As a billionaire many times over, it can be hard to imagine Warren Buffett thinking a lot about how to invest a few hundred pounds.

In fact, Buffett started investing on a very small scale. He has repeatedly said that he believes he could get strong returns if he only had a small amount to invest. That’s because he could buy shares in companies that, as someone who allocates billions of pounds in assets, he no longer sees as investment opportunities.

So if I had £800 to invest today, here are three lessons I’d learn from Buffett about making it work in the markets. I think it all makes as much sense when investing £800 as £800m!

Stick to what you know

It’s easy to imagine that investing in some little-known company in a fast-growing field could be the path to success in the stock market.

Sometimes it works out that way. But just like Buffett, I like to stick to my own circle of competence. Putting money into a company you don’t understand is not investing in my opinion. It’s speculation.

Do less, not more

One of the interesting things about Buffett’s approach to the stock market is not how active he is, but how inactive.

Buffett spends a lot of time researching companies and staying up to date with what’s going on. But he rarely invests. When he does, he often has his share for decades. Indeed, he has said that his preferred holding period is “forever“.

Instead of buying stocks with the hope of selling them shortly afterwards, I take Buffett’s approach and buy to keep.

Always look for a competitive advantage

When Buffett chooses stocks to buy, he doesn’t just focus on the size of the potential market for a given product or service. He also looks at what competitive advantage a particular company has.

As an example, consider his stock holdings in Coca-Cola (NYSE: KO). Demand for soft drinks is high and likely to remain so for the foreseeable future. But the barriers to entry are low. It is easy for a local entrepreneur to start bottling water and selling it, for example.

But what Coca-Cola has done is develop certain attributes that make it stand out. One is proprietary potion formulas. Another is brands. In addition to that, it has an outstanding global distribution network.

Competitive advantages are important because they help a company differentiate itself from competitors. That can give it pricing power, meaning it has more flexibility to set prices at an attractive profit margin. That may not protect it from market developments, however. One risk for Coca-Cola is the increasing health consciousness of many consumers, which threatens demand for some of its main products.

Coca-Cola has a lot going for it as a company. Pricing power is important, and to achieve it and maintain it, a company usually needs some form of competitive advantage.