Do You Have a Farm Business or a Farm Job? (FSFS161)

FSFS161_Diego_CanItScale

Diego: [00:00:00] If you start a farm business and it becomes successful. Is that enough? It depends. That's what this one's all about. Coming up. Welcome to farm. Small farm smart. I'm your host Diego DIEGO. Today's episode of Farm Small, Farm Smart is brought to you by PaperPot Co., your source for all things, Paper Pot. From chain pots, the paper pot transplanters.

We have stuff to get you started and stuff to keep you running. Once you're started. If you want to save time and labor in the field, check out all the tools that we offer to make your farm work easier@paperpot.co today's episode is an important one. It's an episode that was driven by a problem that I see in this space.

I see it in the veg side. And I see it in the livestock side, I talked to a lot of farmers and oftentimes I hear their frustrations. I hear their concerns. I hear their struggles. And one of the common struggles is I feel like I'm doing it all. I never get a break. Can this ever scale big enough? I don't make enough money.

One of the root causes of all these problems. Is the business itself. I don't think people take the time to plan out their business from day one to say, where does this business need to go? Nor do I think that people who run a business successful or not take the time to review their business periodically from time to time and say, where are we?

Where are we going? And does this work for our lifestyle? There's a lot more to it, including a money side beyond profits. And that is the subject of, and that's what I'm going to go into in today's episode. I hope you enjoy it.

[02:00] What if you spent years and years trying to build something on the side?

Something that would require a massive amount of effort, time and money to make it happen. What if you had to sacrifice personal interests, time with the people that you loved and sometimes your own physical and mental wellbeing to build this thing on the side. What if the goal was to build the thing on the side? So it no longer was the side thing.

What if it was to make the side hustle, the main hustle, the main thing. Well, what if after years and years and years of building, life evolved with your building and life changed as you were building and you get to the point where you thought you should be, and you've built this great thing, but it's not a great thing, or maybe better said, a great fit for you.

It's like trying to get out of a jail and you have to scale a wall of an immensely high wall. And you scavenged materials for the longest time and spent time building a ladder in secret with these scavenged materials. On the day of they escape, it's finally time to get out, to break out of the walls or to go over the wall and you put the ladder up and you're just too short.

You can't get your fingers over the top of the wall. Imagine standing at that ladder, reaching, seeing the top of the wall, but not being able to reach it. All that time, all that work. Where did it actually get you?

Building a business that isn't going to get you where you need to go might be not much different than that ladder. The business that you're building on the side or the business that you're building full-time as your escape from a world of having to work for someone else might come up short. The perfect farm, the perfect profitable farm that isn't big enough maybe might not as well exists.

I'll go through an example. I've gone through in the past. If I gave you the perfect farm plan one that laid out everything that you needed to do to build a profitable, small-scale farm, whether that's in vege or livestock, it doesn't matter. But let's say put out in front of you plans.

Things to buy, things to do so you can create a farm that netted you $50,000 a year. Would your problems be solved? Would you buy that? You know, if you would buy it, congratulations because you might've just bought yourself a job. A job with arguably less freedom than a corporate job. Think about the evolution of a lot of farms, you get some land, you start putting in infrastructure, you grow stuff, you sell it, you grow more, you sell it.

And eventually you have enough to live on enough to live on. At least for now starting a business. Isn't enough, starting a business that is successful. Isn't enough, starting a business that's successful and earns X amount of profit is not enough. Unless X is really enough. Today�s show inspired by an email that I received in the email read as follows, quote, most entrepreneurs start what they think is a business, but they really just own a job.

Owning a job is a disaster if you're not prepared to run a business. You have to have a systems to have a business run successfully. That includes four key functions of a business sales and marketing, administration, strategy and management, and operations and operations is really the farming part.

There's a lot more to a farm business than just planting, watering, weeding, and harvesting, right? You have to master the other three key functions that all businesses need to execute. When you think about your business, your farm business, are you building a business, or are you running operations?

Operations are the things you do on a day to day. Moving can tractors, providing water for animals, providing feed for animals, turning over beds, planting new crops, operations, where as the email states, to have a true business, there's more components to that. A sales and marketing component. Most of us are going to have that and administration components, managing employees, seeing the vision, putting processes in place, assigning roles.

