How Not to Fail in Business

It is a fact that 8 out of 10 of the small business start-ups fail within 5 years. Why do you suppose this is true? It could be bad luck, or bad planning, or the poor economy, or lack of finances or the weather, or any number of reasons that we could name. Let’s examine this for a few minutes to see how this applies to our cattle and grass operations.

Resources

labor-land-wealthFor any business venture to be successful there are things that are required namely LAND, LABOR AND CAPITAL. There must be a place to operate, someone to do the work and the money to finance the operation. If all of these components are in place then we can assume that there is a better than average chance that the operation will be successful.

If this assumption is correct then we can also assume that the reason for failure is the lack of another component that we have until now overlooked or not mentioned. That component is KNOWLEDGE, if all of the physical needs are in place and there is a lack of knowledge the failure rate will be in that 80% range mentioned earlier. What this means in the simplest terms is that land, labor and capital without knowledge can and will in most cases lead to failure.

Knowledge

On the other hand if these small business start-ups were franchised the success rate is about 80% for the first 5 years. Why the difference? Again, KNOWLEDGE, the folks in the parent company have written a business plan based on past experience and have developed a plan that will take most of the mistakes out of the operation of the business. If you have learned the operation of for example a McDonald’s or a Subway or any of the thousands of other franchise businesses in the country you can be sure you will be able to do the job in any of their locations. The knowledge that has been learned over the years and has proven to be successful has been applied to the whole system.

Philosophy

A grazer considering it's own philosophy
A grazer considering its own philosophy

But there is something that must be decided even before a business plan can be formulated and that is the PHILOSOPHY of the business or operation. What will be the philosophy of the operation? This will determine in no small part the things that must be done as well as the things that must not be done. If for example the philosophy is profit above all else then you can be sure that this operation will be run differently than one that is being run with a holistic philosophy that includes a profit motive as well. The philosophy of the operation will without question be a reflection of your personal philosophy.

The place to start in your plan is to make a list of your philosophical concepts as they apply to the operation of your livestock outfit. In other words don’t put in your plan things that you know you will never do. This need not be some deep discussion of the meaning of life or any such thing, just your thoughts of what you believe to be necessary to function effectively.

One of the things that we personally believe is that for any livestock operation to be sustainable it must be profitable. And there must come a time when the operation stands on its own without a subsidy from any other source.

We are in the grass business first. This is the foundation on which we have built our operation and there are some truths that we have come to believe that we all must acknowledge before we really begin to understand how this grass business works in relation to our cattle operations:

(1) Cattle add value to forage.
(2) Grass without grazing animals is a cost to someone.
(3) To be a low-cost producer you must build your system on things that are free, the sun, the rain, the growing seasons.
(4) It is not cost effective to improve a pasture beyond what is needed for the class of animals grazing it.
(5) To promote an increase in production is not the answer to increasing income. Our most lasting means as far as income is concerned is cost control.
(6) Work on getting the most for the least. An example would be the difference in feeding hay or grazing stockpile forage. Much effort and costs went into the hay before the first bale was fed compared to turning cattle into a pasture of good fertilized grass. Our time and effort must be compared to that of the cattle and when this comparison is made it becomes evident where the load should fall. We must make it possible for the cattle to do most of the work.

350Those of us in the grass and livestock business can spend the large part of any year going to schools, workshops, seminars, and on field trips gathering all sorts of technical information. But none of it will make a dime’s worth of difference until we go home and put it to use. We all must make our own mistakes and we must develop our own expertise, but the mistakes can be corrected with knowledge and the expertise cannot be developed without knowledge. Use both to create wisdom for your operation.

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