Would Warren Buffett buy your business?
For all the small business owners out there, here is an interesting question for you to think about, would Warren Buffett buy your business?
Now, I know that as far as Warren Buffett’s investing and purchases go, he does not look at small businesses. However, if you take some of the characteristics of the businesses that he does buy, I would bet that your enterprise would be on a very stable platform that would not only provide income for you but would be in a position to dominate the local market or industry that you are located in.
So, what exactly would be some of the characteristics that would make up an appealing company for Warren Buffett? The below is not intended to be a comprehensive list but this short list that should provide an understanding of what I am trying to say.
- Is your business or business model easily understood?
- Is the company operating within its means?
- Are you executing your business plan / strategy effectively?
- Are you able to consistently increase profits or profit margins?
Can you easily explain your business or business model? Normally, for a small business, being able to describe what services or products you produce is not difficult. However, you as a business leader should make sure that if you have employees or team members that they fully understand what it is your business does? Does your office manager or assistant really understand what value or service a property and casualty insurance broker provides? If not, how do they know that they are making correct decisions or communicating effectively with customers or insurance companies about business maters?
The next few items on the list above drive to the value of the business. Are you running your business within its means? If you are, then you should not be producing a large debt ratio. If you have not looked at your operating ratios for a while, I strongly suggest that you do an analysis of your business to examine where you were and where you are now.
When you run financial ratios on your business, you should be able to see which direction your business is moving. A lot of small business owners and managers get focused on the tactical day-to-day or month-to-month running of their business, by running financial ratios, you not only take a strategic look at your business but that exercise also puts it through an analytical check up.
So, get to it, review your business and think about if Warren Buffett would invest into your business and your dream.
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