Mr. Buffett’s three most powerful weapons in his gaming arsenal are cash, emotion and information.

Cash is golden to Buffett’s strategy.
Cash provides flexibility and reflects his “don’t overreach” philosophy.

Meanwhile, keep your emotions in check.
Combining those two weapons permits the business to play offense while others scramble for survival. This means you should seize opportunities with good companies when their market value is down, yet their actual business value is high.

Mr. Buffett is an information sponge,
soaking up and storing data in his memory. He filters and uses snippets of applicable information and ignores the rest.

He knows what he is good at and what he is not.
Fooling yourself into thinking you can figure everything out on your own and on the fly does NOT work. The final lesson is to concentrate your energies on what you stand for as an owner, who you are, what you know, and what you don’t. Be inflexible regarding your principles, then evolve and grow within those parameters as you relentlessly put them into action.

So what does all of this mean for you?

Owners of small business are passionate about what they do and how they do it. Sometimes the stress, pace, and daily issues amp up and the owner’s decisions and purpose become clouded. The anxiety of owning and operating a business, regardless of size, can tempt owners to chase shiny objects in pursuit of quick, easy answers. When in that state, step back and reflect on Mr. Buffett’s business DNA; at his essence, he is no different than you!