A new richest man in the world has been declared with the publishing of the most recent Forbes rich list. Warren Buffett the investment genius has toppled Bill gates as the world’s richest person. Hearing the news I had a thought how did he achieve such success in the volatile world of investment and can his successful strategies be applied to website flipping. 

Enter the mind of a genius.  

Buffet hasn’t been afraid of sharing his secrets of success and below is a simplified list of his strategies in looking for companies to acquire.

1.  Has the company consistently performed well?
2. Has the company avoided excess debt?
3. Are profit margins high? Are they increasing?
4. How long has the company been public?
5. Do the company’s products rely on a commodity?
6. Is the stock selling at a 25% discount to its real value?

 How can this be applied? 

1. Simple really has the website been a consistent performer over the last few years. You don’t want to buy a site that is in the middle of a fad or buy sites that have just done a massive promotion recently. Check their stats as far back as you can.

2. Probably not entirely relevant to websites. But out of context avoid sites that have spent big to be where they are otherwise you may need to spend a similar amount to keep it there.

3. Not profit, profit margins. Income divided by cost is your profit margin. Buffett believed the higher the margin the more efficient and effective the business model is. Buffett liked this as a measure of the management abilities which doesnt apply to website buying as generally management will change with the sale. However on a side note this is a great way to measure your own performance.

4. Again not entirely relevant but out of context how long has the site been going. Buffet is a firm believer of using history as a guide. For business he uses the 10 year rule but for websites I think 3 years is sufficient.

5. Buffett generally would stay away that would sell the same commodity as a competitor such as oil and gas. His belief was that if a company offered little that was different to a competitor than there would be little to set the companies apart. He called this the “economic moat” where the bigger the moat the more difficult for a competitor to gain market share. So in terms of website flipping I would say Buffet would stay away from the me to websites and look for some real originality.

6. Most important point using his calculations from the information above and other various factors buffet would calculate an estimated stock price and if the current price is left than 25% under it’s a company worth buying.

 Essentially Buffett has made his fortune by not following the investment norm. He looks for long term growth and profits, is afraid to jump on an investment bandwagon (late 90’s tech stocks) and is prepared to be patient with his investments. This has led him to be the richest person in the world and results like that should be studied and applied to your own business endeavors.  To your flipping success.

 - Adam Diver

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