Warren Buffett – Timeless and Fool-Proof Advice for Entrepreneurs

Warren Buffett – Advice for Entrepreneurs: simple rules like that delighting customers, working through other people, associating with people better than you are will cause you to move in a better path.

Warren Buffett – Advice for Entrepreneurs: simple rules like that delighting customers, working through other people, associating with people better than you are will cause you to move in a better path.

 

[Edited transcript by Hoan Do]

I would like to just tell you a couple of short stories and we’ll draw maybe a couple of lessons from them.  I would like to tell you of two women that each sold the business to Berkshire Hathaway for many many many millions of dollars. Both of them started with twenty-five hundred dollars by a coincidence was the exact same amount. It was everything they had in the world.

One of them was a woman who landed in Seattle in 1917. She couldn’t speak a word of English. The Red Cross got her to Ford dodge where she was reunited with her husband who had come to the country a couple of years earlier. She lived in Fort Dodge for two years. As she put it, she felt like a dummy. She couldn’t pick up the language. She couldn’t learn a word.

So she and her husband decided to move to Omaha in 1919. There she found a small colony of Russian Jews. She started feeling more at home. As her oldest daughter went to school, she would come home and teach her mother the words she learned in school that day.

This woman, Rose Blumpkin, spent 20 years saving money bringing first her siblings over, her mother and father fifty dollars at a time. She sold used clothing to do it.

She had four children during this period. By 1937, after 20 years, she saved $2,500. She went to Chicago and she bought what she could have furnished her dream, which had always been to open a furniture store. This woman would never gone to school one day in her life. With $2,500 but with the same spirit that the people in this room had about having a dream and working to accomplish that dream,  she built a business which she sold to me in 1983 for 60 million dollars approximately. The fourth generation is working in that business. This woman Rose Blumpkin lived well. She worked for me until she was 103. Then she retired and she died the next year. Mrs. B with her $2,500, could not read or write, and she went into a furniture business, and she didn’t bring anything in unique in furniture but she brought a determination to succeed. She knew she could outwork anyone else. She knew she cared about her customers. She worked at very low gross margins. She built this incredible business.

I saw one other woman who did a similar thing with $2,500. I paid her hundreds of millions for her business.

Today I’d like to tell you about one other small business person. I went to buy his business from him and he turned me down, which was very wise. This was a fellow who was born about eight years before I was he was born in 1922. He was a pretty good athlete, didn’t like school much. His company hires more college graduates each year than any other company in the United States. He went to college for a year and then dropped out. He really wasn’t that interested in the school and the year he dropped out was 1941. When the United States was under attack, he went down to the Army Air Force recruiting station to volunteer. They turned him down because he had hay fever. He went over to the Navy and again volunteered and they took him. They put him on an aircraft carrier. He flew small fighter planes during World War II. Then he came back to the Midwest.

By this time, he would be 23 or 24 years old. He actually kind of went from one job to another for a short period of time. He finally became a used car salesman at a Cadillac dealership in st. Louis Missouri. At age 35 having moved up in the sales organization, he said to his boss: “could I go into car leasing business with you,” The boss said: “well if you’ll cut your salary in half and you’ll come up with $25,000 ( which he borrowed), we can become partners in a car leasing company.” 

My friend Jack started at age 35 at the car leasing business. He had seven cars. It was pretty slow.  In fact one of the things he did was whenever the phone rang, he let it ring three or four times so people would think that he was very busy answering other phones. And of course it was the only call he was gonna get all day. So his first venture was okay but it wasn’t really going to go anyplace. And there’s a lesson in this for all of us. At age 40 he decided with 17 vehicles, he was going to go into competition in the rent-a-car business. So now he’s taking on Hertz and Avis and national and people like that who have hundreds and hundreds of thousands of cars and he’s got 17 cars. And his cars aren’t any different from theirs. He’s buying them from General Motors or Ford or Chrysler and he can’t get the airport locations which those companies have. But he was determined that he would basically offer the customer the friendlier service than they’ve ever seen. And so he started the company and named it after the battleship that he’d flown from in the Pacific, which was the USS Enterprise. When he died about the year and a half ago, his rent-a-car company starting with those seventeen cars was worth more than Hertz and Avis and all the rest of the rental cars put together. The man’s name was Jack Taylor. His son Andy Taylor, the friend of mine, runs the business now.

