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With an estimated net worth of $66.2Billion, Warren Buffett is one of the most successful, wealthiest businessmen and investors of all time. 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 has been acquiring, starting and growing businesses for longer than many of us have been alive.
His company, Berkshire Hathaway, owns and operates some of the largest corporations in the world. Despite all his success, Warren Buffett still manages to remain humble and approachable.
Here are the 10 success lessons from Warren Buffett– “Oracle Of Omaha” for the entrepreneurs,
1. Do work that you love
Success comes when you do what you love. Warren Buffett 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.
“There comes the time when you ought to start doing what you want. Take a job that you love. You will jump out of bed in the morning. I think you are out of your mind if you keep taking jobs that you don’t like because you think it will look good on your resume. Isn’t that a little like saving up sex for your old age?”
2. Understand your business to the core
If there’s anything Warren Buffett understands to the core; it’s Berkshire Hathaway. Why? The reason is because he has been in the financial services industry for years and has a wealth of experience running Berkshire Hathaway. When the dot com boom began; many entrepreneurs and companies were jumping to start their own web based business but Warren Buffett refused to budge because he doesn’t understand the technology industry. He only understands financial service businesses and he has stuck to this industry.
“If you understood a business perfectly and the future of the business, you need very little in the way of a margin of safety.”
3. Spell out the specifics of a deal beforehand
Even when you are dealing with friends and relatives, have all the specifics of the deal spelt out beforehand, including your monetary benefits. Your bargaining leverage is always greatest before you begin a job—that’s when you have something to offer that the other party wants.
“I am a better investor because I am a businessman, and a better businessman because I am an investor.”
4. Pick your associates carefully
Warren Buffett’s success in business and investing can be attributed to his long standing friendship and partnership with Charlie. Entering into partnership is like marrying a wife; if things don’t go as planned, it might leave a bitter taste in your mouth. So pick a partner who you have a long standing friendship with; pick a partner with a positive mindset and most importantly, choose a partner whose strengths complement your weaknesses.
“It is better to hang out with people better than you. Pick out associates whose behavior is better than yours and you will drift in that direction.”
5. Assess the risk involved
Think about the worst and best possible scenarios and promptly make the most rational, progressive decision. That’s basically the advice Buffett gave his son, Howie, when the FBI accused the younger Buffett of price-fixing in 1995. Howie quickly realized that the risks of staying in his then troubled company far outweighed any potential gains, and so he quit the next day. Assessing risks carefully helps you see where you are struggling and can guide you to make smarter decisions.
“I don’t look to jump over seven-foot bars; I look around for one-foot bars that I can step over.”
6. Limit your borrowing and what you owe others
Warren Buffett has never borrowed excessively, even when he was starting out 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, saved his money to invest. Living on handouts, loans and credit cards will not make you rich.
“I have pledged – to you, the rating agencies and myself – to always run Berkshire with more than ample cash. We never want to count on the kindness of strangers in order to meet tomorrow’s obligations. When forced to choose, I will not trade even a night’s sleep for the chance of extra profits.”
7. Think long term
The reason most businesses fail is because the entrepreneur or management is too short term focused. Warren Buffett is still alive at the time of this writing but he has already drawn a long term plan that will guide Berkshire Hathaway after his demise. Warren Buffett doesn’t invest in a business that has no long term plan because he isn’t investing for short term.
“Focus on your customers and lead your people as though their lives depend on your success.”
8. Exercise vigilance over every expense and spending
Warren Buffett is well-known for being frugal and encouraging others to do so. He’s lived in the same house he bought when he was 28 for a mere $31,500 to date. Being frugal and conservative with your spending helps you avoid waste. And when you avoid waste, you make your money work for you and save enough to invest for the future.
“If you buy things you do not need, soon you will have to sell things you need.”
9. Know when to quit
Warren Buffett makes mistakes just like any one of us, but he learns from his mistakes and doesn’t repeat them. Know when to walk away from a loss. And remember in businesses and in people, better quality businesses are more likely to grow and compound cash flow; low quality businesses often erode.
“You only have to do a very few things right in your life so long as you don’t do too many things wrong.”
10. 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.