Multi-Level Marketing, A great Business Opportunity

An established multi-billion dollar US based company (SYNTEK GLOBAL) has just expanded to Ghana (its first office in AFRICA) and its changing people’s lives by providing the best business opportunity in direct selling and the best Fuel treatment products in the world..... . Its a network marketing system which pays huge the more you bring people on board ( registering 4people attracts $500 so just imagine)An opportunity for vehicle owners to save money on fuel, reduce regular maintenance and a huge opportunity for you to earn $1000 -$40,000+ per month or more working part-time. It's time to mine gold in Ghana....Don't Be Left out….! For more information: Click this link: http:// www.youtube.com/​watch?v=17XiURm4GWk Company's Official Website: www.syntekglobal.com and Call +233543998341 Note: Nigeria and other african countries are virgin lands..... This is great. Inbox me for registeration details

PRETEND TO BE DEAF

Before I begin, let me remind you of this famous story which is told of a group of frogs who were to climb a mountain to the top in order to enjoy good and quality life. Some of them were already at the top and were waiting for the rest.

However these frogs who happened to be on top of started making mockery of thee ones below anytime they fumble in climbing up. The subjection of these frogs by their fellow frogs to ridicule was so intense discouraged and demoralized frogs gave up in reaching the zenith of this mountain. This continued for much a long time until most frogs gave up.

One particular frog, with persistence and perseverance had almost got to the top of this mountain despite these comments and mockery by the ones on top. Finally he got there but surprisingly, they realized he was deaf.

Life is characterized by criticisms from every angle. Whatever you do in life would be subjected to criticisms no matter how intelligent, eloquent, confident, and spiritual or any excellent qualities that you have. You might be criticized constructively or destructively depending on the way the situation is. It's up to you to gear yourself towards being constructively criticized. However you should not let someone who is in his or her comfort zone to take your mind away from your dreams and aspirations. In their book, Defying all Odds Albert and Comfort Ocran made mention of the following quotes which state that, everyone has a mountain to climb, a race to run or a dream to pursue, The strongest force that can propel you to the very top of your field is a desire to reach beyond where everyone else has reached and the pursuit of that dream is burning in your heart.

These quotes clearly show that, you have somewhere to get to and it's obligatory. And in order not to skid off from the road to achieving your dreams you have to pretend to be deaf to get there. You wouldn't even hear anyone criticizing you whatsoever. 

Enjoy!!!                                                                                        

IMAGINATION

See yourself becoming great, see yourself marching into greatness, see that in your mind's eye and you can clearly see a thing in your mind before you can do it. Because that which you don't see, you cannot accomplish....These are words of that have to be subjected to rational thinking.

Most people see the word "IMAGINATION" as a normal word but come to think of it, before you can live a life of purpose and accomplishment, you need to create a room in your brain to cater for your greatness or your "to be" self. With that you get a clear view of what to do right from where you are till you get to the top. For instance, before a potter makes any creative art of pottery or anything, he needs to plan it in his mind already shaped in the brain before bringing it live to existence.

Whatever your goal, purpose in life, plans, objectives, dreams, hopes or aspirations, carefully draft it in your mind's eye before start with its project. For plan is important in all facets of our lives.

Enjoy!!!

BIblical Secret to Wealth Creation I

Forget any ideas you may have about who can be successful! When we make the decision to follow God’s rules our financial success does not depend on our education, sex, race, where you were born, the wealth of your parents or how tough your life has been. None of this matters when we commit to follow God’s rules.

That God shows no favoritism is a message that is clear from the Bible.

In Romans 2:11 we read;

“With God there is no favoritism.”

And from Acts 10:34-35;

“Peter proceeded to address them in these words; “I begin to see how true it is that God shows no partiality. Rather, the man of any nation who fears God and acts uprightly is acceptable to Him.””
Yes it is true some of us will have tougher roads to travel. In the end however, the only person responsible for achieving or not achieving financial success is the one person we see in the mirror every day when we wake up in the morning and go to bed at night.
Remember, success many times comes about because people change the way they think about success. So forget those ideas about success you may have picked up along the way because of the wasted time and money you have spent trying to build a second income with nothing to show for your efforts. Forget ideas about success that try to convince you who can and who can’t be successful.
Learn a new way to financial success that is available to anyone willing to take the time to learn at and to take action!