So this man didn’t invent artificial intelligence. He didn’t do anything that just like Mrs. B selling furniture. Any one of us could have entered those businesses. He lived by the creed basically of delighting his customers and working with people and establishing the relationship with them so that they in turn would want to delight the customers. He learned how to project himself and his attitude toward his fellow man. He desired to make a friend out of every customer. He managed to take very ordinary cars and turn them into this extraordinary business from virtually nothing.

It illustrates several points. You don’t necessarily get it right the first time. In the car leasing business, basically we’re competing on the cost of money to finance cars and it’s very hard to delight a customer. At the age of 40 with all of that experience behind him, he found the golden key. He took a very ordinary business and turned it into an absolutely extraordinary operation just like Mrs. B did with furniture. He didn’t worry about whether the Federal Reserve was going to tighten or ease. He didn’t worry about whether the stock market was up or down yesterday. He didn’t worry about the things he couldn’t change. He did focus on the one thing he could change. That was the customers experience.

He was smart enough to see that he would find that business. Henry Ford as you may know failed twice before he started the Ford Motor Company in 1903. The the test isn’t whether you get the greatest business idea in the world the first time out. The test is whether you keep learning as you go along.What your strengths are and what you can do for your customers. What you can bring especially to the party. To do that you need a genuine desire day-in day-out to delight the customer. I’ve never seen a business that delight the customer and doesn’t succeed. What you want is that customer the next day when they want to rent a car or buy some furniture, what goes through their mind is that it’s the place where they’ve had a great experience. I don’t know the tie and the shirts I am wearing now but  I do know I will remember how I was treated what I bought it. 

You long forget about the price but you never forget whether you had a good experience or a poor experience with the purchase experience.If the memory is of rudeness, indifference, they’re never going to come back. 

As a small business owner and as you grow, you have to not only be able to project that interest in people’s well-being in delighting them yourself, but you have to do it through other people. And you won’t be able to do it through people who themselves do not feel they’re being fairly treated and that their views aren’t appropriately considered. So you really do have to learn to multiply yourself through other people. 

I advise the young people to come to Omaha that the most important decision you make is the spouse that most of you will likely have and it’s very important to surround your people yourself with people are the better than you are. You are going to move in the direction of the people you associate with. I advise you to seek out your partner in business, your partner life who actually are examples to you rather than somebody that you need to straighten out yourself. And simple rules like that delighting customers, working through other people, associating with people better than you are will cause you to move in a better path.

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About the author: Hoan Do is a certified leadership coach with John Maxwell Team. Hoan have led multiple teams at Symantec Inc. across the globe delivering world-class solutions to protect consumers and businesses. Hoan is an expert in building highly performing teams. He believes that the best leader is the leader that could grow his followers to be leaders. Hoan has been organizing mastermind groups at work to share with other leaders about transformational leadership and coaching. He has trained many leaders both inside and outside Symantec via mastermind groups, workshops, and one-on-one coaching.
Coaching inquiry: coach@hoanmdo.com

 

Warren Buffett on timing the stock market

Warren Buffett talks about investment versus the tendency to focus on what’s happening today. 

March 8-12 1942, newspapers were filled with extremely bad news from the pacific. Warren was watching a stock called City Services Preferred. It was sold at $84 in 1941 and it was selling at $40 on March 10. 

