Important Business Lessons From The Farm
Growing up on a farm provided me with a wealth of valuable lessons that were based on farm issues, but which have transferred beautifully to virtually every part of my life in the non-farm marketplace. Here are three of those lessons.10 Pigs To The Litter
A young man decided he wanted to raise pigs. Anxious to forecast his impending wealth, his financial assumptions were based on two well-known facts:
1. Sows often give birth to litters of 10 piglets, sometimes even more.
2. It is possible for a sow to give birth to three litters in a year.
Through the magic of multiplication, he began forecasting his potential revenue by multiplying these two assumptions by the number of brood sows his facility would hold. The product of this equation was then multiplied by the market price. Can you say, "Hog heaven?"
Unfortunately, there is one more well known fact that was disregarded by our young agricultural entrepreneur: While his assumptions were quite possible, neither was guaranteed. And in fact, both were highly unlikely.
Financial projections can be a great business tool. Indeed, how could a business plan for the future without being able to forecast the possibilities? But when they are produced with too much enthusiasm and not enough reality, projections can also be dangerous. Many a fortune has been lost by not understanding the folly of forecasting "10 pigs-to-the-litter." The road to bankruptcy is paved with the personal equity of would-be entrepreneurs who did too much multiplying and not enough discounting.
Enter into any venture with the healthy understanding that ALL projections are wrong! And remember: It's okay to plan for great success, but wise farmers prepare for the possibility that they might only average getting 5 pigs-to-the-litter to the market.
The China Egg
"Farm-fresh eggs." Whenever I see those words on a restaurant's breakfast menu, I think back to when that was a daily reality.
But before a farmer can be guaranteed of getting fresh eggs, he or she has to understand that the chicken isn't laying eggs for the benefit of your breakfast, she's only interested in propagation. And if you remove all her eggs, she will quit laying and abandon the nest. Farmers know that if you leave at least one egg in the nest, production will continue.
The problem with this practice is, which egg is the fresh one? The farmer's solution is to leave a china egg in the nest, which the hen doesn't know from a real one. On the farm, china eggs are good.
There are china eggs in business, too. They are the prospects you keep calling on who never buy anything. Sometimes salespeople act like chickens - they don't recognize a china egg prospect from a real one, and keep trying to hatch them.
If you, or one of your salespeople, are investing time and resources in a prospect that never comes through with a contract, identify them as what they are, china eggs that are never going to hatch. Give them your card one last time and tell them to call you when they want to make a purchase.
In the marketplace, china eggs are not good. Spend your time on prospects that will actually hatch.
A Good Bull Is 50% Of Your Herd
A young cattleman was in the process of buying the first bull for his new herd of cattle. Looking over the offerings at a bull sale, the lad struck up a conversation with an elderly man.
"I don't want to put too much into a bull right now," the whippersnapper said, trying to sound like he knew what he was talking about.
With great gentleness, the wise old farmer responded, "Always remember: A good bull is 50% of your herd." To which the greenhorn nodded, as if he already knew that. Then the real-life Yoda hit him with this, " But a bad bull is 100% of your herd."
If you're in the delivery business, eat baloney for lunch if you have to, but buy a good truck. If you're a web site designer, wear out-of-fashion clothes if you have to, but make sure you have the best computer and software capability.
Small business owners always seem to have great needs and limited budgets. The challenge is in how to use that budget effectively.
Take a lesson from that wise old farmer: don't scrimp on the tools around which most of your operation revolves. Besides, baloney's not that bad, and if you wear clothes long enough, they will come back in style.
Write this on a rock... Sophisticated city folk should never look down their noses at their country cousins. Long before there were cities, farmers were identifying some pretty classic rules for life and business.
