I finally had some time to catch up on some reading and I finished one of my favorite annual publications - Warren Buffet's annual letter to shareholders. I realize that much has already been written about his letter and I'm not writing to reiterate any of what has been written about the letter.
Interestingly, the most insightful, important insight (IMHO) for business owners got not comment (at least that I saw). In the letter, Buffet shared his four prong focus:
In good years and bad, Charlie and I simply focus on four goals:
- maintaining Berkshire’s Gibraltar-like financial position, which features huge amounts of excess liquidity, near-term obligations that are modest, and dozens of sources of earnings and cash;
- widening the “moats” around our operating businesses that give them durable competitive advantages;
- acquiring and developing new and varied streams of earnings; expanding and
- nurturing the cadre of outstanding operating managers who, over the years, have delivered Berkshire exceptional results.
With the possible exception of point 3, I can't think of a more succinct, direct and effective filter for management decision-making. (My isssue with point 3 is that it is easily misunderstood by businesses and causes them to diversify their business focus, Berkshire Hathaway is a holding company that owns 60+ highly focused businesses).
Do you want more growth? Give yourself a grade on these three critical pieces to success:
- Improving your financial strength;
- Creating and reinforcing a sustainable, unfair competitive advantage; and
- Recruiting, retaining and recreating great people to support great process.
Now, write down the most important action you can take in the next 90 days, and the next year to improve your grade in each area (or to sustain 'A' performance for areas where you gave yourself an 'A').
So tell me, what are you going to do?