Why Warren Buffett’s Investment Strategy Can Improve Your Business

Warren Buffett is really good at investing. Yes, this is an incredibly obvious statement, but what underlies his success isn’t. His success isn’t just luck but decisions based on data. By focusing on the same areas in your business, you can help make it a stronger and more competitive.

Why Warren Buffetts Investment Strategy Can Improve Your Business image warrenWhy Warren Buffetts Investment Strategy Can Improve Your Business

Warren Buffett(Fortune Live Media, Source)

Taking the Long View

As a value investor, Buffet begins his search with a company’s performance, specifically for shareholders. He looks for the rate that investors are earning on their shares, otherwise known as a Return on Equity (ROE).

Buffett cares not about one year of ROE, but five, ten years of data. He needs the bigger picture to get the most accurate view of a business. Only then can he truly understand the ROE.

As a business owner, you too need the long view. You make both big and small decisions for your business every day. To make the best choices, you need an accurate picture. We all know that many factors can play into why your costs, sales and margins are higher or lower some months vs. others. Taking a longer view will give you the most accurate big picture.

To get an accurate picture of your picture of your business, you need the right data. And this often means a lot of data.

Aggregating large amounts of data can be slow and tedious with paper forms. Who has time to spend hours combing through those forms? You’ll bypass all that work with mobile apps. When you go mobile, every submission goes straight to the cloud. There, it’s safe, secure and easy to access at any time. Looking at five or ten years of data requires a simple search, not hours of work.

Back to Basics: Profits and Costs

If you were to explain business to a child you’d say something like: businesses provide things or services to people at a profit. Whatever a for-profit business offers: it needs to make money to survive.

Another reason why Buffet has been so successful is that he looks at the data on the business’s fundamentals. Does the company avoid debt? Do they make a profit? Do the profit margins increase over time? Buffett looks for businesses that avoid high levels of debt and continual push up their profit margins.

We all know that these details are important, but it can be hard to trace some of your more invisible costs. One client of ours realized that losing paper invoices was costing them $10,000 a month in revenue. Keeping detailed information of your costs and profits is huge in tracking the health and success of your business.

Mobile apps help you track those details quickly and easily. Paper invoices and receipts, are easy to lose or damage. Once again, the cloud protects your data from the Bermuda triangle of your car’s backseat, or the dangers in your coffee cup. Later when you need to look at the information, you aren’t confronted with a massive filing cabinet. Just a small search bar, finding your form in seconds.

Step Away From the Crowd

A major factor in Buffett’s investing: Does the company provide a commodity? If so, he shies away. This decision comes down to the issue of differentiation. Companies need to stand out and be unique. If the business doesn’t offer anything different in it’s industry, than not much sets it apart.

You may not have investors, but you need to know what sets you apart. Why? Every company has outside stakeholders. Perhaps they are customers, maybe they are regulators or policy makers. You have to persuade them about your business, and what sets you apart. Otherwise, you’re another faceless service with a price tag.

You don’t, however, need to reinvent the wheel to differentiate yourself. Going paperless can be a fantastic way to maintain your organization, and differentiate. With emailed receipts, and streamlined processes, your business will be ahead of the technical curve, and above the crowd.

One of our clients used mobile apps as differentiator with major success. In northern Californian, he cleans and maintain pools. He has multiple competitors in town. So why does he have a waiting list of potential customers? He has gone paperless, giving clients custom PDF receipts, and notes on his work. His customers don’t have to run around the house, looking for a wayward tag. Going to a mobile app has saved him money, and attracted new customers to his business.

With a net worth of over $53 billion, Warren Buffett’s investments have paid, and paid handsomely. Perhaps you aren’t looking to invest in the stock market. But your business deserves your best insight and resources to make it the leader of the pack.

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