Berkshire's Letter, Always a Lesson for Business Owners (and Investors)

  • February 28, 2017
  • Scott
  • 0 Comments

Adobe Spark-22Reading Berkshire Hathaways’ annual letter is something I started doing many years ago when I first bought some class B shares.  The annual letter is a fixture in my reading list for many reasons:

  • It is refreshing to listen to a long-term perspective on running a business
  • The optimism of Buffet is infectious.
  • Despite all of his focus on numbers, it is apparent that his approach is very much on the humans involved in business: the managers of his businesses with whom he works, and their customers. 
  • Berkshire eschews financial manipulation of results.

An example of a typical line from Buffet, from this year’s report:

Charlie and I cringe when we hear analysts talk admiringly about managements who always “make the numbers.” In truth, business is too unpredictable for the numbers always to be met. Inevitably, surprises occur. When they do, a CEO whose focus is centered on Wall Street will be tempted to make up the numbers.

In effect, we should manage the business through the ups and downs, not in such a way as to hide them or iron them out of existence.  The annual letter is a fantastic read for investors and business operators alike.

It doesn’t hurt that Berkshire runs the kinds of businesses that BP3 is at home working with – improving the bottom line while making business operations more customer-centric is our sweet spot, and it aligns well with what Berkshire manages to do throughout their operation.  I can only imagine how much shareholder value a robust process transformation implementation across the portfolio could achieve.

 

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