Warren Buffet, Doughnuts & the Circle of Competence: An Entrepreneurial “Danger Zone” You Must Avoid

Have you heard of the Circle of Competence?

It’s Warren Buffet’s conceptual model that’s visually represented by an image of an outer circle and an inner circle (you can watch me explain the Circle of Competence with a delicious, chocolate blueberry doughnut in the video :)).

The smaller inner circle represents what we do know while the much larger outer circle symbolizes the massive amount we don’t know.

The Circle of Competence applies in the world of finance and investment and it certainly applies in the world of business. 

Here’s how the Circle plays out with entrepreneurs…

You’ve probably noticed (and I’m guessing — like me — you’re guilty of doing it yourself!) entrepreneurs tend to get caught up in a crazy rush to start and grow their business.

Even when we work with business strategies we don’t fully understand we jump right in and implement them asap…

We rush into the business danger zone of unknown ideas and strategies.

We think, “I want results and I want it now!” and start doing everything super fast — whether we know what we’re doing or not — and end up building a business “fast food” style.

But as Warren Buffett says,

“No matter how great the talent or the effort some things just take time. You can’t produce a baby in one month by getting nine women pregnant.”

That may seem like an obvious statement yet so many of us forget that it’s true. We believe we can create something truly great — something meaningful — at breakneck speed.

But that’s never going to happen.

Warren Buffet also says, “I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. So, I do more reading and thinking and make fewer impulse decisions than most people in business.”

This is how the world’s greatest investor and money master avoids making mistakes with the billions of dollars he’s investing.

So, here’s what I want for you…

I want you to lean into your zone of genius as you tackle unknown strategies such as new sales and marketing techniques to grow your business.

As you head into unchartered territory – the “danger zone” –  of unknown business strategies and activities, I want you to stop, think and lead with what you do know.

I want you to give yourself permission to sit down and reflect. To take your time and learn what you need to know so you can take action on the right techniques and ideas for your business.

You have to wait 9 months to welcome a beautiful baby into your life and sometimes your business needs the same thing…

Time and space to gestate and become something beautiful in your life.

So, what’s in your Circle of Competence?

Don’t worry too much about what you don’t know right now.

Reflect on what you DO know better than anybody else and how you can lead with that to build a meaningful, successful business…

Then go ahead and take a moment to brag in the comments!

I want to know all about YOUR genius and expertise — the things you do better than anyone else 🙂