Warren Buffett’s Advice On Creating A Valuable Business
Warren Buffett invests in companies with a “competitive moat” which he defines as a durable competitive advantage. Most founders start with a unique idea for their business which becomes diluted as the owner chases revenue at the expense of their original vision.
Take Mitch Durfee for example. Durfee started Grunts Moves Junk, a junk removal and moving company, to help his local community and provide his fellow veterans with a job upon returning from deployment.
But while the business was generating $1.4 million in annual revenue after just two years, Durfee was also losing sight of his initial vision. Durfee was trying to please his customers by offering services completely outside of his original business idea. A 7-figure revenue looked nice on paper, but Durfee was racking up $100,000 in debt, stretching his 20-employee team too thin and struggling to keep up with payroll.
To an acquirer, the business was worthless.
After hitting rock bottom, Durfee made one critical decision that completely rebuilt his company and enabled him to sell Grunts Move Junk successfully last year.
In this episode, you’ll learn:
- One key decision with the power to transform your company
- Why a fast-growing business can still be worthless
- How you might need to scale back your business in order to boost its value