Warren bought 3 shares of City Services Preferred on March 11, 1942 at $38.25. Dow Jones was down 2% because of all the bad news. Warren bought at the high of the day. City Services Preferred was down to $37 the same day. So the timing of buying was off. 

Eventually, City Services Preferred was called later for over $200 a share. However, Warren sold his share when the stock was up to $40 in July 1942, pocketing $5.25 gain per share. 

The conclusion: don’t time the market. 

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About the author: Hoan Do is a certified leadership coach with John Maxwell Team. Hoan have led multiple teams at Symantec Inc. across the globe delivering world-class solutions to protect consumers and businesses. Hoan is an expert in building highly performing teams. He believes that the best leader is the leader that could grow his followers to be leaders. Hoan has been organizing mastermind groups at work to share with other leaders about transformational leadership and coaching. He has trained many leaders both inside and outside Symantec via mastermind groups, workshops, and one-on-one coaching.
Coaching inquiry can be sent to coach@hoanmdo.com

Making 6 figures #2? How to avoid being one of 29% of American households with no retirement savings

Having a job? You can make it to the top 5%

There are 100 people at 65 years old:
One will be rich.
Four will be financially independent.
Five will be working.
Thirty six will be dead.
Fifty four will be dependent.

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Let’s suppose that most men and women start working at 25 and retire by 65.
How much money do you suppose an average man earn in 40 years?
According to CNBC( https://www.cnbc.com/2017/08/24/how-much-americans-earn-at-every-age.html ), this figure would be over $1.6 million. This is a substantial amount. This is a fortune.

Earl Nightingale in his popular audio program “Top 5%” talks about a research. There are 100 men and women at 25 starting out equally in America, the richest country on earth. Each has as much opportunity as the rest. By the time they are 65 years old:

  1. One will be rich.
  2. Four will be financially independent.
  3. Five will be working.
  4. Thirty six will be dead.
  5. Fifty four will be dependent.

Earl’s tape was in 1960s. However, the stats holds even in this present time. Only 5% are financially independent. This is the top 5% that we all want to belong to.

So according to CNBC above, most people will earn at least $1.6 million ($40K per year * 40 years) by the time they are 65 if they started working at 25. Only 5% makes the grade. 95% are either dead or don’t become financially independent. As I wrote in the article “Making 6 figure? How to avoid being one of 69% of Americans who have less than $1000 in the bank“, the survey by GoBankRates year after year still points out that many Americans who make 6 figures have less than $1000 in the bank. So where does the money all go? What’s the problem?

If you practice karate 40 hours a week, 50 weeks a year, for 40 years, you will agree that you will be an accomplished martial artist. I use Karate in this example as I practiced Musokai Karate for over 10 years. I realized the difference between an accomplished karate master and the rest is how much time they put into practicing persistently. My Shihan Arakaki is a living example of an accomplished Karate master through hard work and persistence.

If you practice anything (piano, acting, investing, programming, …anything) 8 hour a day, 5 days a week, 50 weeks ago, for 40 years, you can become an expert. 

In the above research, the fifty four men and women out of 100 who arrive at age 65 without having become financially independent in the richest land in the world have worked in the economy for 8 hours a day, 5 days a week, 50 weeks ago, for 40 years and have not figured out how to be financially independent for the remaining years of their life. 

The experts say that only 5% make the grade because that is the group that does not conform. They do not follow the crowd. 

Conformity is to act like everybody else. And by acting like everyone else, the odd is that 95 to 5 that we will miss the boat of becoming financially independent.

Why do people conform?

The reason to conform is simply because it is an easy thing to do. We have been taught to conform. From the time we were born through school, we were told what to do. We don’t want to be different as being different is ridiculed by others. We want to be liked and to belong to the group. We spent at least 18 years learning to conform.

Out of school, suddenly we find ourselves to be on our own for the first time. We get a job. The most natural thing for us to do as we have been trained to conform is to look around and see how other fellows are doing their jobs. Since we have always been told what to do, why should we start thinking for ourselves? Thinking for ourselves is much hard than to conform.

