Warren Buffet isn’t one of the richest men in the world with the flair for making a fast buck or two for nothing. Or, so it would seem. In fact one of the Buffet bits of advice, however, is that nobody makes a buck as fast as they would like to. He must be getting something right, however, otherwise he wouldn’t have a personal fortune standing at $72.3 billion today. He may not be the richest man in the world, but he has to be getting something right. Want to make it rich? Then, take the advice he has to give to heart.
So, was Buffet born with the business know-how in his blood? Hardly! Otherwise he could sell that too and we would all be asking for transfusions. But, he isn’t one of Time’s most influential people in 2012for nothing. And, he wasn’t the world’s wealthiest in 2008 either because he was twiddling thumbs while others were slaving away. From the very beginning he was out there selling chewing gum and Coca-Cola bottles from door to door as a youngster. He was selling newspapers too as well as golf-balls and stamps. He would reportedly make $175 as a kid just on the newspapers alone. At just 14 years of age he had amassed enough money through working to buy a farm and a 40-acre piece of land. He was well on the road to making it rich even at that early age. So, what did it and how come?
Here are the top ten things you should be doing
1. Be different. If you think that making money is about doing exactly as everyone else is, then you have got it all wrong according to Buffet. You need to think about how the world is and that it will change. Plan and take the risks that things are not going to be static. Do what everyone else does, invest in what everyone is investing in, then you won’t go far. The hoards of cash will just have to be spread around amongst more people. Take the risk and invest in what nobody is investing in and hear them calling after you that you are crazy, and then you will reap the benefits. Use what he calls the Inner Scoreboard and judge yourself by your own standards not measuring your worth by the rest of the world. Buffet was working from Omaha; he wasn’t one of the Wall Street mobsters.
2. Be a planner. Buffet calls it “thumb sucking” when you sit around and act like a kid that doesn’t know what to do. You need to get your information together and do some research. If you can’t stick to deadlines that you need to lay down, then there’s no money going to be there at the end of the line. Don’t bother investing. Investments are based on information and they follow strict guidelines and a timeline. The ability to take snap decisions based upon that information and the ability to stick to the rules that you have set up, will bring the money in.
3. Be a negotiator. Even if it’s with family and friends (or perhaps even more so as they will always try to get something for nothing, won’t they?) make sure that you hammer out the deal before you agree to do anything and well before you start doing the work. Negotiate and have it signed, sealed and delivered before the work starts. You’ll only learn the hard way otherwise. Buffet got a job shoveling snow from his grandfather’s grocery shop. He did the work and realized he had been taken advantage of when he got paid the princely sum of 90 cents. He realized then that it was a bad decision not to talk about the finer details and the small print before you start shoveling the snow.
4. Be a re-investor. Once that money has come your way, then you need to reinvest it. Thinking that the business that you have created or invested in will always be the way it is, is a rash and foolhardy decision. Investment brings about reinvestment and the creation of other companies. In 1945 Buffet and a high-school friend bought a pinball machine and put it in a barber’s shop for just $25. They reinvested the money they made and ended up with several barber shops across Omaha. Within a year it was worth $1,200. By, 32 he was a millionaire and it was all from small sums of money at the start that ended up being ploughed back into the companies and into new ventures.
5. Be a penny-pincher. Waste your money on frivolous things and you will definitely waste your investment. You should only be investing in companies that try to cut costs as much as possible. Buffet once invested in a company where the boss counted the sheets of toilet paper because he thought that he was being done out of the 500 that should have been there. He found out he was and Buffet thought that was good for business.
6. Be debt-free. Well it is sound advice that even the federal government should adhere to. Cut the debt and get debt free otherwise it will just strangle your hold on your finances. Apparently, Buffet has never borrowed any significant amount of money. His advice is to reduce your debt and earn money from the investments.
7. Be tenacious. By hanging in there till the bitter end, regardless of what happens and what you have to do, you will come out a winner according to Buffet. It’s persistence that will make the money roll in (at least in part).
8. Be smart. But, even though persistence is a good thing, checking out the competition and undercutting them producing what might be the most needed thing, you still have to know when it’s time to throw in the cards and walk away (or rather, walk into something else). Buffet says he learnt that when he was a kid and he went to the races. He bet on a horse. It lost, so he bet on another one and lost his money again. The races and horses are like business. You can read up and do the research and you can invest in them, but there’s some bit of luck there that means you are or you aren’t going to make the dollars. Just learnt to walk off and go do something else if you need to. You can’t flog a dead horse, can you?
9. Be a risk-assessor. If you want to go far then you need to be able to ask yourself two questions: what’s the worst scenario possible and what’s the best scenario possible? If the risk of either of those is too great, then there’s no point doing it. Weigh up what’s good and what’s not.
10. Be a success. What does success actually mean? So many of us in this world of consumer-driven frenzy believe that it’s actually the money that you have in your pocket or in your account at the bank. Buffet says (although admittedly it’s easy when you are a billionaire) that success cannot be measured by the amount of zeros you have after your name. This is partly the reason why in 2006 he agreed to give away 99% of his fortune to the Bill and Melinda Gates Foundation. He is known for his frugality and his philanthropy. So, what makes success for him? It’s not the statues or the hospital wings or the foundations that carry his name. He doesn’t want them. He refuses them. He says success is measured by the people that are around you and that love you, even when you have nothing.
Buffet was a millionaire by the time he reached 32 in 1962. That’s not bad, but he had been working since he was a kid, hadn’t he?
But, when it boils down to it, are we all looking to strike it rich or just make enough money so that the taxesthe state is prepared to squeeze out of us don’t seem quite so painful? In a world where making it rich is no longer the answer, but waiting until the state doles out the cash seems to be the motto of this country these days: Waiting in line to get the bucks, rather than bucking the bronco and raking in the money by taking the risks. If only there were more people out there prepared to take the risks, then the country wouldn’t be in the sorry state it is.
The rich wouldn’t be hoarding their cash and the poor wouldn’t be the majority. People wouldn’t be agreeing to accept the minimum in life and allow the masses to be exploited. What about putting the Buffet bits of advice into action?