Tag Archives: financial

Making Investments vs Creating a Job

Economic definitions:

Investment – an investment is the purchase of goods that are not consumed today but are used in the future to create wealth.  to put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value.

Job – a paid position of regular employment.  a piece of work, especially a specific task done as part of the routine of one’s occupation or for an agreed price. Everyone has goals in life – some will involve being financially secure.  If you are interested in building financial wealth, there are a few basic premises which need to be incorporated into your plans.

1) Your saved dollars must be put to work!

2) Break free from the bondage of financial slavery by changing your spending habits

3) Invest in yourself – education or your own business

4) Learn to manage the money you do have – more money will not necessarily fix your financial problems

5) Debt is a hard task master – avoid it!

6) Use your income from a paid job to make investments that will gain in value while you continue your paid job.  Later you can retire from your job and enjoy your investments.

Many, many economic experts have different ideas about how to invest, so it’s up to you to decide who or what you want to invest in.

Dave Ramsey Investing Philosophy

How to Become Wealthy  – Nine Truths that can Set You on the Path to Financial Freedom

Rich Dad/Poor Dad – Dave Pratt, Ranching for Profit newsletter

Shabbat Shalom!

tauna

WOTB

The WOTB Test

Most people blame things beyond our control like the weather, government regulation, low commodity prices and increasing costs for their failure to make a healthy profit. These are the things most often discussed at producer meetings and in the coffee shop. These are also things we can do little about. Making them the scapegoats for poor performance makes it easy to absolve ourselves of responsibility. But if prices, costs, weather and regulation really determine profit or loss, why do some businesses survive, even thrive, in these conditions while others fail? Depressed markets are a crisis for some but a profitable opportunity for others. It is not the situation, but the decisions we make that determine success or failure.

According to the US Small Business Administration, most new businesses fail. Fewer than 10% survive to see their 10th year. In his best-selling book, The E-myth Revisited, Michael Gerber points to an exception. He says that 97% of new franchises survive beyond 10 years. Why the difference? Simply put, franchises have a clear-cut blueprint on how to run a business. McDonalds doesn’t succeed because they make the best hamburgers or because they hire the smartest, talented people to work behind the counter. Over the years they have achieved economies of scale and have a lot of clout when it comes to negotiating lower costs with their suppliers. But they wouldn’t have been in the position to do that if they hadn’t built a business that actually works. They didn’t grow first and then figure it out. They figured it out and then they grew.

As Gerber puts it, they worked on the business (WOTB) to build a business that actually works. We are so busy working in the businesses (WITB) doing $10/hour jobs that we often don’t ever get around to working on our businesses (the $100/hour work). This is the work that determines the winners and the losers in any business…including yours. More than genetics, prices, weather or any other factor, it is this issue that separates the men (and women) from the boys
(and girls) in ranching.

Our ranches suffer economically, financially and ecologically when WOTB takes a back seat to WITB. Our failure to effectively work on our businesses is the single biggest reason that most ranches aren’t profitable and that most ranches don’t survive generational succession with their land or family intact.

It doesn’t have to be this way. Ranching can make a healthy profit, thrive ecologically, stay in the family indefinitely and be the stimulus for revitalizing rural communities. You put your ranch on the path to achieve these results when you put the shovel down and pick up the pencil … when you start working on it, not just in it.

I’ve heard some complain that they don’t like working on their business. I wonder if the real problem is that they don’t know how to work on it. Previous generations may have been able to get by without WOTB when land values were cheaper and their ranch had only been split once by a generational transfer. But times and conditions have changed. What passed for management then, doesn’t pass muster now.

Score yourself to see how effectively you are working on your business:

Scoring:  0 = I have not addressed this issue
5 = I have addressed the issue but have more work to do
10 = This describes my business.

ARE-YOU-WORKING-ON-YOUR-BUSINESS-chart-1

If you scored more than 70, congratulations! You probably have a healthy business with a promising future. If you scored 40 to 70, you’ll be feeling the pinch but will probably continue to get by with off-farm income subsidizing the place … at least until it comes time to pass the ranch on to the next generation. If you scored less than 40, you might want to think about going to work as a cowboy for someone else. If you want a good job, I suggest you hire on with someone who scored more than 60. He’s the one who’s Ranching For Profit.

 

Be sure to check out Dave Pratt’s Ranching for Profit website for more information and to see if his week long school would be something that will help your business!

Farm Finance

Every business or family finances have some unique components that you must determine to help your business or home run smoothly.  However, there are some very basic tools that apply to all.

