For most people, the “Oracle of Omaha” needs no introduction. With a self-made net worth of $84 billion, some experts consider the 87-year-old to be the greatest investor of all-time.
Despite his incredible achievements and decades in the public eye, the modest Midwesterner is frugal, relatable, and full of humility – and his life story is an endless source of lessons to aspiring business professionals around the world.
The Warren Buffett Series
Part 1: The Early Years
Today’s infographic, which is done in partnership with finder.com, is Part 1 of the Warren Buffett Series, a five-part biographical series about the legendary investor.
Note: Stay tuned for future parts with our free mailing list.
The young Warren Buffett was clearly a special kid. He ran his first “business” when he was five years old, and he invested in his first stock when he was 11. Buffett even managed to emerge from high school richer than his teachers.
But what lessons can we learn from Buffett’s prolific childhood – and how did his experiences as a young man shape him into the magnate we know today?
From Numbers to Dollar Signs
Even for someone as gifted and focused as Buffett, a serendipitous insight played a crucial role in charting his future course.
During a visit to the New York Stock Exchange when he was 10 years old, the sight of a young man rolling custom, handmade cigars on the floor made an outsized impact on him. In particular, Buffett realized that such a job couldn’t exist without massive amounts of money flowing through the stock market.
This unexpected epiphany planted the seed for stocks in his brain, and Warren’s long fascination with numbers soon shifted towards dollars.
The Buffett Growth Mindset
Warren Buffett famously spends 80% of his day reading – and the written word was just as important to his younger self. As a lad, one book that caught Buffett’s eye was One Thousand Ways to Make $1,000 by F.C. Minaker
Specifically, the book showed Buffett how $1,000 could compound over time – and that the earlier you had money working for you, the better.
An important lesson from the book? There’s a massive difference in returns between 60 and 70 year compound interest scenarios. In other words, annualized returns are just one part of the equation – but how long the money compounds is the other crucial part. This is a big part of the reason why Warren Buffett got started early.
Warren Buffett’s First Stock
Through his various activities, Buffett had $120 saved by age 11. Naturally, he invested it in a stock, co-investing his sister’s money. They each bought three shares of Cities Service Preferred for $38.25 each.
The share price promptly dropped to $27, but Buffett waited it out. When it got to $40, he sold to net a small profit – however, the stock soon after went all the way to $202!
Warren calls this one of the most important moments in his life, and he learned three lessons:
- Don’t overly fixate on what he paid for the stock
- Don’t rush unthinkingly to grab a small profit. He could have made $492 if he was more patient
- He didn’t want to have responsibility for anyone else’s money unless he was sure he could succeed
These important lessons would eventually tie in well to his value investing philosophy.
The young Buffett wasn’t afraid to try new things to build up his capital. He collected golf balls, sold peanuts and popcorn, sold gum and Coca-Cola, and even created tipsheets for horse races on a typewriter.
Some of his stranger endeavors? He launched Buffett’s Approval Service and sold stamps to collectors around the country, and he also launched Buffett’s Showroom Shine – a car shining business that didn’t last too long.
Warren’s Work Ethic
By the end of high school, Buffett had launched multiple businesses, sold thousands of golf balls, read at least 100 books on business, and hawked 600,000 newspapers.
This hard work led to him having a fortune of $5,000 by high school graduation time, the equivalent of $55,000 in today’s currency. He even owned land at this point, after buying 40 acres of Nebraska farmland with his newspaper profits.
Knocked Off Course
After high school, Buffett decided he was a shoe-in for Harvard. He knew it would be stimulating for him intellectually, and that the famed business school would allow him to develop a strong network.
The only problem? He got rejected.
Instead of letting this get to him, he discovered Benjamin Graham’s book The Intelligent Investor and fell in love. It was the methodical investing framework he needed, and he would later call it the “best book about investing ever written”.
Buffett would soon be accepted at Columbia Business School, where Benjamin Graham and David Dodd taught finance. Graham became Buffett’s idol, and his second-biggest influence behind his own father.
Part 2 of the Warren Buffett Series will be released in early January 2018.
Credits: This infographic would not be possible without the great biographies done by Roger Lowenstein (Buffett: The Making of an American Capitalist) and Alice Schroeder (The Snowball), as well as numerous other sources cataloging Buffett’s life online.
How to Take the First Steps in Scaling Your Business
What are the roadblocks to achieving scale? We look at these growing pains, as well as the steps needed to get past them in scaling your business.
How to Take the First Steps in Scaling Your Business
Most entrepreneurs are hungry to bring their company to the next level.
Whether they operate a family-run business or a rapidly evolving tech startup, there is always another milestone in sight. Business owners want to their companies to make an impact with their customers and communities, and they want to keep honing their craft.
But with 27.9 million small businesses in the United States alone, there is no shortage of competition for the same pieces of the pie.