Let's take a look at this quotation too.

From the book of Isaiah, God professed His utmost love and care for us when He said He knew us right from our mother’s womb (Isaiah 44:1-5, Jeremiah 29:11) and He has good plans for us to bring us to an expected end. From this standpoint we already know God wants us everyone to be successful and rich in life. God has promised virtually everybody with good fortunes and greatness and to enjoy the fatness of the earth He did to Job. In many parts of the Bible, God promises us wealth and success if we adhere to His teachings and warnings.

The book of Joshua in the first chapter coming down to verse 8, God urges us to read and meditate on His word and we will be prosperous and successful.

Simplifying the above quotation, God wants us to study His word continuously, think in depth, analyzing the contents of it and getting what God wants to communicate to you. Automatically, God will open closed doors for us and even provide water us in the desert places.

Know What Success Really Means

 Hi guys this is a very short blog just to remind you of your preparation for success and get a thought-provoking understanding to it..... 

: Despite his wealth, Warren Buffett does not measure success by dollars. In 2006, he pledged to give away almost his entire fortune to charities, primarily the Bill and Melinda Gates Foundation. He's adamant about not funding monuments to himself -- no Warren Buffett buildings or halls. "I know people who have a lot of money," he says, "and they get testimonial dinners and hospital wings named after them. But the truth is that nobody in the world loves them. When you get to my age, you'll measure your success in life by how many of the people you want to have love you actually do love you. That's the ultimate test of how you've lived your life."

Researching and Developing Your Business Ideas

Introduction

Enjoy this post as it serve as a springboard in helping you realise your business dreams.
Developing your business idea into a viable product or service is a critical part of building a business. Thorough assessment and market research at an early stage will help you to establish whether there is a market for your product or service. This guide will help you assess whether your idea can form the foundation for a successful business and put a process in place to monitor and measure its progress. It also has tips on how to finance the development of your idea and how to protect it if other people get involved.

Finding and developing your new idea for a business
A new idea is often the basis for starting up a business. Many entrepreneurs spot a gap in the market and start businesses that provide a product or service that fills it. Others come up with ways to improve an existing product.

Coming up with a new idea
If you want to start a business but don't yet have an idea to work with, there are many ways to go about identifying one. The following questions may help:

• Do you have any particular skills that could form the basis of a new business? Are you aware of a gap in the market in the industry that you currently work in?
• Do you have a hobby that could be turned into a business?
• Has there ever been a time when you needed a particular service or product that nobody else    provides? If you needed it, there is a good chance that other people will too.
• Can you help solve any of the problems posted by government departments and public sector organisations on the Small Business Research Initiative (SBRI) website? SBRI is a government scheme supported by the Technology Strategy Board that awards funding to develop innovative ideas.

Developing your idea
Once you have got a business idea, take time to refine it. This will help you to decide whether it could be the foundation of a successful business. There are various established methods of developing a business idea. You can:

• conduct market research to discover whether your idea fills a gap in the market - see our guide on market research and market reports
• brainstorm your idea with friends, colleagues or staff - they can give different perspectives on the idea and may know if anyone else is doing the same thing
• think about whether your idea can take advantage of an opportunity created by new technologies, e.g. by trading online consider whether social trends will affect demand for your product, e.g. the increasing demand for organic food or concerns about global warming and carbon footprints

Support for businesses developing new ideas
Designing Demand is a practical mentoring programme developed to help small to medium-sized businesses and technology start-ups use design to improve performance. It helps businesses embed effective processes for the management of design and innovation and gives managers the skills to exploit design by spotting opportunities, briefing designers and running projects that deliver. Designing Demand is part of a range of support offered to businesses in England through the government's new Solutions for Business portfolio.
Is there a market for my idea?
There are certain criteria you can use to establish whether there is a market or demand for your product or service:

• Does it satisfy or create a market need?
• Can you identify potential customers?
• Will it outlive passing trends or capitalise on the trend before it dies away?
• Is it unique, distinct or superior to those offered by competitors?
• What competition will it face - direct or indirect, local, national or global?
• Is the product safe for public use and does it comply with relevant regulations and legislation? Seek legal advice before proceeding.
• Will the market want your product or service at a realistic price?

