Applying Warren Buffett's Wisdom to Your Franchise Journey: 5 Rules for Success

Unlock the investing wisdom of Warren Buffett and apply it directly to YOUR franchise journey! In this solo episode, Giuseppe Grammatico breaks down Buffett's 5 core rules for building wealth (Long-Term Vision, Staying Informed, Competitive Edge, Quality, Managing Risk) and shows how they translate into actionable strategies for franchise owners and aspiring entrepreneurs. Timeless advice for lasting success!

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Transcript

Giuseppe Grammatico: 0:00

Warren talks about investing and when he does invest, he doesn't invest in stocks. He invests in companies and his whole intention is. To own a piece of that company because he believes for what that company stands for. I personally do not invest in crypto. I have nothing against crypto. I don't understand and I'm not comfortable. With that type of currency. So I don't wanna invest in it. Can you make money? Absolutely. Can you lose money? Absolutely. Is there a plan? It's doing your homework and not going in into anything blind. And that goes back to owning your, and understanding your business and industry.

0:36

Welcome to the Franchise Freedom Podcast, where you can escape the corporate trap through franchise ownership. Here's your host, Giuseppe gr, the franchise guide.

Giuseppe Grammatico: 0:49

welcome to the Franchise Freedom Podcast. I'm your host, Giuseppe Grammatic, your franchise guide. I am gonna mix things up today. We've been doing a lot of conversations around franchise ownership. We've had various franchisors, franchise companies on here, funding and franchise attorneys, and wanted to mix things up a little bit because, a lot of things flow altogether. And the reason I bring that up is just. Had the opportunity this weekend to listen to the Berkshire Hathaway annual meeting, and for those that haven't listened to that, that meeting. They I believe the entire two hour of Warren's, two plus hours of Warren speaking is up on YouTube. And you can listen, there's a six hour plus recording. So there's some commentary before and after. But Warren is someone I've been following since I was was in college going into the late nineties. And someone that. His principles really aren't just about investing in the stock market, but investing in businesses, investing in yourself. Wanted to really discuss, because he's been a role model to me. I follow his ways of investing and really had an impact on me over the years. Again, if you haven't listened to it, check it out. I'm gonna see if I can include the YouTube blank here. And yeah, just a great listen. So he will be stepping down and replacing himself in the business as he approaches the age of 94, 95. So just a quick little. Bio and who Warren Edward Buffet, billionaire investor, philanthropist served as CEO and chairman of Berkshire Hathaway, is known as the Oracle of Omaha and is considered one of the most successful investors in the 20th century. 1965 buffet game majority control of Berkshire Hathaway, a textile manufacturer, and turned it into his primary investment vehicle. Why do we talk about Warren? The reason we do is number one, he has consistently beat the stock market and has a different approach. The overall stock market, we refer to that as the s and p 500. And he is got some investment principles that I think, remain true regardless of whatever industry. If you own businesses or own stock bonds, whatever you real estate, it all applies. And the reason we talk about this quite a bit and we're gonna get some future guests on the show is that, everything flows together. So for myself, for example. The income I make for my franchise consulting and coaching business I reinvest back into my business. I reinvest into real estate. I reinvest into the stock market. The money is flowing. There's definitely some. Additional income streams Warren talks what we're gonna get into his five rules, but his number one rule number one and two, which are pretty funny, here are number one never lose money and number. And rule number two is remember rule number one. But yeah I wanted to just list his five rules and then we're gonna, we're gonna dive deep into a few of them here. So Warren's five rules we call it Buffet's wisdom. For potentially building wealth, include investing for the long term, staying informed, maintaining a competitive advantage, focusing on quality and managing risk. So those are some of the principles. There's plenty more. But for this episode, for this show we're gonna talk about the five. So investing for the long term. I find this one very interesting because in order to invest in the long term, you need to have a vision. When you're looking at an investment, whether that be a stock you're looking to invest in, in the stock market, or even your own franchise or non franchise business before getting into that, you need to have a vision. Where do you want to be? What are you looking are you looking to own it, the business for five years and flip for a profit? Are you looking to own for the next 20 years, retire and create a legacy for your family? Having that long-term vision is crucial. It'll help you put everything on track, place everything out. So you have annual goals. So if it means starting at one location and adding a location every year, ending with 10 in the course of 10 years, you write that out, that way you have something to work off of. I personally use Google Docs and a Google Sheet so that I can share with my mentors. If you have a coach, you can share with your coach, anyone on your team, your investors and partners and your spouse, whoever's involved in the process. But having that, that long-term vision, I think is crucial. Warren talks about investing and when he does invest, he doesn't invest in stocks. He invests in companies and his whole intention