FINANCIAL BY DENISE NORBERG-JOHNSON
With five decades of business experience, this billionaire is known for his
contrarian approach to investing, his
indifference to the accouterments of
wealth, and his willingness to shoot from
the hip during interviews. What does Buffett know that most entrepreneurs never
learn? Here are a few things that electrical
contractors can learn from the man at the
helm of this vast business empire.
Don’t spend your profits; reinvest
them in your business. In high school,
Buffett and a friend bought one pinball
machine and installed it in a local barbershop. By reinvesting their earnings, they
eventually owned eight machines. When
they sold their business, Buffett used his
share of the proceeds to invest in stocks
and start another business. At the age of
26, he was a millionaire in today’s dollars.
Have a complete plan before you
make the deal. You have the greatest
bargaining strength at the start of the job,
when your customer needs you the most.
Buffett learned this lesson after spending
five hours shoveling out his grandfather’s grocery store following a blizzard.
Because he hadn’t established the value
of the job up-front, his grandfather paid
him a pittance for his hard work.
Be decisive. Buffett once said, “You’d
get very rich if you thought of yourself as
having a card with only 20 punches in a
lifetime, and every financial decision used
up one punch. You’d resist the temptation
to dabble. You’d make more good decisions and you’d make more big decisions.”
His method is simple: Do your
research, ask someone you trust to
hold you to a deadline, don’t “suck your
thumb” (his label for unnecessary sitting
and pondering). Don’t consider a deal
unless there is a price on the table, and
then give an answer quickly.
Don’t follow the crowd; be different. Most people thought Buffett was
an oddball when he began managing
other people’s money in 1956. He stayed
in Nebraska instead of working on Wall
Street, and he refused to tell even his
parents where he had invested their
funds. Fourteen years later, when he
closed that partnership, it was worth
$100 million. Contrary to the common
practice, he sought undervalued investments and beat the market average every
year. To be above average, Buffett said,
you have to use an “inner scorecard” and
judge yourself by your own standards—
not those used by everyone else.
Watch your expenses, and limit
your debt. Buffett once bought a com-
pany after learning that the owner was
counting the sheets in toilet paper
rolls and discovered that he was being
cheated. He wasn’t receiving the 500
sheets per roll he paid for. Buffett val-
ues this level of vigilance over the
small expenses, and he seldom borrows
money. His advice to the people who
seek his help in restoring financial bal-
ance is simple. Negotiate with creditors,
pay what you can, and save money to
invest when you are debt-free.
Be tenacious, but know when to
quit. Buffett admires entrepreneurs
such as Rose Blumkin, who turned her
pawnshop into Furniture Mart, the largest furniture business in North America,
by underselling larger competitors and
negotiating fiercely. At the same time, he
continually assesses his own holdings and
is willing to walk away from a loss before
the hole becomes deeper. He learned this
lesson as a teenager, after attempting to
recoup losses at the racetrack by betting
more until he had lost a week’s wages.
Create your own definition of success. Buffett is also a lifestyle contrarian
who has pledged to give away most of his
wealth to charities. He has never lived
ostentatiously and is not interested in
having his name etched on buildings.
“I know people who have a lot of
money,” he said once, “and they get testimonial dinners and hospital wings named
after them. But the truth is that nobody
in the world loves them. When you get to
my age, you’ll measure your success in life
by how many of the people you want to
love you actually do love you. That’s the
ultimate test of how you’ve lived your life.”
Not every electrical contractor wants
to be Warren Buffett, but everyone wants
to leave a legacy. How you do business
will make a difference to your customers,
your family and your community. Some
of Buffett’s lessons may help you build
your own path to success and avoid a few
mistakes along the way.
Be Smart; Be Different
Taking lessons from Warren Buffett
A MENTOR CAN MEAN THE DIFFERENCE between success and failure as a business owner. Whether your electrical contracting business is new or has existed for
generations, you can always learn from other entrepreneurs. Warren Buffett, CEO
of Berkshire Hathaway, oversees 80 different companies and his stock has a per-share price in the six figures.
NORBERG-J OHNSO N is a former subcontractor and past president of two national
construction associations. She may be reached at firstname.lastname@example.org.