Market research can play an important role in answering many of these questions and increasing your chances of success. It is much better to invest time researching before you invest your money. Market research techniques can be basic or sophisticated. You could:

• canvass the opinion of friends and colleagues
• survey the public about whether they would use the product or service
• ask customers of competing products what improvements they would like to see
• use focus groups to test your product or service
• monitor your competitors' activities
• look at what has and hasn't worked in your industry or market niche
• hire a market research agency
• try a small scale trial launch - perhaps through your own website or one of the online outlet or auction sites

It is very important that you are as thorough in your market research as possible, as mistakes made at this stage of development could prove costly later on. Remember, the more information you have, the better you will be able to understand your potential customers, the marketplace and how your product fits in. For more information, see our guide on common mistakes when starting up - and how to avoid them.

Plan the development of your idea
Try to identify the key stages or checkpoints in the development of your idea. Each checkpoint gives you a chance to evaluate the progress of your product or service and decide whether you need to make any changes. It will also allow you to consider at the end of each stage whether to progress with the idea. Any idea that has no realistic chance of success should be dropped before too much time or money is invested. Your checkpoints may include:

• designing - turning your idea into a product or service that can actually be sold
• prototyping - creating a usable example of your product or service, which can then be tested
• protecting - applying for a patent if you have invented a product or type of technology
• financing - raising the money you will need to get your business started
• operations - setting up the structure of your business, eg finding a suitable location, hiring staff, etc
• marketing - working out how you will sell your product or service

Judge your progress
If the goals of any of your checkpoints are not met, you need to analyse why this is the case. Ask yourself whether your objectives were unreasonable. If so, you may need to revise your objectives.
There are circumstances when you should reconsider your original idea. These include:

• developing a product or service that isn't commercially viable and won't produce a reasonable financial return
• developing a product that is not technically viable, e.g. it cannot be manufactured or it doesn't meet performance requirements
• someone else releasing a product or service which is very similar or identical to yours, especially if they are a large or well-established competitor

Finance the development of your idea
Securing adequate funding is one of the biggest obstacles many entrepreneurs face. Your funding needs may also change during the course of product development as it may take longer or cost more than you first expected. Loans and overdrafts are the most common ways to raise money for a new business.

Government support to help you develop your idea
There are plenty of other ways to raise the finance you need, especially when setting up a new business. Grants and government schemes offering support to new businesses are widely available. For example, the Small Business Research Initiative (SBRI) provides funding for innovative products that could help solve a specific government or public sector problem. Successful applicants receive a development contract and 100 per cent funding to demonstrate feasibility and develop a prototype. Read about support for innovation in our guide on government support for businesses or you can see the page on the Small Business Research Initiative in our guide on support networks and facilities for innovation and R&D.

Other sources of finance to help you develop your idea
As well as loans, overdrafts and government sources of finance, you could also investigate:

• realising, or cashing in, the value of shares
• investment from business angels or venture capitalists
• family loans
• joint ventures
• remortgaging your property
• bank loans

You should build into your financial forecasts a generous margin for contingencies and the unexpected. It's not worth investing your money and then running out before you have completed the development stage. You should look at the state of your funding at each development stage or checkpoint to help evaluate your finance options.

Business plan
Whenever you approach banks, potential investors, business partners or government departments for money you will need to show them a business plan. This should explain:

• the goals of your business
• what the purpose of the business is
• your marketing plan
• what you intend to spend the invested or borrowed money on
• how this will benefit both the business and the investor or lender
• how you intend to repay any lenders

Sharing your ideas with others
At some stage you will probably wish to discuss your idea with a third party. This could be informally, such as seeking advice or encouragement from friends or family, or formally, by hiring a professional consultant, talking to your solicitor or accountant or forming a partnership or joint venture with another company.