Now, if we're a company of one that can be us doing that role. But I'm willing to bet a lot of times in a busy operational time that administration even self-administration gets thrown out the window. And the one that I think really gets left aside is strategy and management. It's not something that is nagging now.

It's the tiny cut that won't stop bleeding. That, when you look at it, it's just a dribble, but eventually it bleeds you dry. Based on my experience of talking to a lot of people in the farm space, both on the livestock and vegetables side, I don't think enough people take the time to think about why they're doing what they're doing.

They get caught up in the act of building this thing. And once you start building, if you're not careful to step back and look at what you're building, the building can take over. Momentum can take over because it's always the next thing. It's always the next cycle. We're turning over more crops. We're getting the next batch of chickens and we're going to try and sell more and grow more.

But what if eventually you can't sell anymore or you can't grow anymore or what you can sell just doesn't provide enough for you to live on or for the lifestyle that you want to live. The goal is to get you to ask the question. Sure. Are you building a business or are you building a job, a job for you?

If you're building a job, you really need to think about, about where it's all going and where it can go. Sure it might be great now. Sure. It might work now, but what about down the line? Where is it all the leading? How long can you do this alone? How much of your quote business is you dependent? If it's a lot you dependent, then you have a job.

It's a job that has no backup, no benefits. And no company time to waste in a lot of ways. That's a great thing. And that's what makes a lot of solo-preneurs, go getters and grinding it out because you don't have a lot of margin of error when it's all you, if it needs to get done, it's on you. The problem is when you start to fail or falter or fade.

Maybe not because you're giving up, but because something else is kind of giving out. The physical, mental toll of farming or even running a business is very high. Can your body handle that day in and day out without ever getting a break? Can you mentally handle that? Can any other people in your life handle you while you try to mentally handle it all.

If you're the decision maker for that job, you're making all the decisions, all the stress is on you. It's intense. Can you step away? Do you have anybody else to help make those decisions? If it's a business of one or a job you don't. So you're forever having to manage the stress, physical and mental that goes with running that business.

If it's really a job that you own in a job that you're building, you need to ask, is this even a job or is it a hobby? Is it a hobby that brings in some side income? I think it's really important to step back anytime you're creating anything or building something. And ask the question, where is this going?

Where does it need to go? Where does it need to go now? And later, because you need to create something that is going to support you now, but also support you later. And oftentimes, probably most time later in life is going to look very different than now is going to look in life. Because later is going to bring maybe more people with family.

Later is going to eventually involve retirement. I don't know that many small farmers or small-scale entrepreneurs think that far ahead. What are you going to do one day when you want to walk away? If you're barely making enough each year, that might be great now, when you're say single or married, or you have a partner and you�re kid-less.

But what about putting money aside for a rainy day? What about putting money aside for that child's future or your future? If it's a job, what happens when you're sick? What happens when you're hurt? What happens when you want to take a break and go on a vacation? Can you? You might the grind it out through the sickness, through the pain, skip the vacations for a few years.

But eventually that's going to get old and maybe you're not the first one to notice that it's getting old. Maybe it's somebody really close to you, a partner that says this is getting old. The danger of a job that you own. Getting old as that job is now going to become the blame for a stress relationship, a stress to you, a hurt relationship or hurt you.

Your job, your business, it has to match your lifestyle and it has to match how your lifestyle is going to change and evolve as your life evolves. If it doesn't, that's where the friction comes in and eventually something cracks. The job or the business change or get shut down, or life is forced to change. And sometimes those changes aren't the ones we want and they aren't good changes.

So ask yourself, what are you building? Is it what you need now and what you're going to need later for family, for retirement, for backup. So in case you get sick, if you get hurt, if you want to go on vacation, you have people there that can help.

Can your business get you there? Or did you just spend a lot of time building something, not fit for the long haul? You know, are you going to get to the top of the ladder, trying to go over the wall and realize that there just aren't enough rungs on the ladder at times like that we can look back and say, Hey, it was a great experience. I went for it. I tried, I took a lot of pride in starting when other people wouldn't.

I'm not discounting that, but I'm sure it's going to be pretty disheartening to realize that you came up short. When I think some planning and foresight could help you plan to not come up short. You know, things can always change. We can't predict at all.

