Warren Buffett Way : Buy a business, not a stock

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This step has a proper methodology to follow. Warren Buffett way says that a person should always buy a business and should not use stock or some other weird name. Invest in simple businesses: You should know how the business makes money, most of the investors put their money in companies without knowing how it earns money. One should have a clear answers of following questions relating to the business you want to invest in.
1. Is business simple and understandable?
2. Does the business have consistent operating history?
3. Does the business have favourable long-term prospects?

From company's management point of view following answers should be clear in one's mind
1. Is board of directors rational?
2. Is Board/management candid with shareholders?
3. Does management resist the institutional imperative?

 Investor should understand finances of the business and no doubt regarding same should be present
1. Management focus on equity, not earnings per share.
2. calculate "owner earnings"
3. Look for companies with high profit margins
4. For every rupee retained make sure the company has created at least one rupee of market value.

 Stock market valuation
1. What is the value of business, one should make sure that the business should be undervalued at time of purchasing.

Step 1 : Turn off stock market
Step 2 : Don't worry about the economy
Step 3 : Buy a business, not a stock
Step 4 : manage a portfolio of businesses