• Remember, once you put an idea into the public domain it can no longer be considered confidential or a trade secret. You should therefore take steps to protect your intellectual property.
• Before talking to third parties, it is a good idea to ask them to sign a non-disclosure agreement to prevent them from sharing the details of your confidential discussion with others. See our guide on non-disclosure agreements.

Intellectual property
Your intellectual property is what sets you apart from competitors. It could be your company brand, invention, design or creative work. Protecting your intellectual property makes strong business sense.
Remember that you cannot protect an idea in its own right but you can protect the tangible work that you do to realise your idea. There are several legal ways to do this:

• trademarks restrict others from using your brand or logo
• copyright protects original literary, dramatic, musical and artistic works
• patents protect inventions
• design rights and registration protect a product's appearance

If you form a partnership or joint venture, draw up a contract defining who owns the idea and what the share of future profits will be. You must seek professional legal advice before taking any final decisions. A good place to start is by contacting your local Business Link. You can also contact The Intellectual Property Office with your queries. They can help you protect your brand, creative work or invention. You can apply for intellectual property rights including patents, designs, trademarks and copyright on the Intellectual Property Office website - Opens in a new window.

Test the market
Product testing is important throughout the design process. While you are developing your product or service it's a good idea to keep testing the market to make sure you are still on the right track. You can do this by using:

• Focus groups - ask small groups of your target customers what they want from your product or service.
• Questionnaires - try to get as wide a sample as possible.
• Prototypes - show an early version of your product to customers. You may find that your prototype will go through several stages of development as you refine your idea.

You may need to respond to suggestions from users by modifying the design. Don't be discouraged, as most successful entrepreneurs do not view this as a failure, but as a learning curve. It's a good idea to send your product to a large or very reputable potential customer or user. A positive testimonial will prove invaluable as you approach other customers. You may want to consider testing even after your product goes on sale. Ongoing contact with customers can uncover both the shortcomings of your product and possible opportunities that you may have missed.

Once you have a final product, you can then set about building a brand. A brand includes everything that is visible to the customer, such as the product name, its packaging and its delivery.

You also need to consider your pricing policy. You need to cost all the materials, other inputs, machinery, processes and administrative time realistically. You will need to research different suppliers and the cost of marketing and distribution. Then check on the price at which your competitors are selling to customers. You can determine the price of your product or service so that it is attractive to customers as well as making you a profit.

The Science Of Getting Rich (Right to be rich)

