business issues Long-Term Thinking Buffett was an impressive long-term thinker, which goes hand-in-hand with steel fabricating. Fabrication companies should think in terms of decades, not months and years. Short-term thinking, such as manipulating work-in-progress reports, will often lead to trouble. Be hon-est with yourself and your partners. Rela-tionships with trade partners and custom-ers take years to build but can be instantly destroyed. Think long-term and build a business based on sustainability. Invest in people, invest in well-constructed CapEx plans that automate, and increase through-put with high long-term ROI. Stick to What You Know In 1996, Buffett’s letter to sharehold-ers described his key to success: “circle of competence.” It may be his most important principle. His letter read: “What an investor needs is the ability to correctly evaluate selected businesses. Note the word ‘selected’: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.” While Buffett is applying the principle to investing, I think it’s also applicable to projects. Understand what projects and work you can do profitably and what proj-ects and work don’t fit your capabilities. I have seen fabricators wade into trouble when they venture outside their circle of competence. You always need to try some-thing new, but that does not mean betting the company’s future on it. Avoid risks with the potential to knock you out of the game. Take a small risk and learn from it. approach to investing, they revolution-ized financial thinking with a long-term perspective. You can apply much of their wisdom in your own business for free with a library card and by watching their infa-mous past annual stockholder meetings on ■ YouTube. Buffett and Munger are two of the greatest business minds of the last century. While they will be remembered for their Legacy John Schuepbach ( johnc@steelmergers.com ) is the director of Phoenix Solutions Group Intl, LLC specializing in M&A and financial consulting with steel fabrication companies. Modern Steel Construction | 21
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