The To-Do List Exercise That Helped Warren Buffett Build a Billion-Dollar Business
Plenty of business owners are efficient. They religiously structure their Google Calendars. They check items off their to-do lists. In short, they get stuff done.
Simple time tracking that syncs with payroll.
But being efficient doesn’t mean you’re always effective.
What’s the difference? Effective business owners complete the right tasks. They execute and implement on the things that make the biggest difference for their businesses—and themselves.
In other words, it’s not what they do that makes an impact. It’s what they don’t do.
For billionaire investor Warren Buffett, that means ruthlessly prioritizing what he does do, so he can build his company, spend nearly 80 percent of his day reading, and maintain a nearly empty calendar while he’s at it.
Here’s how to incorporate Buffett’s brilliant prioritization strategy into your own business.
Warren Buffett’s approach to to-do lists
The story goes like this. Buffett’s personal pilot, Mike Flint, once asked him how to prioritize his career goals.
Buffett told him to take the following steps:
- Step 1: Write down your top 25 goals on a piece of paper.
- Step 2: Circle the five goals that matter most and would make the biggest impact.
- Step 3: Start two new lists. Write the five goals on one list, and then put the other 20 on a second list.
Flint agreed to work on his top five goals. But since he really did want to accomplish the 20 other goals, he told Buffett he would also work on them along the way. The top five would get most of his attention, but since they were also important, he wouldn’t totally ignore the other twenty.
Buffett shook his head.
“You’ve got it wrong, Mike,” he said. “Everything you didn’t circle just became your Avoid-At-All-Cost list. No matter what, those things get no attention from you until you’ve succeeded with your top five.”
Yep. The other 20 items, no matter how seemingly important, go on your Not To-Do list.
Why the best to-do list is a not-to-do list
Stop thinking that a massive to-do list is a sign of your seriousness, ambition, or importance as an entrepreneur. “It’s not a proxy of your seriousness that you fill every minute in your schedule,” says Buffett.
While it sounds counterintuitive, limiting the items on your to-do list is an extremely effective way to increase your productivity. (Keep in mind there’s a difference between tasks and goals. “Open a new location” is a long-term goal that requires multiple steps to get there.)
That’s why your to-do list should only include tasks, not high-level goals.
For example, say you want to start an ecommerce business. Your to-do list might look like this laundry list of things below.
1. Find funding
2. Create a business budget
3. Pick a business name
4. Pick the right business entity
5. Set up your business
6. Buy your domain name
7. Set up your business email account
8. Set up a Fulfilled by Amazon (FBA) account
9. Decide on the best shipping carrier
10. Pick your CRM software
11. Get a business credit card
12. Open a business bank account
13. File your business taxes
14. Pay yourself
15. Find your own office space
16. Brush up on your online marketing skills
17. Establish a strict daily/monthly schedule
18. Determine which functions to outsource
19. Hire a contractor
20. List your products
21. Develop your brand identity
22. Find an A/B testing tool
23. Set up partnerships with companies in your space
24. Create a long-term marketing plan
25. Launch your ecommerce site
While everything on the list makes sense, trying to do a little of everything at once is a recipe for failure. Plus, achieving some goals creates the foundation for achieving other goals.
“Evaluate lease terms to make a final decision about a store location” is a step that sets the stage for a number of other steps in the process. Which, in Buffett’s view, means if “select location” is on your to-do list… things like “develop year-five marketing plan” definitely does not.
So which five items should go on your to-do list?
1. Establish a strict daily/monthly schedule. (Because time management will be critical, and because you still need to crush your full-time job.)
2. Set up a FBA account. (It’s an easy way to gain experience and see what works and what doesn’t.)
3. Set up your business. (You absolutely need to get your business license, among other things.)
4. Develop your online marketing skills. (This is the only way people will find out about your business.)
5. Find an A/B testing tool. (Because the only way to know what works is to have data that shows what works.)
Set up a schedule you’ll follow consistently. Get your administrative ducks in a row. Start selling products, start marketing those products, test to see what works and what doesn’t—those are the first steps in building a successful ecommerce business.
Get those under your belt and then you can shift your focus to the other bullets on your list. Why? Because you have to have a business before you can work to grow that business.
Still not convinced Buffett’s approach works?
Then try this.
- Create a to-do list for tomorrow.
- Circle the two or three most important tasks from the list—the tasks you absolutely must get done.
- Write those three items down on another piece of paper or in a doc.
That is your to-do list for the day.
The rest of the items you originally listed? Keep them on a separate sheet of paper. You may work on those things, but only after you’ve knocked off the first two or three items on your to-do list.
Or you can take it to the next level.
1. Create a to-do list and circle the one thing you need to accomplish most.
This is the task that will create the most value for your business. It’s the task that solves the biggest problem, generates the most revenue, or lays the best foundation for future success.
It’s not creating esoteric spreadsheets because you like creating spreadsheets. It’s not creating detailed reports because you like creating detailed reports. And it’s definitely not spending time “networking” on social media because, well, you like social media.
For a small business owner, your most important activities always involve generating revenue—or if you can’t generate revenue, on keeping costs as low as possible. Like working to reduce accounts receivable. Or to negotiate a better maintenance contract with a supplier. Or streamlining (not expanding) reporting systems so your employees can focus more on work and less on administrative tasks.
2. Plan to tackle that item first.
Write out exactly what you have to do to take care of your tasks. Make sure all the tools you need are available. Don’t ease into your day; prime yourself so you can start the day at an all-out sprint.
3. When your workday starts, actually tackle that task.
Do that every day and you’ll be much more successful.
- One, you won’t just have gotten something done; you will have gotten the right thing done, which will only get more important as your business grows.
- And two, tackling the most important thing you need to do sets the tone for the rest of the day.
To paraphrase Isaac Newton, a body in effective motion tends to stay in effective motion.
That’s why I always pick an important task I need to get done, and plan to do it first thing. And it ensures that I stay focused on getting the right things done.
Which, for a small business owner, is the key to short-term and long-term success. The average entrepreneur’s to-do list is huge. But there’s a difference between the things you could do and the things you absolutely need to do.
Pick the five you need to do the most—and do those. Then you can work on a new list of five.
Keep doing that, and someday you’ll look back and realize just how much your business has grown—and you’ll know how to ensure it keeps growing. (Thanks, Warren.)
Five to-do list items at a time.