Enjoy this post.........................  1. WHATEVER may be said in praise of poverty, the fact remains that it is not possible to live a really complete or successful life unless one is rich. No man can rise to his greatest possible height in talent or soul development unless he has plenty of money; for to unfold the soul and to develop talent he must have many things to use, and he cannot have these things unless he has money to buy them with. 2. A man develops in mind, soul, and body by making use of things, and society is so organized that man must have money in order to become the possessor of things. Therefore, the basis of all advancement for man must be the science of getting rich. The object of all life is development; and everything that lives have an inalienable right to all the development it is capable of attaining. Man’s right to life means his right to have the free and unrestricted use of all the things which may be necessary to his fullest mental, spiritual, and physical development; or, in other words, his right to be rich. 3. In this post, I shall not speak of riches in a figurative way. To be really rich does not mean to be satisfied or contented with a little. No man ought to be satisfied with a little, if he is capable of using and enjoying more. The purpose of Nature is the advancement and improvement of life. And all men and women should have all that can contribute to the power; elegance, beauty, and richness of life. To be content with little is sinful. 4. The man who owns all he wants in order to live all the life he is capable of living is rich. Life has advanced so far, and become so complex, that even the most ordinary man or woman requires a great amount of wealth to live in a manner that even approaches completeness. Every person naturally wants to become all that they are capable of becoming; this desire to realize innate possibilities is inherent in human nature; we cannot help wanting to be all that we can be. Success in life is becoming what you want to be; you can become what you want to be only by making use of things, and you can have the free use of things only as you become rich enough to buy them. To understand the science of getting rich is therefore the most essential of all knowledge. 5. There is nothing wrong in wanting to get rich. The desire for riches is really the desire for a richer, fuller, and more abundant life; and that desire is praise worthy. The man who does not desire to live more abundantly is abnormal, and so the man who does not desire to have money enough to buy all he wants is abnormal. 6. There are three motives for which we live; we live for the body, we live for the mind, we live for the soul. No one of these is better or holier than the other; all are alike desirable and no one of the three—body, mind, or soul—can live fully if either of the others is cut short of full life and expression. It is not right or noble to live only for the soul and deny mind or body; and it is wrong to live for the intellect and deny body or soul. We are all acquainted with the loathsome consequences of living for the body and denying both mind and soul; and we see that real life means the complete expression of all that man can give forth through body, mind, and soul. Whatever he can say, no man can be really happy or satisfied unless his body is living fully in every function, and unless the same is true of his mind and his soul. Wherever there is unexpressed possibility, or function not performed, there is unsatisfied desire. Desire is possibility seeking expression, or function seeking performance. 7. Man cannot live fully in body without good food, comfortable clothing, and warm shelter; and without freedom from excessive toil. Rest and recreation are also necessary to his physical life. He cannot live fully in mind without books and time to study them, without opportunity for travel and observation, or without intellectual companionship. To live fully in mind he must have intellectual recreations, and must surround himself with all the objects of art and beauty he is capable of using and appreciating. To live fully in soul, man must have love; and love is denied expression by poverty. A man’s highest happiness is found in bestowing benefits on those he loves. Love finds its most natural and spontaneous expression in giving. The man who has nothing to give cannot fill his place as a husband or father, as a citizen, or as a man. 8. It is in the use of material things that a man finds full life for his body, develops his mind, and unfolds his soul. It is therefore of supreme importance to him that he should be rich. It is perfectly right that you should desire to be rich; if you are a normal man or woman you cannot help doing so. It is perfectly right that you should give your best attention to the Science of Getting Rich, for it is the noblest and most necessary of all studies. If you neglect this study, you are derelict in your duty to yourself, to God and humanity; for you can render to God and humanity no greater service than to make the most of yourself.

COMMUNICATION

                          COMMUNICATION

Communication is the activity of conveying meaningful information. Communication requires a sender, a message, and an intended recipient, although the receiver need not be present or aware of the sender's intent to communicate at the time of communication; thus communication can occur across vast distances in time and space. Communication requires that the communicating parties share an area of communicative commonality. The communication process is complete once the receiver has understood the message of the sender.

1. An information source, which produces a message.
2. A transmitter, which encodes the message into signals
3. A channel, to which signals are adapted for transmission
4. A receiver, which 'decodes' (reconstructs) the message from the signal.
5. A destination, where the message arrives.

The history of communication dates back to prehistory. Communication can range from very subtle processes of exchange, to full conversations and mass communication. Human communication was revolutionized with speech perhaps 200,000 years ago ^{citation needed} Symbols were developed about 30,000 years ago ^[1], and writing about 7,000. On a much shorter scale, there have been major developments in the field of telecommunication

Ways We Communicate:

1. Talking
2. Hand Gestures
3. Colour Codes
4. Music
5. Drawings
6. Cards
7. Text Messaging
8. E-Mail
9. Telecommunications
10. Phone Call

Types of Business Communication

There are two types of business communication in an organization:

1. Internal Communication
2. External Communication

1. Internal Communication

Communication within an organization is called "Internal Communication".

It includes all communication within an organization. It may be informal or a formal function or department providing communication in various forms to employees.

Effective internal communication is a vital mean of addressing organizational concerns. Good communication may help to increase job satisfaction, safety, productivity, and profits and decrease grievances and turnover.

Under Internal Business Communication types there come;

a) Upward Communication
b) Downward Communication
c) Horizontal/Literal communication

a) Upward Communication

Upward communication is the flow of information from subordinates to superiors, or from employees to management. Without upward communication, management works in a vacuum, not knowing if messages have been received properly, or if other problems exist in the organization.

By definition, communication is a two-way affair. Yet for effective two-way organizational communication to occur, it must begin from the bottom.

Upward Communication is a mean for staff to:

o Exchange information

o Offer ideas

o Express enthusiasm

o Achieve job satisfaction

o Provide feedback

b) Downward Communication

Information flowing from the top of the organizational management hierarchy and telling people in the organization what is important (mission) and what is valued (policies).

