To mitigate the risk of getting sued by Dave Pratt, I better give credit where credit is due — that is let’s talk about, “workin’ on the business.” That’s right business planning, office work, cost of production analysis and marketing. These are the most favourite and sought after chores that ranchers and farmers around the world love to do, right after fencing, feeding and seeding! I may sound a bit facetious, however, the fact is nowhere else in my business do I make better returns for my time then when I am sitting down in front of my computer, figuring out what works, what doesn’t, what I should do more of and what I should do less of.
Throughout the year I spend a lot of time in the office. In fact, this past year I spent so much time in the office that I had to toss my antique oak office chair for an orthopedic/ergonomically correct chair. I was getting a bad back from slouching and kicking my feet up on the desk. A large percentage of the time I spend is related to our branded beef program. However, as much time is also spent working on all our other ventures. There are things I enjoy doing and there are things that I have to force myself to stay on top of — keeping on top of the bookwork can sometimes be a chore, however, when the numbers are all entered it makes for an interesting story and time well spent.
Typically what I find all comes down to what Vilfredo Pareto discovered 100 years ago — the 80/20 rule, or better known as Pareto’s Rule. Looking at the income side of the equation I most always find that 80 per cent of it comes from things that take me less than 20 per cent of my time. Then on the flip side there are things that only make up 20 per cent of our income yet consume 80 per cent of our time. So I guess if I were smart, I should just focus on the big income drivers that make the 80 per cent part and forget the rest. This may make sense if I were to look at it with a one-year perspective. However, as many of you well know, not ever year is like the next and having all your eggs in one basket can also be very risky.
As important as it is to optimize the biggest-bang-for-the-buck model, I also know risk mitigation and it is just as important to have diversified income streams in our business plan. Every year it seems a different enterprise will dominate the others and yet in the span of one year, because of changes in market demands, it can be reversed. Sometimes I have a brain lapse and think that being debt free would make life much simpler. At that point I suck back some coffee and realize that provided that debt is manageable and that there is steady cashflow I shouldn’t get too worried about it. In other words, “are we looking at it with a return to assets versus the cost of carrying the debt basis.” To me cashflow is king; however cashflow can also be a double-edged sword, because diversification can also lead to subsidization.
I have seen it all too often — parts of ranches/farms that make money that are then used, many times unknowingly to mask and give a blood transfusion to parts that are big time money pits and that can’t stand on their own. We need to look at our office and management time like being a coronary specialist. We should constantly be dissecting and analyzing our businesses — in a metaphorical sense; analyzing where the blood is being produced, where it is flowing and how to keep the pressure stable!
So hopefully I have convinced all of you to take your office job of “workin’ on the business” more seriously. I know it doesn’t happen overnight but I know if agriculture could get as addicted to the office as much as others can get addicted to nicotine the industry would be much better off.
To help create “‘the workin’ on the business” addiction here are some helpful steps.
Make the office easily accessible
Don’t put the office into the basement — make sure you have daylight
Build it so that it becomes command central — make it a fun place to be. My office is right off the kitchen — probably almost too accessible
Build a routine. My routine is fresh ground coffee, the BBC, email and then on with my day.
Reward yourself. After you have spent time in the office then you can go out and do chores
Get high-speed satellite internet. If you get bored/ frustrated at least surfing the net will keep you in your chair
Find sites that are of interest to you that will expand your mind and suck you into that chair.
Spend money on good furniture and better yet a good chair so your ass doesn’t get sore.
Put up a nice calendar. Every year my father-in-law sends me the “Swiss Farmers Calendar.” It is a beautiful calendar with Switzerland’s most devoted farm woman going about their daily chores in less than conventional attire.
Learn how to use spreadsheets and better yet learn how to download templates from others
Make lists and set goals for daily, weekly and monthly achievements
Stick with it, forming a habit takes 21 days.
Dr. Christoph E. Weder is a purebred Angus breeder in the Peace region of Alberta and also runs SVR Ranch Consulting. For additional info check out www.spiritviewranch.com