Do you know who Warren Buffett is? Neither did I. I did recognize the name — I had heard it for years and was always given to understand that he is very, very rich. I recently investigated him in greater detail and found that he is — and I quote — a “magnate, businessman and investor” (so if anyone ever asks you who Warren Buffett is, tell them he is a magnate!).
If you want more details, he is a college graduate with a background in economics. He has for his entire life been very frugal despite the extreme wealth he has earned. He has been called the Wizard, Oracle and Sage of Omaha. He is a faithful value investor.
He seems to sum up this approach to investing with the statement: “It’s far better to buy a wonderful company at a fair price than to buy a fair company at a wonderful price.”
He is a great storyteller, a believer in the perniciousness of inflation and an extremely successful investor. This accounts for the fact that he is positioned at the apex of wealth in this country, being ranked No. 2 as of March 2017 with $78.7 billion.
Some time ago, Buffett created a list of his “10 Rules for Success.” This sort of information from such a man seemed worth looking into. As I suspected, he seemed to have a very sensible approach to business. Happily enough, these rules can easily be applied to any business, even the business of operating a sustainable farm.
Here are his rules, with comments of my own regarding farming for a living. I think they are very useful, sound and on-the-money (pun intended) words of wisdom for those who wish to earn a living farming.
Warren Buffett’s 10 Rules for Success
1. Reinvest Your Profits
Profits, especially your first profits, are not money earmarked for fun. That is money for repairs and improvements. It should be used to buy necessary equipment that will free up your time so you can do more and move closer to self-sufficiency — tools that will cut down on extra and unnecessary steps. They can simplify and streamline procedures with improved setup and mechanize when it is helpful and worthwhile in the long term. Carefully think about new crops and sales approaches that can add to your business and what pursuing them will require.
2. Be Willing to Be Different
Selling farm products can vary greatly in terms of what will make you successful. This is because so much is variable. Your climate, soil, interests and your sales options, customer pool and time. Not to mention your talents and skills. Because of
this, it generally does not work to simply mimic or duplicate others’ farming operations. Their situations are different than yours. It will be much better to create a system that works for you. Yes, it may be different. Others won’t understand why you grow this and don’t grow that. Do or don’t certify? Sell wholesale? And why do you grow curly willow? Create your own picture of success.
3. Never Suck Your Thumb
This is good advice — now let me clarify. Buffett calls excess sitting and thinking “thumb-sucking.” He says to gather all information that impacts a decision, set a deadline for making that decision and decide. Often in farming (and life), the reality of a situation will not be what you would like it to be, but that will not change the reality. Farming can be regarded as a constant state of inconstancies. With planting, watering/fertilizing, harvesting and selling, time is of the essence. You can’t afford to wait, and you must become an expert at making swift, solid decisions. Be an optimistic realist.
4. Spell Out the Deal Before You Start
My spin on this rule would be to investigate your sales options before you have something to sell. Look into farmers’ markets, restaurants and grocery stores that work with local producers in your area. We like to plant produce in quantity with these options in mind, and we focus on those crops that can easily move from one channel of sales to another. In other words, make a plan and then make a backup plan. And don’t forget that converting vegetables into animals is also a backup plan.
When we have large harvests approaching, we get in touch with customers who are interested in the product, inform them of quantities available and prices and have them place orders. We will often have most or all of our large quantities sold before we arrive at our farmers’ markets. When there is flexibility to be had in harvesting, make sure you use it to your advantage so that you avoid glut harvests, allowing others to use your excess to their advantage. Do your best to avoid the rock and the hard place.
5. Watch Small Expenses
This is particularly critical for the small farmer. And it can be so easy to fall into this pitfall because farmers need to wear so many hats — production, harvesting, promotion and sales. Every division needs its tools. Keeping a handle on small expenses is critical to earning profits. As they say, it isn’t what you make but what you spend that makes the difference. Small expenses can best be avoided by thinking ahead. What will you need? Can you buy one larger quantity at a discount instead of many smaller quantities at a higher price? Check your storage areas to see what you already have. Do some price comparisons when buying supplies. Small expenses are not only the differences in cost here and there that add up; they also take the form of buying bells and whistles that you don’t really need for your operation.