How can you take steps in scaling your business, and do what your competitors are not willing to do?
Roadblocks to Scale
Today’s infographic comes to us from Brunner Consulting, and it breaks down common roadblocks to scaling as well as potential solutions to the problem of decision fatigue.
To begin, we’ll look at a poll of U.S. small business owners, which gives perspective on the challenges most often faced by companies with fewer than 10 employees:
- Profitability (50%)
- Hiring new employees (48%)
- Growing revenue (41%)
- Cash flow (38%)
Unless a business has deep pocketbooks or is venture-backed, there are several obstacles here that may prevent companies from scaling successfully.
A lack of profitability is an obvious limitation, but it’s also clear that revenue growth, cash flow, and adding new employees can be growing pains that may derail any long-term plans.
Why is scaling your business so challenging?
It’s because most types of businesses are not really scalable to begin with. The only sustainable way to scale for most companies is to grow revenue while decreasing operating costs, and for many traditional small businesses (i.e. bakeries, restaurants, hardware stores, consulting, etc.) this can be incredibly difficult.
Even if you come up with a scalable business model, there is yet another obstacle that can prevent your from growing the right way: decision fatigue.
In a growing and evolving company, entrepreneurs can’t do everything – and when they try to make every big and small decision, it affects the quality of those decisions. It can lead to being unnecessarily risk averse, maintaining the status quo, or even avoiding decisions altogether.
Scaling Your Business: First Steps
For a business to grow, there has to be more than one decision-maker.
There are two main routes to this:
1. Delegate Responsibility
In a typical small business, employees find and diagnose problems, while owners focus on solving them. However, by delegating these day-to-day decisions to employees, it frees up owners to work on the big picture items that can fuel growth.
2. Play to Your Strengths
Entrepreneurs can’t do it all, so it’s best to play to your strengths. To do this, outsource business departments that are outside of your wheelhouse. Often those may include things like bookkeeping, marketing, customer service, or website design.
Decentralizing decision-making is one of the first steps in scaling your business – and no matter how you do this, it frees you to focus on the big problems.
The World’s Best and Worst Places for Ease of Doing Business
In some countries, launching a business is easy. In others? It’s a hassle that is littered with bureaucracy, corruption, and a lack of basic services.
The Best and Worst Places for Ease of Doing Business
The Chart of the Week is a weekly Visual Capitalist feature on Fridays.
When it comes to supporting new businesses, not all jurisdictions are created equal.
Whether it’s the basics, like hooking up electricity and registering the business, or more complex regulatory hurdles, your location can impact the success of your venture in a big way. What makes a country business-friendly, and where are the most hassle-free places to open up shop?
The Ease of Doing Business ranking, by World Bank, breaks countries’ complex regulatory ecosystems down into quantifiable components. The resulting index and ranking system is a global look at who’s making it easy to do business, and which countries are struggling.
A Global View of Doing Business
The visualization below looks at the score (0-100) of 190 economies around the world, as well as a spread between high and low scoring factors in the subindices. While two countries may have the same score, one might have a much wider “spread” which points to outlaying successes or serious challenges in their regulatory framework.
Luxembourg, for example, ranked number one in the Trading Across Borders factor, but 173rd in Getting Credit.
Note: click the graphic below of the full list to expand to a higher resolution.
View a high resolution version of this graphic.
Of the 190 economies covered in the report, New Zealand comes out on top for the third year in a row. Singapore and Denmark round out the top three.
The United States, whose ranking has been slipping in recent years, came in at 8th spot.
This ranking offers up some surprises, such as Macedonia and Georgia, which are both in the top 10. Georgia makes it easy to start a new business, and has the lowest number of procedures to get the process going.
Afghanistan had the biggest year-over-year score increase after making big strides in enhancing the legal framework for businesses.
Rwanda is ranked at a very respectable 29th place – the only low-income economy to crack the top 50.
Building the Index
The data for the ranking is compiled from over 12,500 expert contributors in 190 countries who deal with business regulations on a daily basis. The final score is based on the average of 11 factors:
- Starting a business – Procedures, time, cost, and minimum capital to open a new business
- Dealing with construction permits – Procedures, time, and cost to build a warehouse
- Access to electricity – Procedures, time, and cost required to obtain an electricity connection for a new warehouse
- Registering property – Procedures, time, and cost to register commercial real estate
- Procuring credit – Strength of legal rights index, depth of credit information index
- Protecting investors – Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
- Paying taxes – Number of taxes paid, total tax payable as share of gross profit, and hours per year spent preparing tax returns
- Trading across borders – Number of documents, cost, and time necessary to import and export
- Enforcing contracts – Procedures, time, and cost to enforce a debt contract
- Resolving insolvency – The time, cost, and recovery rate (%) under bankruptcy proceeding
- Labor market regulation – Flexibility in employment regulation and aspects of job quality
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