Warren Buffett CEO, Berkshire Hathaway: It Takes 20 Years to Build a Reputation and Five Minutes to Ruin It. If You Think About That, You'll Do Things Differently

Reputation lessons from Warren Buffett

Applies to every aspect of life

Warren Buffett, the CEO of Berkshire Hathaway, is one of today’s most respected businessmen—and he got that way, in large part, by placing a premium on the importance of reputation.

One consistent theme in that advice is the value of a good reputation. Simply put, your reputation, and/or the reputation of your business, are among the most important factors in determining whether or not you are successful.

If your firm has a strong culture of honesty and transparency, then everyone who deals with your firm will witness it and remember it the next time they need a product or service you offer. In fact, according to a 2016 report by the Temkin Group, 86 percent of customers who have good experiences with businesses choose to buy from those firms again, and more than 75 percent of these happy clients will tell others about their positive experiences.

Executives have a public profile to think about, but they also deal with customers and employees. It’s much easier to ruin a reputation you have spent decades building than it is to build one up. Unfortunately, by the time some managers learn this lesson, it’s too late for them.

If a customer associates your brand with dishonesty or obfuscation, then the negative association will linger in his or her mind, thus making it incredibly difficult to win back the person’s trust. According to a Zendesk study (PDF), 95 percent of individuals who had poor experiences also share their stories on review sites, which can cause potential customers to avoid your business.

While this doesn’t appear to be about reputation on its face, it actually is because Buffett’s advice here is a great way to improve your company’s image. All interaction customers have with your employees has the potential to shape what the public thinks of you. Therefore, you need to make sure that all your employees, from the mail clerk to the CEO, display the highest levels of integrity and responsibility. Merely saying that you “truly value your clients” in your mission statement isn’t enough to offset the fact that your customer support team is rude or ill-trained.

Warren Buffett on reputation: lose a shred and I will be ruthless (1991)

The most important thing to remember about your company’s reputation is that it is fragile. Don’t rely on your past successes to shield you from future problems. To protect your reputation, you need to be proactive; this means you must constantly monitor what others are saying about your business and respond professionally to negative comments and reviews right away.

Buffett often said that he could rather lose a lot of money than integrity and reputation. It is way easier to make money back than reputation. Unlike other good traits like energy and intelligence, integrity is a personal choice. The choice can make or break a reputation.

Further, you need to actively promote a positive online presence. This might include answering questions on a business forum, posting informative blogs on your site and others, or supporting charitable efforts in the community—as long as it helps you establish your business as an authority in its field.

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