Running a Business the Warren Buffett Way: Opinion Essay

You don’t have to be a genius to know how to spend your money wisely. Saving and investing your hard earned income can get you amazing results. Similarly if you own a business or want to start one, the use of capital is one of the key issues you need to consider. And what better person than Mr. Warren Buffett to help you out in this regard. Warren Buffett is like an institution when it comes to giving people advice about investment and how to conduct business. The stocks he buys and the companies in which he invests becomes hot commodities all over the world. That’s the reason why each word from him is regarded as the authority on the subject. According to Mr. Buffett, if you want to run a business the following factors will you help you out greatly. While some of the points are written with respect to stocks and investment, they can be applied to running any business too. Keep Calm in the Face of Volatility People usually panic in the wake of an adverse event and haphazardly do things that usually make things worse for them. Warren Buffett once told his shareholders that he don’t bother much when price of his company’s share fluctuate sharply.

The above quote literally means that an adverse situation is actually an opportunity to make investment, although a calculated one. While you need to refrain from investment as much as you can when there is a buying spree going on as the bubble will burst anytime. Similarly you need to tackle bad or favorable scenarios keeping in mind the above quote. Keep Good Company This doesn’t mean that you need to have good friends involved in your business or do business with just people you know. Instead it is all about sticking to your investments in the long term rather than just going after every business prospect that looks lucrative. Starting a business is no ordinary feat as you have to burn the midnight oil to make it successful. Even a minor distraction towards this task can be fatal for your business. Similarly if you are dealing in stock market, you need to hold back big-valued stocks to reap benefits from them. Keep Costs Low Starting a business is a costly affair for sure. Even if you put in the entire capital in the product development and marketing phase, one can still be not sure whether the product will hit the bull’s eye or not. So keeping costs low at all levels is the basic necessity for a business to succeed in these testing times. And surely you would like to hear something from Mr. Buffett to offer you some advice in this regard.

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Warren Buffet once elaborated the fact of keeping costs low at the success bash of Berkshire’s GEICO auto insurance subsidiary by saying, And when those customers referred their friends and relatives back to the company, it was an even greater success story for Berkshire giving it Keeping Employee Incentives Simple Many companies these days offer their employees incentives and bonuses in the form of stock option other than cash. The employees may not be totally satisfied with this practice as the value of a stock can go down in a matter of few days. So a company should make arrangement in this regard to facilitate people according to their performance by not making stock option as the only way to praise the performance of their employees. Warren Buffet can give you life-long lessons in this regard with his letters to his shareholders always a classic when it comes to getting solutions. About this scenario, Mr. Buffett tell employers not to give employees stock options that are Keep out of Trouble While no one can predict the future with cent percent success rate, proactive measures can make sure to avert adverse scenarios happening regularly. Businesses can get into trouble easily with internal and external threats playing a major role. You can easily guess Warren Buffett has something special in this regard too to save the employers and the employees too. According to Mr. Buffett, There is no rocket science involved in this theory. You just need to be extra-cautious while looking at the industry trends and the results of the other companies’ strategies. In this way, you can plot your future path with cent percent accuracy. Keep Your Undervalued Stocks for Future A quite common practice for several companies these days is that they use whatever option they have to buy in dire need. Using the undervalued stock is perhaps the first thing they use to sell as they try to save the cash and other valued stocks.

Warren Buffett gets very angry when companies practice this as he is always critical of using undervalued stocks which are not fully valued by the market. This is what he always tell his employees and the shareholders which is pretty much self-explanatory. Keep it Small Small businesses started to make a kill in the market right around the early 70’s. These businesses are easier to manage with not many employees to look after and the ROI is pretty much in line with the expectations of the investor. But big businesses attract big investors as they look for higher margins of profits in quick time. Warren Buffett is not that hopeful in this regard. The working of Berkshire Hathaway has always followed this principle with its unit managers handling all of the work instead of the headquarters doing the bulk of the tasks. That’s why Warren Buffett shed some more light on this issue, Keep your Reputation It take ages for the companies to make a reputation for themselves in the market. To create the goodwill, the product needs to be satisfying the requirements of the end user with quality at its core. The recent incidents at United Airlines with the passengers didn’t go well with the airline’s clients as well as general public. Their reputation nose-dived at an all-time low and it will take quite some time for them to recover from this. The blunders from their PR department made the matters worse for them. Maintaining the reputation of the product or service is one lesson on which Warren Buffett lays so much emphasis. It is perhaps the most important piece of advice for new businessmen and aspiring entrepreneurs.