Warren Buffet was recently interviewed in Parade magazine, the Sunday insert in Gannet newspapers. Parade can be a good source for a lot of light reading, suduko puzzles, and “celebrity watch” fluff pieces. I did not expect to read about America’s most respected investor giving sound business advice. Much of what Buffet recommends falls into the category of common sense. But, perhaps it is a bit refreshing that success and wealth can be attributed to following common-sense principles.
Here are Buffets 10 rules:
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.