Buffett’s Best Business Advice

The quotable king of the investment world has a lot to say that will help small companies and business owners seeking a retirement nest egg.

Buffett’s Best Business Advice

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More than 15 years ago, a group of friends from my neighborhood and I started a stock club. Once a month we got together and pooled our modest dues to purchase a tiny slice of a company. 

We talk equities, sure, but it’s as much a social gathering as anything. We’ve watched our kids grow up and each member flourish in their chosen careers. As for our portfolio, we’ve enjoyed high-flying economic times and sweated out the devastating market collapse of 2008.

It’s been a great learning experience and I would recommend such a club to business owners who may want to scratch that investing itch, especially if it’s part of an overall retirement savings strategy. Anyone can benefit from a greater awareness of stocks, bonds, mutual funds and how smart investing can help build a retirement nest egg.

One thing about the stock club I’ve really enjoyed is following the stories and advice of Warren Buffett, the chairman and CEO of Berkshire Hathaway and one of the richest people in the world. From his start hawking sticks of gum on the street at age 6 to his massive current wealth of about $80 billion, the 90-year-old so-called Oracle of Omaha is one of the great American success stories. 


Practical Gentlemen

Buffett reminds me a lot of Sam Johnson, the late CEO of Johnson Wax, another billionaire who I had the opportunity to interview years ago. Neither used their wealth to live a life of over-indulgent luxury and gave a lot of their money away. When I met Johnson, he drove a late-model Buick to his office everyday and often took his lunches at a little hamburger stand nearby. I would call both of these gentlemen practical given their circumstances.

Buffett is somewhat famous for his austerity. He could buy mansions all over the world, but he’s lived in the same relatively small house in Omaha since 1958. He often eats breakfast at McDonald’s like other working folks. And in 2006 he announced he would give away 85% of his fortune rather than salt it away for generations of his heirs.

Buffett has generously shared investor advice throughout the years. And the advice is not just good for prolific stock traders. Many of these insights would be helpful to shop owners trying to build and improve their businesses in 2022 and save a little nest egg for their retirement.

So here are a few of my favorite words of wisdom from Warren Buffett and how they can impact your business and the firearms community:

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” Buffett is saying that you can’t just go out and buy a good reputation. It’s hard earned, and protecting it should be job No. 1. He backstopped this when talking about how he would react to an employee error: “Lose money for the firm and I will be understanding. Lose a shred of reputation for the firm and I will be ruthless.”

Recently I heard about a contractor contemplating firing a new employee for making a mistake in the field that would cost some money to fix. That could be a teachable moment for an otherwise quality worker. Things happen. But if an employee did something to harm your company’s good name, Buffett would tell you not to put up with that.

“When you have able managers of high character running businesses about which they are passionate, you can have a dozen or more reporting to you and still have time for an afternoon nap,” Buffett has said. “Conversely, if you have even one person reporting to you who is deceitful, inept or uninterested, you will find yourself with more than you can handle.”

And when you find a good worker or manager, Buffett would tell you to get out of the way and let them do their jobs. He once used this baseball analogy, “The important thing we do with managers, generally,” he said, “is to find .400 hitters and then not tell them how to swing.”

“Your best investment is in yourself. There is nothing that compares to it.” I think of this one every time I attend an industry event. Consider the SHOT Show, for instance. The retailers you meet there took time from their busy schedules to learn through industry training, see the latest technology being offered, and spent hours networking with others. Over the course of ownership of a company, all these investments will pay major dividends. Whenever you have the choice to learn something that can help your small business thrive, go in that direction. This will help you evolve in the industry and build an asset that will be worth a lot of money someday.

“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.” Buffett reminds us all to seize the day when it comes to moves for your business or in the stock market. In buying stocks, Buffett says you have to go against the grain and buy when others are selling off. “We simply attempt to be fearful when others are greedy and to be greedy when others are fearful,” he explained. That’s how you buy low and sell high.

In your own business, watch carefully for great opportunities. Perhaps another retailer in your area is contemplating selling off his company and buying it would allow you to build revenue in a practical way. Or maybe you see demand for a new service and you could fulfill it with training and a new piece of equipment. These opportunities may come around only a few times in a decade. Learn to recognize them and have the courage to take the leap.

“Rule No. 1: Never lose money. Rule No. 2: Don’t forget rule No. 1.” This simple advice goes for your business as well as your personal finances. If you are going to hire a new staffer or buy a new piece of equipment, make sure those investments are going to pay off. Track how much you’re spending on human and steel assets, then do well by taking care of them. Watch the ledgers closely and make sure the numbers are black and not red at the end of the month.

As for investing, Buffett would tell you it takes hours and hours of regular reading and research to choose your own investments. Most of us, retailers included, don’t really have time to do that. So as soon as you can, find a smart and trustworthy professional to help you organize your retirement investments. To save money, Buffett has often recommended buying a variety of index funds (those owning a broad spectrum of leading stocks) and keep them forever.

“I’ll give my children enough money so that they would feel they could do anything, but not so much that they could do nothing.” Buffett wants to help his family realize the American dream and have a good life, but he doesn’t want his success to stunt their desire to work and create their own success stories. So he will leave them maybe millions, not billions, and encourage his heirs to continue with the work ethic he has taught them.

As retailers, you’re not talking billions, but maybe if you are successful after 30 years and save for retirement, you might be talking millions. Buffett would have you take care of your kids and grandkids, but not make them feel entitled to a paycheck without working hard for a day’s wage.

“It’s always been a mistake to bet against America, since 1776.” Amen to that. Take solace in the fact that your company has the great good fortune to be located in the best country in the world for small business success. The same can be said for your ability to save money and invest in a broad portfolio of companies, be they American or foreign. Our economic leadership and stability is the envy of many countries across the globe. The potential for your company is limitless if you have the smarts and energy to grow it bigger.

“In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu pandemic; and the resignation of a disgraced president,” Buffett has said. “Yet the (Dow Jones market) rose from 66 to 11,497 (points).”


Never too Late to Start

Maybe your current business is allowing you to put hamburgers on the table, but not much more right now. Or you have real estate and equipment to pay off and little left to invest in a retirement plan. Maybe you’re older and you feel like there’s not much time to amass that nest egg. I get that. But I’ll leave you with one interesting fact that should give hope to all of us who work hard but have trouble seeing the light at the end of the tunnel: Warren Buffett made 99% of his wealth after age 50.  


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