  1. Bookkeeping-every family and small business should employ bookkeeping principles.  These will include records by account, labor costs, profit and loss (income statement), working capital, balance sheet, debt-to-asset ratios.
  2. Use a double-entry system to keep track of where your money is spent.
  3. Set up basic accounts, these may need sub accounts depending on your company, but here are 10 basic ones:  sales, expenses, payroll, and retained earnings for your income statement and cash, accounts payable, accounts receivable, notes payable, inventory, and owner’s equity for your balance sheet.

 

Most of us have taken basic bookkeeping in high school and so already have the foundation for setting up appicable accounts for our own families and businesses.  The stumbling block is actually doing it!  If you wonder where all your money is at the end of the month or year or complain about the lack of funds, then it’s time to make a resolution and commitment to keeping track of where your money goes. This especially includes all those little cash purchases; coffee, candy bar, water bottle, etc.  Remember, too, you don’t have to buy software to do this.  For millenia, record keeping has been done with pen and paper.  However,  if computer software will encourage you to move forward, I think there are some very reasonably priced packages out there.  Many you may be able to try out for free for a short time.

Here’s a budget helper that seems to be free, but i don’t know anything about is.  It is Dave Ramsey’s EveryDollar free budgeting tool.  Plus Dave Ramsey has a bunch of free tools available.

Whether you choose computer software or a pencil and notebook, start this year taking control of your finances.

Cheers!

tauna

Repairing our Favourite Picnic Table

Our dear friend, Jesse Bright, built this eight-sided picnic table out of western red cedar  maybe 12-15 years ago.  He was still in high school, (another talented homeschooler), so it’s been a while.  Jesse is now a technical designer at Skidmore, Owings, & Merrill in Alameda, CA, specialising in making his companies’ skyscrapers sustainable and ‘green’ as is reasonable.

Since the table has been sitting directly on the soil all these years, the bottom boards finally rotted away.   So, today’s  task is to at least get all the boards cut.  Unfortunately, ragweed pollen is at extreme high allergy rate, so I can only spend a few minutes at a time outside before succumbing to maximum sneezing, mucuos production, swollen, itchy, red eyes.  😦

When my children were younger, this project of repairing the picnic table would be one of many math lessons.  (We just completed 13 years of home education).  Of course I did all the cutting and drilling until they were older.  However, by then they could manage the entire project.  Measuring, determining angles, planning the project, gathering the necessary tools and materials, determining if something needs to be purchased, then going to town to make the purchase or finding them out of our own inventory.  Time and financial budgeting included as well as problem solving (because you know nothing is as easy as it looks).   All skills needed to be successful no matter one’s career choice.

Finished just in time for Shabbat!

Shabbat Shalom!

tauna

Turned upside down in preparation for base board removal and measuring.
Most of the screws coule be removed with the cordless power drill, but some needed special attention.
Most of the screws could be removed with the DeWalt cordless power drill, but some needed special attention.
Using my small monkey wrench (visegrips), I could turn the stripped headed screws out fairly easily.
Using my small monkey wrench (Vise-grips), I could turn the stripped headed screws out fairly easily.
The boards had been glued down, so using a disk sander, I sanded off the old boards that had stuck to the glue and ripped off when I pulled off the old boards. Also, sanded off the old glue to make a smooth surface.
The boards had been glued down, so using  my Makita disk sander, I sanded the old boards that had stuck to the glue and ripped off when I pulled up the old boards. Also, sanded off the old glue to make a smooth surface.
Our local lumber store did not have Western Red Cedar boards, so i had to settle for treated 2x4s. Nathan went to get the boards and they sent him home with boards that are above ground grade! GRRRR. Nevertheless, I was ready to finish the project, so i used them anyway. Will treat them with a couple extra coats of boiled linseed oil when i have time. I used a skill saw to the cut the boards. Check out that short board with the 45 degree angles. I did that, too! I'm no carpenter, so that 's a big accomplishment for me.
Our local lumber store did not have Western Red Cedar boards, so i had to settle for treated 2x4s. Nathan went to get the boards and they sent him home with boards that are above ground grade! GRRRR. Nevertheless, I was ready to finish the project, so i used them anyway. Will treat them with a couple extra coats of boiled linseed oil when i have time. I used a Skilsaw  (our model 5250 is so old there is no web link!) to cut the boards. Check out that short board with the 45 degree angles. I did that, too! I’m no carpenter, so that ‘s a big accomplishment for me.
Thunder enjoying a cool morning and looking surprised! :-) Actually, he was just into a yawn.
Thunder enjoying a cool morning and looking surprised! 🙂 Actually, he was just into a yawn.