Downward communication generally provides enabling information - which allows a subordinate to do something.

e.g.: Instructions on how to do a task.

Downward communication comes after upward communications have been successfully established. This type of communication is needed in an organization to:

Ø  Transmit vital information

Ø  Give instructions

Ø  Encourage 2-way discussion

Ø  Announce decisions

Ø  Seek cooperation

Ø  Provide motivation

Ø  Boost morale

Ø  Increase efficiency

Ø  Obtain feedback

Both Downward & Upward Communications are collectively called "Vertical Communication"

c) Horizontal/Literal communication

Horizontal communication normally involves coordinating information, and allows people with the same or similar rank in an organization to cooperate or collaborate. Communication among employees at the same level is crucial for the accomplishment of work. Horizontal Communication is essential for:

o Solving problems

o Accomplishing tasks

o Improving teamwork

o Building goodwill

o Boosting efficiency

2. External Communication

Communication with people outside the company is called "external communication". Supervisors communicate with sources outside the organization, such as vendors and customers.
It leads to better;

o Sales volume

o Public credibility

o Operational efficiency

o Company profits

It should improve

o Overall performance

o Public goodwill

o Corporate image

Ultimately, it helps to achieve

o Organizational goals

o Customer satisfaction

In short, there are four main types of communication; these consist of written, verbal,computerised and special methods. (Verbal can be split into two groups; verbal and non-verbal) Non-verbal communication involves things such as body language, crossing your arms, having your hands in your pockets, crossing your legs, eye contact etc.

WARREN BUFFET's STYLE OF INVESTMENT (How He Does It)

Did you know that a $10,000 investment in Berkshire Hathaway in 1965, the year Warren Buffett took control of it, would grow to be worth nearly $30 million by 2005? By comparison, $10,000 in the S&P 500 would have grown to only about $500,000. Whether you like him or not, Buffett's investment strategy is arguably the most successful ever. With a sustained compound return this high for this long, it's no wonder Buffett's legend has swelled to mythical proportions. But how the heck did he do it? In this article, we'll introduce you to some of the most important tenets of Buffett's investment philosophy. (For more on Warren Buffett and his current holdings, check out Coattail Investor.)

Buffett's Philosophy
Warren Buffett descends from the Benjamin Graham school of value investing. Value investors look for securities with prices that are unjustifiably low based on their intrinsic worth. When discussing stocks, determining intrinsic value can be a bit tricky as there is no universally accepted way to obtain this figure. Most often intrinsic worth is estimated by analyzing a company's fundamentals. Like bargain hunters, value investors seek products that are beneficial and of high quality but underpriced. In other words, the value investor searches for stocks that he or she believes are undervalued by the market. Like the bargain hunter, the value investor tries to find those items that are valuable but not recognized as such by the majority of other buyers.

Warren Buffett takes this value investing approach to another level. Many value investors aren't supporters of the efficient market hypothesis, but they do trust that the market will eventually start to favor those quality stocks that were, for a time, undervalued. Buffett, however, doesn't think in these terms. He isn't concerned with the supply and demand intricacies of the stock market. In fact, he's not really concerned with the activities of the stock market at all. This is the implication this paraphrase of his famous quote : "In the short term the market is a popularity contest; in the long term it is a weighing machine."(see What Is Warren Buffett's Investing Style?)

He chooses stocks solely on the basis of their overall potential as a company - he looks at each as a whole. Holding these stocks as a long-term play, Buffett seeks not capital gain but ownership in quality companies extremely capable of generating earnings. When Buffett invests in a company, he isn't concerned with whether the market will eventually recognize its worth; he is concerned with how well that company can make money as a business.

Buffett's Methodology

Here we look at how Buffett finds low-priced value by asking himself some questions when he evaluates the relationship between a stock's level of excellence and its price. Keep in mind that these are not the only things he analyzes but rather a brief summary of what Buffett looks for:

1. Has the company consistently performed well?
Sometimes return on equity (ROE) is referred to as "stockholder's return on investment". It reveals the rate at which shareholders are earning income on their shares. Buffett always looks at ROE to see whether or not a company has consistently performed well in comparison to other companies in the same industry. ROE is calculated as follows:
= Net Income / Shareholder's Equity


Looking at the ROE in just the last year isn't enough. The investor should view the ROE from the past five to 10 years to get a good idea of historical performance.