is. To own a piece of that company because he believes for what that company stands for. He believes the comp company is undervalued. He could potentially add value and or see value down the road. So this is not something about buying a stock and trading it. He's talking about actually owning a piece of the business, having that mindset and shift that as opposed to just trading stock and just, dealing with numbers on paper. Or tickers on, on, on paper, you're actually owning a piece of the company. So the intention is to own for the long term. So that, that is number one. Number two, staying informed. Staying informed means a lot of things, knowing on, what's going on in the industry. Has your industry changed? Staying informed goes into, I look at it for, on, on the side of business ownership is learning about ai. What are some of the, what some of the advantages of using the technology? What are some changes that the industry, I. Is experiencing. And again, this applies to business ownership as well as if you're owning stock or as Warren says, owning publicly traded companies. But staying informed as to the changes, what effects will there be with the change in addition of ai, what does the market look like? Figuring out what are. What is the competitive pricing? What are things we should look at when it comes to equipment staying on top of the equipment, if there's equipment involved staying informed of, and we're gonna talk about this, I. Your competitors, but knowing, what the competitors are doing specifically in the market when it comes to pricing, when it comes to equipment and ways of going about business. Staying informed is also a big one. Whether it's, again, investing in the stock market or your business because you wanna know what's going out there going on in, in your industry and how you can stand out. So if you are in the painting space, what is it that will help you? Maintain that advantage and help you stand out in the industry. Which brings us into number three, which they merged together there, but you know, is maintaining a competitive advantage. You need to know what your competition is doing. You're not spying on them in a bad way, but you wanna know Exactly. I. What they are doing, what they are doing differently, what's working, what's not working. You're in the same industry. You're potentially, competing for the same customers and clients. So what is gonna make you truly stand out in a painting business, going back to a very simple business to understand. It's the simple fact of customer service and follow up, showing up for an appointment on time and really being professional, being able to quote the customer same day, show them before and afters, give them different options when it comes to the finish of the paint if maybe. Someone in your family has health issues and there's more a paint that offers anti-microbial properties. That is also something standing out to me is that okay, you don't wanna, consider yourself a commodity, but what can you do to stand out amongst your competitors? And I think. Some of the simple stuff like follow up, showing up on time being able to give a quote and potentially even schedule the job all in the same day. I think that gives you a major advantage. I know for myself, we've went to get a few quotes on home services, including power washing and took three, three emails, three communications or messages I should say. For that first return and reply. So that alone leaves a bad bad taste in your mouth followed by number four, focusing on quality and always going over and beyond your customer. So if you own a business, I. They have options. Odds are whatever product or service you're offering there's gonna be competitors out in the market. So what do you do? And again, a lot of these are bleeding together, but what do you do when it comes to quality as far as follow up and that follow up? I always tell everyone is that. Mistakes or issues are inev inevitable. It's part of business things will happen. It's how you go about fixing that. And when I had my last companies, we would go back and say, we know that mistakes and issues are inev inevitable and they're gonna come up. What we will do is in the event, something were to come up, number one we try to prevent it by doing an a daily inspection, but in the event something does fall through the cracks, this is your main point of contact and this is how we will go about. Fixing that issue fixing the issue, being proactive to make sure it doesn't happen again. And depending on the extent of what happened whether it was, a missed service, a missed area, going over and beyond and issuing a credit for the day or, for a partial credit. And going back into the investment world, focusing on quality, is that you're really getting to know the businesses that you're investing in, what you know, what service or product they're putting out, getting to experience the service or product. If you don't believe in the service or product, this, that may not be the right investment for you. Same as it may not be the right business for you. These are things that come up. Over and over again. And the over kind of arching theme, behind all this too, is that you need to also be able to understand your market. And that's a I should actually say, I take that back. You should really be able to understand your business, what business you are in. A lot of franchise companies, again, they may be in the painting space, but what they really excel is they're a marketing and sales engine. That's the true business. They excel at marketing sales. They're a lead generation engine that they can really apply to just about any home service type of business. I. Really understanding the business and not investing in a business or starting a business you don't truly understand and taking your time before launching or investing in a current business