Business Intelligence

The Secret to Building a Successful Business on Your Own

by Bruce Judson (12000)

The era of the go-it-alone entrepreneur has arrived.

Specifically, technology in the form of email, the World Wide Web and a broad array of off-the-shelf and on-demand business services now makes it easier than ever for anyone to start and build a tightly focused business enterprise. When this technology is combined with a sound business idea, any individual can create and grow their own business. Even more impressive, it’s possible to stay small but still reap sizable profits because the leverage of technology means the go-it-alone entrepreneur doesn’t need to build an entire corporation to sustain the business entity.

When you’re on your own, you know you’re capturing the full value of your work. If you work hard, you’re the one who reaps the rewards. When you accomplish something, you get the financial rewards and you have the satisfaction of knowing that you’re benefiting from your efforts. Over the past few years, changes in the way businesses work and in supporting technology mean there has never been a better time to start your own business.

–Bruce Judson

Go It Alone!

Investment Strategies of the World’s Greatest Investor

by Robert G. Hagstrom Jr. (13000)

Warren Buffett is one of the most successful stock market investors of the past 30 years.

His entire approach is to focus on the value of the business and its market price. The Buffett approaches to investment are:

1. Never follow the day-to-day fluctuations of the stock market.
The market only exists to make it easier to buy and sell, not to set values. Keep an eye on the market only for someone who is willing to sell a stock at a not-to-be-missed price.

2. Don’t try and analyze or worry about the general economy.
If you can’t predict what the stock market will do from day to day, how can you reliably predict the fate of the economy?

3. Buy a business, not its stock.
Treat a stock purchase as if you were buying the entire business, using the following tenets:

Business Tenets
1. is the business simple and understandable from your perspective as an investor?
2. Does the business have a consistent operating history?
3. Does the business have favorable long-term prospects?

Management Tenets
1. Is management rational?
2. Is management candid with its shareholders?

Financial Tenets
1. Focus on return on equity, not earnings per share
2. Calculate “Owner Earnings”
3. Search for companies with high profit margins
4. For every dollar of retained earnings, has the company created at least one dollar’s extra market value?

Market Tenets
1. What is the value of the business?
2. Can the business currently be purchased at a significant discount to its value?

4. Manage a portfolio of businesses
Intelligent investing means having the priorities of a business owner (focused on long-term value) rather than a stock trader (focused on short-term gains and losses).

The Warren Buffett Way