Warren Buffett Just Revealed What He Thinks Makes a Business Great


Warren Buffett, one of the richest and most successful men alive, has just revealed what aspects of a business he looks for when buying a business. In other words, one of the most successful men around has just told us what he considers to be "must-haves" in a successful business.

If you’re thinking about starting a business, or have one that you’re trying to take to the next level, sit up and pay attention. After all, it’s not everyday that one of the world’s most successful businessmen reveals his secrets.

Here are Warren Buffett’s must haves when considering buying a business.

It Must Have a Proven Track Record

I realize that many of you reading this will think this doesn’t apply to you because you’re in the process of starting a business, but it does—and let me tell you why. Many entrepreneurs have the attitude that they want to make fast money, and that’s their number one goal. Or they pin all of their hope on future earnings based on their projections. But Warren Buffett doesn’t see it that way.

In an age where everything moves fast, would-be entrepreneurs think that a new business operates in the same way. But that’s just not true. Slow and steady wins the race, and even Warren Buffett realizes that a business that does well consistently is worth much more than an overnight success or one that has great potential.

It Must Have Little to No Debt

So much for those who preach that you have to go into debt in order to start a business. I’ve talked about this time and time again—debt only reduces your cash flow, which makes investing in new growth almost impossible. Warren Buffett won’t even consider buying a business that’s in debt. Instead, he wants a business that has a positive cash flow. If you’re in the planning stages of your new business, you might want to rethink taking out that large loan.

It Must Have a Great Management Team in Place

A business without a great management team can quickly find itself in trouble, and that’s why Warren Buffett will only consider buying companies that have a great one in place. The same should hold true for your business. Do you already have a spot-on management team in place, or is that something you need to make a priority before you continue your startup plans?

It Must Have an Easily Explained Business Concept

Finally, Warren Buffett only likes to purchase businesses that are simple and have a business concept that’s easily understood and explained. If it takes you too long to explain what your business does, or you have to explain it over and over again, you should probably go back to the drawing board and perfect the concept.

In business, it’s always wise to take the advice and leading of those who have already succeeded. And if a great success like Warren Buffett reveals what he looks for in a business, it’s time to sit up and take notice. Does your business meet all of his requirements? If not, what can you do about it to change that today?