But at least if we think about where we need to go and where we want to go. That's going to give you a better shot of getting there than winging it or just putting no thought to it at all. Because then you can really say I tried, but you know, these things came up and it just didn't work out. Leaving something, shutting something down, moving on from something, knowing that you really did try and give it your best is going to leave a sweeter taste in your mouth than saying, you know, I tried, but, man, I did not plan this well.

Lifestyle's really important. You need to think about what type of lifestyle do you need to live or want to live you and the people in your life. Maybe you have a partner, maybe you have children, maybe there's other people who depend upon your income to survive. What lifestyle do you all want?

Like business. Life has two sides when it comes to money, there's the income side of things. There's the expenses side of things. You can control both. You can make more money and you can cut your expenses. So income can stay stable and cutting expenses can make you feel like you have more income because you're spending less.

That allows you to maybe put money aside. But you can only cut so much realistically. And I hear a lot of people say, well, I'm just going to live a really low-key lifestyle. I think that's a now thing, not a long-term plan for most people. I don't think you're going to cut your expenses or live a lower expense lifestyle as you get older.

I think the natural evolution is more and better. Not too extravagant, but it's just what we want is we feel more successful. We'll say, well, I'll get a new phone finally, or I can upgrade my car, not to a Lambo, but just something that starts reliably every time. If you add people to your life, that's going to bring with it expenses.

I think there's something in our DNA and maybe this is an American thing of you work your way up. You finish better than you started. And I'm not saying again, it's all about stuff, but in a lot of ways, it, it is about having some nicer things or better things. Because there are some proof that you made it happen.

So you can say, you're going to cut and you can say that the plan isn't a scale lifestyle and you just want to keep it small. So it's us, and it pays for our lifestyle and that's good enough. But to me that seems fragile and maybe a bit utopian. Because if you grow, it's going to bring challenges of growth.

You're probably going to have to take on employees and I'll get to that in a minute. But first let's think along the lines of, we're not going to have employees, it's just going to be us. We're going to produce enough to support our lifestyle. And that's it. The fragility in that is it is just, you. You forever.

How long do you think you're going to live? How long are you going to need this business to produce income? If you're just producing enough for you to survive on, what if you go down? What if you can't get work? What if the work becomes too hard? What do you do then? You could just get another job or something, which is fine, but at least think about that.

If it is going to be enough to support our lifestyle. Think ahead. Are we going to want to have kids? Are we going to want to have more kids? Are we going to want to move to a different location? Are we going to want some safety net? Are we going to want some time off at the times of year where this field dictates we have to work?

Five years from now, if you're doing the same thing, is that right? Is that success to you? Is it going to make you happy? And one thing I talked about in a past episode recently was is it going to make the other people in your life happy? It's not just a you decision unless it's really only you.

So the solution potentially for a lot of people to give something more anti-fragile is to have a business, which is a thing, a thing that multiple people run a thing that gets its own momentum going and in some ways runs itself very different than the solo preneur job. And I was motivated to do this because I think a lot of people are building jobs and that's scary. I've started a lot of businesses in the past that were never going to make a lot of money.

Where's that going to get me? And it's not all about money, but if it's not going to make a lot of money and if it's not going to move the needle on then allow me to just do that thing and quit my job or work full time, what's the point? Some people might say it's totally worthwhile. But I think a lot of people, when they look at this objectively and rationally, we'll say a business or really a job that can, and scale that can hire people might not be the longterm solution.

One of the keys that differentiates you owning a job or owning a business is can you afford to hire consistent, good help. If you can't, then you don't have a business. Hiring itself is not easy. It's a big deal. It brings on its own set of challenges. But avoiding hiring people because of its challenges is going to come with its own set of costs and create a whole other set of problems.

So hiring isn't easy, employees are not easy, but personally I think having an employee management problem is easier than a �it's just us with all the pressure and stress, and we're only getting older problem.� I think having to deal with employees is going to be easier than struggling because there aren't employees and you have to do it all.

You know, if you're big enough, you can get a good manager to deal with the employees. If it's just, you. You can only get yourself to do the work you don't want to do. There's no one else that there, or if the business has to grow to do more income, if you're already at the end of your rope, you can't do anymore, how do you get more income?

You can get creative. But again, maybe that eventually those options run out. At some point it is producing more and you can only produce so much. So think about your view on employees, how are you building employees into your business? Do you want to have employees, if you don't, where does that leave your business longterm?