or investing in that specific stock, that publicly traded company. Really understanding the business is gonna be key. Knowing everything about it. Experiencing it. If you're gonna invest in a certain business, you wanna experience a service and product, as I mentioned earlier before diving, diving in and investing in that business. And you don't have to be invested in anything in the stock market. There's mutual funds, there's bonds, there's commodities there's crypto. There's so many different options. Don't feel like you have to be able to invest in, in all those areas. I personally do not invest in crypto. I have nothing against crypto. I don't understand and I'm not comfortable. With that type of currency. So I don't wanna invest in it. Can you make money? Absolutely. Can you lose money? Absolutely. But you know, the whole premise there is investing in things that you're comfortable with. I have experience with, and that's not to say I don't, get up to speed and maybe invest down the road. But currently I feel like between my business, my investments in real estate, in the stock market, that's comfortable for me getting growth, I'm getting. In monthly and quarterly income and distributions, and that's okay. So don't feel like you have to be in every aspect of the market or that you have to have 20 different businesses. Mark Cuban talks about this all the time. We had one of his, one of his companies he invested in on Shark Tank called So soap you only have to Be Right Once is something he talks about all the time. And you're gonna have some failures in the mix as well. So you don't have to have 20 businesses. You can really focus in. On one business and do a lot of damage with that business. If you think about it, 24 hours in a day, if you're focusing on one business versus I had met someone early on in my career. He owned seven businesses, and I go, why seven? He's like, well, for every day of the week, he would literally dedicate himself and go to that car wash. And he owned a a separate auto detailing business and five and a business that, that dyed clothing and sold dyes and four others. And he would actually spend. That day in and off a small little office talked to everyone and dedicate a day a week for each business, which I thought was cool. Did they all equally make him money? They all made him money. He did say there was one or two that made a majority of his income, but I found that interesting. So I. There's no rights. No right or wrong here, I guess is the point I'm trying to make is that, you really, you don't wanna spread yourself thin, especially when you're launching your first business. Really, get to know the business, the platforms to be on and focus on quality. You wanna give that, that product or service, everything you have, you don't wanna. Go in halfway and have a lot of mistakes and forget the follow up and things like that. And number five on buffet's. Five rules that we summarized for today would be managing risk. Managing risk starts with your due diligence, and that goes back to, sta long-term. Viewpoint and reiterating his role, staying informed, maintaining a competitive advantage, focusing on quality and managing risk is really going back to say, okay, where, what are the risks? What are the threats in the industry? Will AI affect my business and or service? Are there more competitors moving in and offering a similar type of business, specifically in the market I am in? How do I manage risk? Well, I also look at things. When you're starting a business and it's managing your cash flow, I always say when you own a business, you're always gonna find ways to reinvest back into the business. So a big part of that is okay, using I had Rocky Lani from Profit First, and it's paying yourself first before expenses. Figuring out a way to say, okay, for every dollar that comes in, 20 20% are going to taxes. I'm making these numbers up, 30% operating expense maybe a 10% profit, kind of distribution and the rest goes to the owner's salary. In that way you're managing risk in that you're not overspending in certain areas by not having a budget. And you're knowing your numbers so that you're figuring out ways. Okay. Do I have to cut costs? Managing risk also has to do with KPIs. Reviewing the numbers, making sure you have enough lead flow. If you're having enough lead flow, is the quality there? Is the sales person able to close those specific deals? And the same goes, when you're investing in the stock market, managing risk, looking at you're gonna have the advantage of being able to look at the financials do the. Is there a, a lot of selling being done from the corporate office. Are they buying back a company stock? Is has there been continuous growth? Is there a plan? It's doing your homework and not going in into anything blind. And that goes back to owning your, and understanding your business and industry. When you're managing risk, you're doing the due diligence upfront. Again, you're never gonna be a hundred percent, you're gonna do as much research as you can on a franchise. You're gonna talk to the franchisor, you're gonna talk to the franchisees. You're also going to meet with the franchisor at a virtual or in-person discovery day. But you're doing your due diligence the best you can. Same thing when you're investing in, in a stock, in you, a publicly traded company. You're going in, you're looking at the numbers. You're looking at, who o who owns the business. Is there a lot of selling? Is there a lot of buying? Has there been growth? Where does the company see itself? So there's a lot of analysts kinda research, which is helpful, but just knowing what, where the company is going. That information is all readily available. You can find that on Google Finance, but just seeing where that business is going to figure out, hey, it has done well. But that past performance will that help