By starting at 25 and retiring at 65, you know that people have 40 years to become great at their craft. However, 95 percent won’t do it. The reason is because they do like everyone else, they follow the crowd.

Everyone has a choice. You can choose to follow the crowd to be like everyone else or to join the top 5%. The choice is yours.

If you don’t want to conform, you must think now before it’s too late.

If you decide to join the top 5%, let’s continue. If not, reading more will waste your time.

There are only two steps when it comes to financial independence. And anyone can do these two steps:

  1. One’s attitude toward their work.
  2. The money one can save.

First, no matter what your present job is, it contains many hidden opportunities. Take a moment in quietness, ask yourself those questions, and silently write down the answers:

  1. How can you become an expert in your present industry?
  2. Do you know your job and your industry like a doctor knows about medicine?
  3. What will your job be like in 5 years? Can you do it the same now?
  4. What are some ways that have not been done before to improve your job?

No matter what your job is, it contains the key to greatness. Look for it until you find it.

Second, your financial success has nothing to do with the money you earn but only with the money you save. Unless you save 10% or more of what you earn, you are doing yourself a disservice. Following those steps consistently and you will know the power of saving as well as enjoy your life, especially the later part when you need it most.

  1. First, save one-tenth of what you earn and dont touch it.
  2. Second, for every dollar you save, make it work for you. Make your savings your slaves. Make their children your slaves also.
  3. Third, control your expenditure so that you never have to tap into your saving. Better yet, slash your expense so that you may have some extra dollars to put into your saving. Remember #2, your saving will work for you along with its children, grandchildren,
  4. Fourth, guard your capital. Remember that getting rich is not a quick venture. You must be patient and not jump into any venture that causes you to lose your saving.
  5. Fifth, be disciplined and remember step #4. Warren Buffett follows this principle by saying “the first rule of investing is to not lose money. The second rule is to never forget rule #1”.

For detailed explanation, you can read more at: Making 6 figures? How to avoid being one of 69% of Americans who have less than $1000 in the bank.

Don’t follow the crowd. Start thinking for yourself now. Look for the key to greatness in your job. Start saving and put your saving to work.

Remember that 95% won’t do it. You want to be financially independent. You want to join the top 5%. And you can.

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About the author: Hoan Do is a certified leadership coach. Hoan have led multiple teams at Symantec Inc. across the globe delivering world-class solutions to protect consumers and businesses. Hoan is an expert in building highly performing teams. He believes that the best leader is the leader that could grow his followers to be leaders. Hoan has been organizing mastermind groups to share with other leaders about transformational leadership and coaching. He has trained many leaders via mastermind groups, workshops, and one-on-one coaching.
If you are curious about the above method and how you can apply it to your life successfully, open your email and send me an inquiry at coach@hoanmdo.com

 

 

Making 6 figures? How to avoid being one of 69% of Americans who have less than $1000 in the bank.

Are you making a 6-figure ($100,000) or higher income? How much do you have in saving?  How much do you save per year?

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In the latest survey (September 2016 by GoBankingRates) on 7000 American adults, 69% said they have less than $1000 in the bank. Close to half of participants who earn between $100,000 and $149,999 have less than $1000. One-third of participants with incomes of $150,000 and above said that they had less than $1000 in the saving. 6% of those high income earners had nothing in the bank. Where did their money go? What will they do in case they need more than $1000? What will they do in case of emergency? Taking a loan? Using credit cards?

If you are not of those who have difficulty with saving money, you can skip the rest of this article. My primary goal is to show those who have troubles with saving money how they can save even just small amount and possibly retire being a millionaire if they do it right. Saving in my definition is the money you put away without touching it for expenses.

The following steps work for a man who makes one cent as well as the man who makes millions or billions. If you only make 5 figures, it works for you as well.

