If you’re the farmer standing there with thumbs hooked in the suspenders of bib overalls, chewing on a piece of straw, this column may not interest you. On the other hand, if you’re a farmer who sees farming as a highly remunerative business opportunity, the following will interest you.
Where most farmer surveys deal with farmers’ ages, crop mixes, acreages and debt loads, a recent farmer survey superseded those parameters by at least 10 times. The survey began by deeply probing various farmers’ psyches to determine mental characteristics such as attitudes toward change, growth, tradition, education, risk, debt, work ethic and so on. No aspect of the psychological survey intended to compare intellectual capacity; rather, every question aimed to discern those mental parameters that a farmer ultimately draws upon to make decisions. Because decisions, we all know, result in outcomes and outcomes, we also know, result in equity balances.
For example, a farmer who inherited his operation might have a very different attitude toward risk than one who began from scratch and saw the risk of leveraged growth as fundamental to survival. While the heir might manage risk to lose the least, the guy who began from scratch might use risk to make the most. The survey explained many more examples than just these two, but space here is limited.
Much to its credit, the survey went to great lengths not to pigeonhole any single farmer group. Rather, it looked for psychological commonalities that particular farmers generally shared with counterpart business managers. Looking back to the 2008 recession, certain businesses collapsed during the crisis while others blossomed. What made the difference between Circuit City and Best Buy as one folded and the other soared? What about Blockbuster and Netflix? Blockbuster went from 5,000 locations to two. Netflix? Everyone can see how that is turning out.
So: As a business manager/farmer, how do your managerial attitudes rank among your most successful counterparts in the following categories?
- Debt: It isn’t debt itself that matters among the most successful farmers. Rather, it is how debt is used that makes the difference. Clearly, credit allows one to leverage into equity far faster than waiting for equity to build.
- Collaboration: Seventy percent of the most successful farmers collaborate through market cooperatives just as non-farm business managers of similar ilk collaborate in key market points. In the potato example, considering total potato production as a single pile of potatoes and knowing that every 1 percent change in that pile’s volume results in adding or subtracting 7 percent of value to that pile— does collaboration make sense in this regard? Give any other business such power over its financial future and ask yourself what it would do with it.
- Change vs. tradition: The world is always moving forward. It always has and it always will. Staying in front of that wave is what good business managers do. Staying in front is hard work, but working hard is also what good business managers do.