You don't get to become one of the most successful investors of all time without being smart about money. Warren Buffett has offered many pearls of wisdom that could help you manage your business finances.
Warren Buffett has seen plenty of success over the years, putting him in the best position to offer you plenty of tips that could help you improve your company. When it comes to business finance, Buffett has the magic touch, with 2016 seeing his company's stock rise by 23 per cent and a list of great investment choices dating back more than a decade.
Considered by many to be one of the greatest investors of all time, Buffett has a net worth of around $73 billion. After buying his own stock at age 11, he has gone on to acquire more than 60 companies. Despite all this, he has also committed to giving away more than 99 per cent of his wealth, showing that he isn't simply all about the money.
While following directly in Buffett's footsteps may not be possible - no matter how much you might want to completely emulate his success - there are several great lessons he has imparted over the years that could help shape how you approach your organization's finances.
"Rule number one: Never lose money. Rule number two: Never forget rule number one"
According to Buffett, it is much harder to improve things after a loss and get back to your high point as a company, meaning that hanging onto money is key for success. Smart investments, contingencies and correct accounting can all help ensure you maintain a good base sum so that losses won't drastically impact your company.
While there is no real sure-fire way to ensure you don't lose money, having as many plans in place as you can to reduce the impact when you do can go a long way to helping your organization stay a success. If you can work to retain funds and take steps to reduce costs in order to do so, there is a better chance you'll see a gain in the long-run.
"Someone's sitting in the shade today because someone planted a tree long time ago."
Buffett looks at investments in the long term, meaning he doesn't put much - if any - stock in short-term gains. This, he believes, means companies can enjoy more success and profit in the future, making the initial stages of business finance the most important.
Although short-term gains can be beneficial for companies, to ensure an organization's longevity, these should not be the main goal and should be re-invested to help with longer-term plans. Researching your sector and the market as it is now and looking into predictions for the future can better help you choose a direction for your business and ensure your finances are correctly prepared.
"Most behavior is habitual, and they say that the chains of habit are too light to be felt when they are too heavy to be broken."
Warren Buffett may be worth millions, but he lives well below his means, spending as little as possible on a daily basis. From a quick McDonald's breakfast to living in the same house since the 1950s, Buffett isn't big on shelling out. His advice is that businesses take a similar approach, saving money where they can and not spending extra unless they really have to.
Taking a strict approach to company finances and striving to get the best possible deal on everything from supplies to outsourcing will help to ensure your company always has more coming in than it does going out. To take on this advice, assess all of your current outgoings, see what can be cut and research alternatives that deliver quality but cost less.
These positive money habits can benefit your business and ensure that any unexpected costs don't risk damage to your company.
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