A warning before you proceed. The method I am about to give you is simple but requires your persistence to apply. You will be rich if you follow it consistently.

First
, save one-tenth of what you earn and dont touch it. Bob Proctor and Earl Nightingale put it in another way: pay yourself everything you earn from 8am to 12pm on Monday. If you earn $1000 per month, put aside $100 for your saving. Use only $900 to pay for your expenses. The hardest part is to have discipline not to touch the $100 you save. The most important thing to remind yourself of if you are tempted to use your saving is that you will spend your future without return.
Second, for every dollar you save, make it work for you. Make your savings your slaves. Make their children your slaves also. Let’s say that you put $100 into a bank that would pay you back 5% in interest annually. At the end of a year, you would have $105. The second year you would earn additional 5% on your $105 and end up with $110.25… in other words, your money is compounded at 5%. The first $100 is your slave. Its first 5% is its child which is also your slave. Each additional year you would get more slaves that work for you to earn your wealth.
If you start with $100 and continue to put in $100 each month, with 5% interest, by 10th year you will end up with $15,662.10.
Third, control your expenditure so that you never have to tap into your saving. Better yet, slash your expense so that you may have some extra dollars to put into your saving. Remember #2, your saving will work for you along with its children, grandchildren, …

Fourth, guard your capital. Remember that getting rich is not a quick venture. You must be patient and not jump into any venture that causes you to lose your saving.

Fifth, be disciplined and remember step #4. Warren Buffett follows this principle by saying “the first rule of investing is to not lose money. The second rule is to never forget rule #1”.

If you start with $100 and continue to put in $100 each month, with 5% interest, by 10th year you will end up with $15,662.10. With this amount, you are better than 60% of those who earn more than $150,000 per year. Right after your first year, you will be far better than 69% of American adults who have less than $1000 in the bank.

As I warned you earlier, you must be disciplined to religiously put $100 into saving every month without fail. You must find a way to invest your saving so that it can compound at 5% over 10 years. This is a compound interest of 5%. Buffett recommended index fund, which is historically very safe to earn above 5% return.
Another discipline you must develop is to listen only to people with credibility and expertise. In your endeavor to invest your saving, listen only to people you can fully trust and they really know what they tell you as well as they have track records to prove.

Watch out for advices from your friends, relatives, co-workers, or even strangers. Advice is too cheap. You will lose money if you do not know what you are doing.

Now, go and make a plan for your saving. Pay yourself at least 10% of what you earn, make your saving work for you, be consistent, and listen only to people with credibility. You are on your way to become rich and enjoy your life in comfort.

 

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PS: if you are looking for banks that pay over 5%, look over at the interest rates around the world. Please factor in the inflation rate when considering to make an investment.
A much safer investment is a low-cost index fund. The average return of the S&P; 500 stock index for the 10 years ending Dec. 31, 2012 was 7.10 percent. The S&P; 500 index mutual funds from Fidelity and Vanguard produced returns of 7.03 and 6.99 percent annually, respectively. Looking at bond index funds, the Vanguard Total Bond Market Index Fund produced a 10-year average annual return of 5.07 percent, compared to 5.20 percent for the Barclay’s bond market index that the fund tracks. (Source: Zach.com)

About the author: Hoan Do is a certified leadership coach with John Maxwell Team. Hoan have led multiple teams at Symantec Inc. across the globe delivering world-class solutions to protect consumers and businesses. Hoan is an expert in building highly performing teams. He believes that the best leader is the leader that could grow his followers to be leaders. Hoan has been organizing mastermind groups at work to share with other leaders about transformational leadership and coaching. He has trained many leaders both inside and outside Symantec via mastermind groups, workshops, and one-on-one coaching. Hoan perfected his own method “think and lead rich” to start leaders with the right mindset before equipping them with a complete leadership development solution.
If you are curious about the above method and how you can apply it to your life successfully, open your email and send me an inquiry at coach@hoanmdo.com