Wisdom for contractors from Warren Buffett

The world of Wall Street and the world of renovation contracting are, needless to say, hardly in the same solar system. Stock prices fluctuate minute by minute and investment brokers make money whether the Dow is up or down. The more turbulent the prices, the greater the frequency of trades. There is often a disconnect between a company’s mid-term and long-term prospects and the price of its shares. Those share prices are often driven by greed or fear.

Renovation contracting is a different world, of course. For small business remodelers and custom homebuilders, reputations are built with real building materials being installed on real timelines, with real human relationships in play. If there were anything like a “stock” price in our industry (some major U.S.-based tract homebuilders are publicly traded), it would be based on what your clients think of your work. Simple as that.

So it’s instructive to spend a little bit of time thinking about the investment philosophy of one of the richest men on the planet: Warren Buffett, legendary American capitalist, aka “The Sage of Omaha.” Buffett made his fortune largely (if not entirely) by playing a long-term “value investing” game, rather than hopping on and off stocks as a day trader. He has invested in solid firms with significant competitive advantages and he has stayed along for the ride, with the majority of his investments, in perpetuity.

Buffett could have made more money, but he’s done OK. His net worth is $67-billion. American.

If you looked at the reputation of your own renovation firm as a stock, would you invest? Would you stay invested for 10, 20 years or longer? If not, maybe you should take a fresh look at how you do things. “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently,” Buffett once said. It’s a worthy mission statement for anyone in our business.