and predict future performance and not necessarily right. We wanna make sure that companies still. Being innovative, utilizing ai, cutting costs while still growing and really increasing the the bottom line, which at the end of the day, we wanna be profitable, but we don't wanna be so profitable that we're pulling so much outta the business that we're, hurting growth by not reinvesting in technology, by not adding headcount and staff and things like that. To. recap, war Warren's five rules. You have long let's see, potential building wealth, including investment for the long term, staying informed, maintaining a competitive advantage, focusing on quality and managing risks. And as I mentioned at the beginning of the show focus on not losing money and rule number two. Is, don't forget rule number one. So obviously no one goes into business with the intention of losing money. But I think, when you start a business, the intention is let's make money. Let's get systems in place. A franchise will give you that competitive advantage. But let's reinvest back in the business. So we have the blueprint, we know exactly what to do and the systems in place, but we wanna make sure to increase headcount should the demand be there on the market. So a lot of great stuff. I wanted to do this quick show because just as I mentioned, I've been following Warren for the, for over I would say close to 30 years now. Love what he is done back in the day. Value investing really didn't appeal to me because it was the tech bubble. So it seemed like anything you purchased went up in price and in value until that bubble burst. Warren has always had a long, a kinda long view, a perspective and how we approaches his investments. And I think you can use those philosophies to find your, your your business focus is gonna big is big. Know your market. Don't spread yourself too thin by having to invest in every single investment out there to feel like you're diversified. You could be diversified. As Warren mentioned he's his advice, and I heard this on a previous call, was investing 90% in the s and p index fund. It could be Vanguard, it could be the spiders, SPY, and then 10% short short term government notes. And that will be one way dollar cost average. That way you're getting full access to the market, you're getting a little bit of cash flow in there as well. And and some diversification. So it's very hard to continuously beat the market. Warren and Berkshire have have done that consistently and yeah, I just wanted to, I. Just wanted to give a shout out to Warren. Warren, if you're listening, we'd love to have you on the on the show. Maybe I'll have him on as who may have some more time on his hands. But really appreciate your words of wisdom. We'll put the link there. So if anyone wants to check out the video really inspiring stuff and be curious to get your feedback. Wanted to mix things up a little bit. The investment world it's hard to find financial advisors that are able to come on the show. There's so many rules and regulations and topics and things like that, and, we're not we're not overly structured. We like to have open and honest conversation. Con considering I, I come from the investment world and I am not a no longer a financial advisor and not giving any type of financial advice, just things to, to think about. Someone like Warren. And I think that his last meeting here before the new CEO takes over was definitely inspiring. And definitely learn something from that from that talk. Thanks again for joining everyone. We're gonna mix things up. We're gonna, we're gonna add the shows like this going forward. Just some value adds, some things to think about. We did mention. We had Jeremy Dyer I think it was towards the end of last year. We talked about real estate syndication. We do have people that have made money in their franchise and reinvested in, in that in that area. And those are different types of investments, different types of returns. A little bit more structured, less involvement. Those are there, there's some appealing aspects and not so appealing aspects depending on your situation. Franchise obviously is not passive. It's you could be full-time or part-time, but there's still involvement there. It's not a kind of buy the franchise and then walk away and it runs on its own. So really figuring out the investment that's right for you when it comes to the the type of business, your, in, your involvement, the role, how many hours you can put and when those hours are the investment. And there's a. Quite a few other elements there, timeframes and things like that. If you are interested in having a chat, I'd be more than glad to help you figure out more important than anything else. If a franchise may be a good fit or not. Go to gigi the franchise guide.com. You can book a call. I. Top right, corner of the website. There's a button there. We'd love to help you out. There's no cost for our services in 20 minutes or less. We'll figure out together if a franchise may or may not be a good fit before deciding on the on the next step. So hope you take me up on that offer. Hopefully you found this type of video informative and helpful. We'll share as many links as that we come up with here. And if you have any comments or a idea for a future topic. Definitely let us know. Be more than glad to cover that area. Do like to mix things up as business ownership is fun. We're not in silos here in stock market. Business ownership, franchise real estate, all flows together when you look at it. Hit me up. Thank you for your support. Thanks for listening in today, and we'll talk to you guys soon. Bye-bye.

21:27

Thanks for tuning in if you want to learn how to make the transition from corporate to owning your franchise. Join Giuseppe on the next episode. You can also follow on all social media platforms and achieve financial and time freedom today.