Don't just think of the financials. Think of the cost of that physically, mentally to you and the other people in your life. Start running what-if scenarios 10 years from now? Oh, what if we have two kids that we don't have now? And what if we don't have employees? W how busy am I going to be on the farm?

Is that going to mean I'm going to have to make sacrifices? If I hired employees, what would that look like? Hiring is it's tough. I mean, look at the outside world. Like it's a world of hiring. The systems have kind of been figured out. I think everything that people get scared of when it comes to hiring, including myself, are fears that aren't really justified when you go out and do it, there's always bad stories, but there's a ton of great stories as well. So I would not let fear of hiring control the rationality of hiring.

When you think about a business versus a job, another thing you really need to think about. Is your products in the market streams. Some businesses are built to scale some businesses aren't for better, for worse feed lot beef is built to scale.

You can get that operation to be huge compared to grass fed beef. Grass fed beef is a lot harder to scale putting a thousand animals in a feedlot. Is going to be a lot easier to manage than a thousand animals on pasture because the pasture side is going to take more land and I'm not defending feedlot beef.

And I'm not saying, go start a feedlot, but I'm saying that business is set up in a way to scale. You can only produce so much lettuce on an acre. And I recently drove back from Phoenix, crossing through Yuma, Arizona, the Imperial Valley here in Southern California. It is thousands of acres of lettuce green as far as the eye can see in what would otherwise be a desert.

Companies like Taylor farms can go big. They can scale huge. You don't have to walk in the footsteps of the feedlot operators or the thousand-acre lettuce growers but you should think about. Can your business scale enough to get you to where you want to go? If you need a business that's going to make $150,000 net income, can your business, doing what you're doing, ever conceivably get there?

If it�s not gonna, what are you going to do? Why started and build it to 90. If you need one 50, it's pointless. It's a waste of time. If you need 150, then the plan should say, Hey, we can get this to 90, but then we need to do dot, dot, dot, getting outside jobs, start another business, whatever. So just building a farm, growing lettuce, selling a little bit more and trying to grow that year over year�not a plan.

It's not a plan to run a business, right. It's closer to hobby than business. Think about where you're selling a farmer's market versus selling to whole foods or ConAgra a whole foods or ConAgra can absorb immense amounts of food.

Now there's negatives to that. I get it, but let's not highlight the negatives. Let's look at the advantage of that. And the advantage of it is it allows businesses to grow bigger because they might need to grow bigger. If you have a small farmer's market. And that's your only market stream, eventually you can only push so much product that farmer's market.

And if that amount of push doesn't lead to the income that you need it to lead to, where's that gotten you? How many markets can you do? You say, well, we, you do more farmer's markets will, even if you did all 10 farmer's markets in your area, Oh, can you actually do that? Meaning can you be present for all of them and will that cumulatively add up to enough or is the cost too great?

You start to see a lot of farms selling to grocery stores now, growing things like just greens or microgreens. And I know some people might think that's selling out, but there's a strategy in that. Like, it can be systematized, it can be run with less people. It can be a market or a customer that can consume a lot of product in one shot.

If the income dial needs to be turned up your business and where that business sells product and what products that business grows are some of the main factors in being able to turn that dial up. I hope this episode really hits home. We just ticked over new years. This is the time of year where people really start to.

Think about things and how things might want to change. And while you might be getting super excited about Johnny's and High Mowing and all the catalogs showing up and what you're going to grow next year in a way that's temporary satisfaction. That's the quick hit really spend some time this year thinking about things that aren't in the catalogs.

Where is your business going? Where do you need it to go? Can it scale with the customers and products and model that you have to get you to where you want to go? Are you factoring in life changes? Huge problem I see in this space is people building income-producing hobbies.

While liberating, while something to be proud of, more something to look back at and say, look what I did. It might not be the right thing for you and where you want to go. Just like you don't want to get to the top of the wall, just like you don't want to lean that contraband ladder up against the prison wall, get to the top wrong and come up a hand-length short. Make sure you take some time to plan and think so you don't come up short.

There, you have it scaling a farm business. I hope it really makes you think. Take some time this month to review this stuff, to think about this stuff and make sure that the work you're doing is leading you to where you want to go. If you want to leave a comment on this episode, shoot me an email Diego at permaculture voices, or hit me up on Instagram at Diego footer.

I'd love to hear what you thought. That's all for this one. Thanks for listening until next time. Be nice. Be thankful. And do the work.