Building a Small Business That Warren Buffett Would Love

Building a Small Business That Warren Buffett Would Love

by Adam Brownlee
Released March 2012
Publisher(s): Wiley
ISBN: 9781118138885

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Book description

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.

Table of contents

  1. Cover
  2. Title page
  3. Copyright page
  4. Dedication
  5. Foreword
  6. Acknowledgments
  7. Introduction: Painting the Picture of the Ideal Business
    1. There Is a Template
    2. The Context—Focus on the Fundamentals First
    3. Who Says? Warren Buffett Does
  8. CHAPTER 1 Buffett and the Fundamental Business Perspective
    1. Warren Buffett as Your Small Business Consultant
    2. Return on Equity, Return on Investment—the Preview
    3. Apples to Apples
    4. Investing from the Business Perspective
    5. A Spiel on Capital Gains
    6. Turning Capital Gains into Cash Flow
    7. Buffett as a Cash Flow Powerhouse
    8. The Cash Flow Trifecta
  9. CHAPTER 2 The Importance of a Consumer Monopoly or Toll Bridge
    1. Briefly Stepping through the Quantitative Mirror
    2. And What It Is Not . . .
    3. What? The Consumer Monopoly and My Small Business
    4. Taking on the Big Boys Is a Big Mistake
    5. If You Can’t Beat ’Em, Join ’Em—Why a Franchise Makes Sense
    6. Track Records and Subway Cars
    7. Purchasing an Existing Business
    8. The Toll Bridge
    9. How to Build a Consumer Monopoly
    10. Branding
    11. Some Branding Pointers
    12. How to Build a Toll Bridge
    13. The Best Combination—A Consumer Monopoly Toll Bridge or a Toll-Nopoly
  10. CHAPTER 3 Strong, Consistent, and Growing Earnings
    1. Through the Eyes of Warren Buffett
    2. Earnings and the Consumer Monopoly
    3. And What We Do Not Want to See . . .
    4. Why This Is So Important
    5. Where to Start—The Income Statement
    6. Income Statement Forensics
    7. I Am Purchasing an Existing Business, This as Opposed to I Am Robot
    8. I Am Starting a Small Business
    9. How to Project
    10. Now for the Hard Part
    11. Marketing Research
    12. The “Splitting the Pie” Method of Marketing Research
    13. A Small Trial Run or, Just Open the Doors and See What Happens—Hello World!
    14. Reverse Engineer the Financials
    15. Take a Friendly Noncompetitor Out to Lunch
    16. Analyzing Larger Public Companies
    17. Bottom Line
    18. Application for Small Businesses
    19. The Initial Rate of Return on a Stock—The Initial Rate of Return on a Business
    20. Discounting
    21. Six Degrees of Hypersensitive Separation
    22. So What? How Does This Apply to My Small Business?
    23. Take Away
  11. CHAPTER 4 Emphasizing a High Return on Equity
    1. Painting the Picture of Return on Equity
    2. And Now Some Examples
    3. Return on Equity Industry Averages
    4. Another Reason Return on Equity Is So Doggone Important
    5. To Rent or Not to Rent, That Is the Question
    6. Some Definitions
    7. Breaking Up Is Hard to Do
    8. Similar, Yet Different
    9. Of Assets, Cash Flow, and Financial Independence
    10. What Warren Wants to See—The Entire Reason We Are Covering This Topic
    11. Across the Universe of Investments
    12. How to Become Joe-Like
    13. An Afterthought on Financial Ratios
    14. Uses of Funds
    15. Assumptions
    16. More Detail on the Ratios
  12. CHAPTER 5 Retained Earnings—The Fuel for the Engine of Compounding Returns
    1. Death of the Compounding Engine
    2. Let Me Have a Dollar
    3. Of Retained Earnings and Llama Farms
    4. But . . . We Are Supposed to Be Discussing Small Business, Correct?
    5. Looking at a Phenomenon
    6. Retained Earnings, So What?
    7. Taxes, Taxes, Taxes . . . and Death
    8. Up in the Sky, It’s a Plan, It’s a Bird, It’s . . . Super Buffett
    9. Retained Earnings in Relation to Business Valuation—the Proof in the Pudding
    10. One Other Thing to Keep in Mind
    11. How Warren Buffett Determines the Price
    12. How the Heck Does This Apply to My Small Business?
    13. How the Heck Do I Apply the Historic Earnings Per-Share Method to My Small Business?
    14. Valuation as It Relates to Retained Earnings
    15. Low Research and Design, Low Required Investments in Maintenance and Upkeep . . . Low I Tell You, Low
  13. CHAPTER 6 The Tumor of Long-Term Debt
    1. Debt: Friend or Foe?
    2. Wrapping Your Brain around Debt versus No Debt
    3. This Is a Two-Way Street—The Reverse Effects of Leverage
    4. My Poor, Poor Income Statement—Damn You, Debt!
    5. Good Debt Versus Bad Debt
    6. Warren Buffett versus Good Debt versus Bad Debt versus Your Small Business—Who Wins?
    7. How to Wire the Debt Prescription into a Small Business
    8. But What If I Am Starting a Business?
    9. Stocks Versus Real Estate Investing
    10. In Conclusion
  14. CHAPTER 7 Keeping Up with the Joneses
    1. Hamburgers, Cokes, and Animated Mice . . . Oh My!
    2. Just What Is Inflation?
    3. So What? How Does This Apply to My Small Business?
    4. The Opposite Is Also True
    5. An Either-Or World
    6. Fixed Debt Can Be Your Friend—Hello, Friend
    7. Inflation Is Not Your Baby Daddy
    8. Commodity-Type Businesses
  15. CHAPTER 8 With Healthy Net and Gross Margins
    1. Before You Can Have Net Margins, You Must Have Gross Margins
    2. So What? What Say You, Warren?
    3. Gross Margin Is Really Not That Gross
    4. Two Important Things
    5. And Now, a Bucketful of Consumer Monopoly Margin
  16. CHAPTER 9 Building a Small Business That Warren Buffett Would Love—Finishing the Landscape
    1. The Spirit
    2. Finis! A Landscape Framed
  17. Epilogue
    1. The Business Plan—Well, Yeah, There Is an Outline, but This Is Not War and Peace
    2. Goals and Milestones—You Said You Were Going to Live Up to Them, How Did You Do?
    3. Implementation—It’s a Pretty Document . . . So What?
  18. About the Author
  19. Index

Product information

  • Title: Building a Small Business That Warren Buffett Would Love
  • Author(s): Adam Brownlee
  • Release date: March 2012
  • Publisher(s): Wiley
  • ISBN: 9781118138885