In his widely read annual letter to shareholders, Warren Buffett often includes a few folksy comments that provide pearls of wisdom and common sense for all of us.  One of my favorite pearls is  - "It's only when the tide goes out that you learn who's been swimming naked."

Below are a few pearls of wisdom for entrepreneurs (and all of us) that appear in Mr. Buffett's 2009 annual letter to Berkshire Hathaway's shareholders.

On Measuring Performance...

From the start [we] have believed in having a rational and unbending standard for measuring what we have - and have not - accomplished. That keeps us from the temptation of seeing where the arrow of performance lands and painting the bull's eye around it.

On Risk and Mistakes...

"[We] avoid businesses whose futures we can't evaluate, no matter how exciting their products may be. In the past, it required no brilliance ... to foresee the fabulous growth that awaited such industries as autos (in 1910), aircraft (in 1930) and television sets (in 1950). But the future also included competitive dynamics that would decimate almost all of the companies entering those industries.... At Berkshire we will stick with businesses whose profit picture for decades-to-come seems reasonably predictable. Even then, we will make plenty of mistakes."

On Delegation and Empowerment...

"We tend to let our many subsidiaries operate on their own, without our supervising and monitoring them to any degree. That means we are sometimes late in spotting management problems ....  Most of our managers, however, use the independence we grant them magnificently, rewarding our confidence by maintaining an owner oriented attitude that is invaluable and too seldom found in huge organizations. We would rather suffer the visible costs of a few bad decisions than incur the many invisible costs that come from decisions made too slowly - or not at all - because of a stifling bureaucracy."

On Liquidity and Peace of Mind...

"We will never become dependent on the kindness of strangers.... Instead, we ... arrange our affairs so that any requirements for cash we may conceivably have will be dwarfed by our own liquidity. Moreover, that liquidity will be constantly refreshed by a gusher of earnings from our many and diverse businesses....The $20 billion-plus of cash equivalent assets we customarily hold is earning a pittance at present. But we sleep well."