book

Building a Small Business That Warren Buffett Would Love

Name: Building a Small Business That Warren Buffett Would Love
Author: Adam Brownlee
ISBN: 9781118138885

by Adam Brownlee

March 2012

Beginner

208 pages

3h 55m

English

Wiley

Read now

Unlock full access

Cover
Title page
Copyright page
Dedication
Foreword
Acknowledgments
Introduction: Painting the Picture of the Ideal Business
There Is a TemplateThe Context—Focus on the Fundamentals FirstWho Says? Warren Buffett Does
CHAPTER 1 Buffett and the Fundamental Business Perspective
Warren Buffett as Your Small Business ConsultantReturn on Equity, Return on Investment—the PreviewApples to ApplesInvesting from the Business PerspectiveA Spiel on Capital GainsTurning Capital Gains into Cash FlowBuffett as a Cash Flow PowerhouseThe Cash Flow Trifecta
CHAPTER 2 The Importance of a Consumer Monopoly or Toll Bridge
Briefly Stepping through the Quantitative MirrorAnd What It Is Not . . .What? The Consumer Monopoly and My Small BusinessTaking on the Big Boys Is a Big MistakeIf You Can’t Beat ’Em, Join ’Em—Why a Franchise Makes SenseTrack Records and Subway CarsPurchasing an Existing BusinessThe Toll BridgeHow to Build a Consumer MonopolyBrandingSome Branding PointersHow to Build a Toll BridgeThe Best Combination—A Consumer Monopoly Toll Bridge or a Toll-Nopoly
CHAPTER 3 Strong, Consistent, and Growing Earnings
Through the Eyes of Warren BuffettEarnings and the Consumer MonopolyAnd What We Do Not Want to See . . .Why This Is So ImportantWhere to Start—The Income StatementIncome Statement ForensicsI Am Purchasing an Existing Business, This as Opposed to I Am RobotI Am Starting a Small BusinessHow to ProjectNow for the Hard PartMarketing ResearchThe “Splitting the Pie” Method of Marketing ResearchA Small Trial Run or, Just Open the Doors and See What Happens—Hello World!Reverse Engineer the FinancialsTake a Friendly Noncompetitor Out to LunchAnalyzing Larger Public CompaniesBottom LineApplication for Small BusinessesThe Initial Rate of Return on a Stock—The Initial Rate of Return on a BusinessDiscountingSix Degrees of Hypersensitive SeparationSo What? How Does This Apply to My Small Business?Take Away

CHAPTER 4 Emphasizing a High Return on Equity
Painting the Picture of Return on EquityAnd Now Some ExamplesReturn on Equity Industry AveragesAnother Reason Return on Equity Is So Doggone ImportantTo Rent or Not to Rent, That Is the QuestionSome DefinitionsBreaking Up Is Hard to DoSimilar, Yet DifferentOf Assets, Cash Flow, and Financial IndependenceWhat Warren Wants to See—The Entire Reason We Are Covering This TopicAcross the Universe of InvestmentsHow to Become Joe-LikeAn Afterthought on Financial RatiosUses of FundsAssumptionsMore Detail on the Ratios
CHAPTER 5 Retained Earnings—The Fuel for the Engine of Compounding Returns
Death of the Compounding EngineLet Me Have a DollarOf Retained Earnings and Llama FarmsBut . . . We Are Supposed to Be Discussing Small Business, Correct?Looking at a PhenomenonRetained Earnings, So What?Taxes, Taxes, Taxes . . . and DeathUp in the Sky, It’s a Plan, It’s a Bird, It’s . . . Super BuffettRetained Earnings in Relation to Business Valuation—the Proof in the PuddingOne Other Thing to Keep in MindHow Warren Buffett Determines the PriceHow the Heck Does This Apply to My Small Business?How the Heck Do I Apply the Historic Earnings Per-Share Method to My Small Business?Valuation as It Relates to Retained EarningsLow Research and Design, Low Required Investments in Maintenance and Upkeep . . . Low I Tell You, Low
CHAPTER 6 The Tumor of Long-Term Debt
Debt: Friend or Foe?Wrapping Your Brain around Debt versus No DebtThis Is a Two-Way Street—The Reverse Effects of LeverageMy Poor, Poor Income Statement—Damn You, Debt!Good Debt Versus Bad DebtWarren Buffett versus Good Debt versus Bad Debt versus Your Small Business—Who Wins?How to Wire the Debt Prescription into a Small BusinessBut What If I Am Starting a Business?Stocks Versus Real Estate InvestingIn Conclusion
CHAPTER 7 Keeping Up with the Joneses
Hamburgers, Cokes, and Animated Mice . . . Oh My!Just What Is Inflation?So What? How Does This Apply to My Small Business?The Opposite Is Also TrueAn Either-Or WorldFixed Debt Can Be Your Friend—Hello, FriendInflation Is Not Your Baby DaddyCommodity-Type Businesses
CHAPTER 8 With Healthy Net and Gross Margins
Before You Can Have Net Margins, You Must Have Gross MarginsSo What? What Say You, Warren?Gross Margin Is Really Not That GrossTwo Important ThingsAnd Now, a Bucketful of Consumer Monopoly Margin
CHAPTER 9 Building a Small Business That Warren Buffett Would Love—Finishing the Landscape
The SpiritFinis! A Landscape Framed
Epilogue
The Business Plan—Well, Yeah, There Is an Outline, but This Is Not War and PeaceGoals and Milestones—You Said You Were Going to Live Up to Them, How Did You Do?Implementation—It’s a Pretty Document . . . So What?
About the Author
Index

Overview

The guide to making money the Warren Buffett way

The book that presents the same fundamentals that Warren Buffet used to turn an initial $105,000 investment into a $40 billion fortune in a way the general reader can apply, Building A Small Business that Warren Buffett Would Love is a succinct, logical, and straightforward guide to financial success. Highlighting one simple message: that Warren Buffett successfully invests in great businesses with strong fundamentals, it argues that these fundamentals can be replicated in a small business to yield outstanding results. Offering a solution for people wanting to start a business to provide additional income in today's uncertain economy, and designed to help entrepreneurs build fundamentally sound, small businesses using Warren Buffett's business investment perspective, the book covers:

An overview of Warren Buffett's investment methodology and how it applies to small businesses
The details of the Buffett investment criteria—a consumer monopoly, strong earnings, low long term debt, and high ROE with the ability to reinvest earnings—and the application of these fundamentals to both start-up and existing small businesses

An approach to building a small business that applies the well respected principles of Warren Buffett, the book presents an exciting new look at the steps to success that have been proven trustworthy by one of the richest men in the world.

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.

Read now

Unlock full access

More than 5,000 organizations count on O’Reilly

O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.

Julian F.

Head of Cybersecurity

I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.

Addison B.

Field Engineer

I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.

Amir M.

Data Platform Tech Lead

I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.

Mark W.

Embedded Software Engineer

How to Close a Deal Like Warren Buffett: Lessons from the World's Greatest Dealmaker

Publisher Resources

ISBN: 9781118138885Purchase book

Cloud Computing

Data Engineering

Data Science

AI & ML

Programming Languages

Software Architecture

IT/Ops

Security

Design

Business

Soft Skills