One attractive aspect about farming is the opportunity to be an entrepreneur by starting and building your own business. Some say times have changed and that cannot be done anymore. But I see it happening every day.
A client of mine started farming with his wife six years ago, renting a farm and at the same time borrowing money to build a hog barn and feed hogs for a contractor. Today they have a seven-figure net worth and new opportunities presented to them on an ongoing basis.
Having started a few businesses myself and taught entrepreneurship for 10 years, I have observed several key characteristics of entrepreneurs. Overlaying these with what I’ve observed in this young farm couple, there are tremendous parallels.
Some people might be programmed for success,
others for failure
They have a passion for running their own business—certainly a key component of an entrepreneur.
They are risk-takers. However, they don’t try to hit home runs. Base hits work just fine.
They have self-confidence. They are goaloriented and know exactly when they will have capital items paid for in their business. They keep good records and live within their means.
They are accountable to themselves. When things go wrong, they first look in the mirror and blame who they see—not the weather, the markets or their competition.
Education is important. But I’ve always felt the best formula for success is to work for someone else long enough to get promoted. That proves you have the patience, interpersonal skills and work ethic to succeed.
No amount of formal education can provide the experience that one gets in dealing with the hard knocks of life. Quite frankly, where I see young farmers struggling most is when they’ve had it too easy and Mom and Dad have provided too much.
The success gene. People often explain the success of entrepreneurs by saying they have a "success gene." Well, a recently published study by the University of Bonn and the Institute for the Study of Labor in Germany suggests that there is a success gene. The study, which included 3,600 parents with children age 25 or older, indicates that some people are genetically programmed for success while others are programmed for failure.
The difference? It basically boils down to two factors.
First, if your parents were people who were willing to take risks, most likely you will be also. We all have to take risks to get ahead. It’s that simple.
Risk-taking parents raise risk-taking children. This is vividly displayed in the farming game. The best example I can think of is an Iowa farm family I have known for 30 years. The parents have passed away, and most, if not all, of the children are now very successful.
Being a risk-taker does not mean being a "riverboat gambling" type. I prefer the analogy of a mountain climber. He takes risks, but they are calculated risks. He understands that certain skills are needed and that procedures and rules need to be strictly followed to reach his goal. It is the same in business. Taking excessive risks can result in bankruptcy, but taking reasonable risks can leverage your time, talent and resources.
I often refer to risk and reward as a teeter-totter. If the risk is not offset by a reasonable reward, then the farm purchase, building expansion, management practice or new technology might not be worth the risk.
The second factor is that successful parents have an ability to trust others and will more than likely raise children who also trust people.
Judgment is involved here. Being gullible will not make you successful. But to get ahead, you need to be a trusting person.
You probably know farmers at both ends of the spectrum. Some get along with a variety of people and others have difficulty getting along with anyone. The ability to get along with people becomes an even larger factor as we deal with more landlords, employees, lenders and vendors.
Now look at the level of success of those farmers. Does the theory hold?
Moe Russell is president of Russell Consulting Group in Panora, Iowa. He provides risk management advice to clients in 34 states and Canada. For more risk management tips, visit his website at www.russellconsultinggroup.net. To submit questions, call (877) 333-6135 or e-mail firstname.lastname@example.org.
- December 2012