2. Has the company avoided excess debt?
The debt/equity ratio is another key characteristic Buffett considers carefully. Buffett prefers to see a small amount of debt so that earnings growth is being generated from shareholders' equity as opposed to borrowed money. The debt/equity ratio is calculated as follows:
= Total Liabilities / Shareholders' Equity


This ratio shows the proportion of equity and debt the company is using to finance its assets, and the higher the ratio, the more debt - rather than equity - is financing the company. A high level of debt compared to equity can result in volatile earnings and large interest expenses. For a more stringent test, investors sometimes use only long-term debt instead of total liabilities in the calculation above.

3. Are profit margins high? Are they increasing?
The profitability of a company depends not only on having a good profit margin but also on consistently increasing this profit margin. This margin is calculated by dividing net income by net sales. To get a good indication of historical profit margins, investors should look back at least five years. A high profit margin indicates the company is executing its business well, but increasing margins means management has been extremely efficient and successful at controlling expenses.


4. How long has the company been public?
Buffett typically considers only companies that have been around for at least 10 years. As a result, most of the technology companies that have had their initial public offerings (IPOs) in the past decade wouldn't get on Buffett's radar (not to mention the fact that Buffett will invest only in a business that he fully understands, and he admittedly does not understand what a lot of today's technology companies actually do). It makes sense that one of Buffet's criteria is longevity: value investing means looking at companies that have stood the test of time but are currently undervalued.

Never underestimate the value of historical performance, which demonstrates the company's ability (or inability) to increase shareholder value. Do keep in mind, however, that the past performance of a stock does not guarantee future performance - the job of the value investor is to determine how well the company can perform as well as it did in the past. Determining this is inherently tricky, but evidently Buffett is very good at it.

5. Do the company's products rely on a commodity?
Initially you might think of this question as a radical approach to narrowing down a company. Buffett, however, sees this question as an important one. He tends to shy away (but not always) from companies whose products are indistinguishable from those of competitors, and those that rely solely on a commodity such as oil and gas. If the company does not offer anything different than another firm within the same industry, Buffett sees little that sets the company apart. Any characteristic that is hard to replicate is what Buffett calls a company's economic moat, or competitive advantage. The wider the moat, the tougher it is for a competitor to gain market share.

6. Is the stock selling at a 25% discount to its real value?
This is the kicker. Finding companies that meet the other five criteria is one thing, but determining whether they are undervalued is the most difficult part of value investing, and Buffett's most important skill. To check this, an investor must determine the intrinsic value of a company by analyzing a number of business fundamentals, including earnings, revenues and assets. And a company's intrinsic value is usually higher (and more complicated) than its liquidation value - what a company would be worth if it were broken up and sold today. The liquidation value doesn't include intangibles such as the value of a brand name, which is not directly stated on the financial statements.

Once Buffett determines the intrinsic value of the company as a whole, he compares it to its current market capitalization - the current total worth (price). If his measurement of intrinsic value is at least 25% higher than the company's market capitalization, Buffett sees the company as one that has value. Sounds easy, doesn't it? Well, Buffett's success, however, depends on his unmatched skill in accurately determining this intrinsic value. While we can outline some of his criteria, we have no way of knowing exactly how he gained such precise mastery of calculating value. (To learn more about the value investing strategy of selecting stocks, check out our Guide To Stock-Picking Strategies.)

Conclusion

As you have probably noticed, Buffett's investing style, like the shopping style of a bargain hunter, reflects a practical, down-to-earth attitude. Buffett maintains this attitude in other areas of his life: he doesn't live in a huge house, he doesn't collect cars and he doesn't take a limousine to work. The value-investing style is not without its critics, but whether you support Buffett or not, the proof is in the pudding. As of 2004, he holds the title of the second-richest man in the world, with a net worth of more $40 billion (Forbes 2004). Do note that the most difficult thing for any value investor, including Buffett, is in accurately determining a company's intrinsic value.

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