There are probably those who think we cling to our thriftiness at the expense of sufficiently developing our brand. We have seen people jump wholeheartedly into buying special bags, packaging, business cards, signage, etc. to promote their products in their first year of operation. They aren’t always around the next year, though. We repurpose bags and packaging materials, reuse cardboard and quart boxes, have reusable price tags and display a homemade sign at our farmers’ market stall. We once considered buying plastic slips for our fresh-cut flower bouquets, thinking it might add a professional touch, but we decided the professional touch was in their arranging, which was always quite attractive. And buying plastic wasn’t really consistent with our ideologies of reduce-reuse-recycle and of a product’s quality being more intrinsic and less superficial.
6. Limit What You Borrow
Our farm has operated on a “no borrowing” policy. Yours should too. That may mean it takes longer to get building and infrastructure improvements done. It may mean that it takes longer to buy time- and labor-saving devices, but events do not always go as planned on the farm. Weather, pests of all kinds and the almost inexplicable will at times work together to make this happen. This can mean sales you were counting on not materializing, so don’t count your chickens (or spend them) before they hatch. Life will always be better when you are working toward your goals, as opposed to working to keep ahead of your debt.
7. Be Persistent
Persistence is important. For example, large portions of our farm sales have always been through farmers’ markets. Establishing your customer base does not simply happen overnight. You need to be there on both the good days and the bad. If sales are low, you need to keep bringing your product, well-presented, for when they start to improve.
Use conversation and encouragement to remind customers what you have and why it’s good. When they see you repeatedly and see others shopping from you, they will get the idea. If you hope to have customers try different types of produce or different varieties, you have to persist until they are willing to try. Identify your natural advantage in your farming situation. Look for the open niches in terms of sales opportunities and take advantage of these.
8. Know When to Quit
This advice can come in handy on many levels in agriculture. As an eco-farmer, you will be exposed to many exciting ideas. People are doing all kinds of things that you might want to try as well. Perhaps you try some that require more time than you thought, or more specialized equipment. Maybe you need to spend more time selling than you thought you would. Will it be worth it? Do you take the next step or stop here? If you don’t want to take the next step, then stop giving the half-hearted attempt your time. If you have crops that no one wants to buy, should you stop growing them altogether or just stop growing them for sale? Can you grow less without it costing you too much more? Would you be happy without these crops or products? Are plants worth the space they use — the extra attention they need — or are they not? Your money, your garden space, your time and your enthusiasm are not without limits. Be aware of these limits as they apply to each crop, project and homesteading chore, and operate within them.
9. Assess the Risks
This certainly has applications when selling farm produce. For example, price premiums are always there when you have the first and the last of an item for the season. The early and late sweet corn, tomatoes, cucumbers and summer squash are always a sure sale. To grow these crops will take extra effort, whether that means succession plantings, extra watering and fertilization, plantings with protective barriers both early and late in the season, etc. Will bringing in these crops be worth the extra effort and extra expense? What if the plants live but don’t produce well; will it still be worth it? What if you only get a week’s advantage on the competition? To extend seasons and fight against the natural seasonality of plants at the extreme ends of the growing season will always be more work, so make sure the labor is worth it.
Naturally, this risk assessment can be applied to other areas, not just to crop planting. You think you want to increase your flock of chickens. Yes, you know what to do with the extra eggs you will have in the fall and winter when local eggs are scarcer, but what is the plan for the spring egg boom? What if you want to increase egg production with supplemental light and heat in the winter? Will the earnings cover the expenses? Just because something can be done does not necessarily mean it should.
10. Know What Success Really Means
We have been talking a lot about basing farm decisions on whether something is economically feasible and about making use of all opportunities out there. This is a reminder that there is always the consideration of whether a decision will make you happy and give you joy, because in the end that is a huge consideration for the viability of your farm. Don’t use up all of your time being financially successful. You must earn money from a farm to pay for the farm and life, but the happiness you get from a farm is free. Don’t be so busy earning money for its own sake, or expanding because it might impress others, or working on projects that earn money that you don’t really enjoy or need for your homestead. Be sure to particularly remember Rule No. 10, and your farm decisions really will be successes.
By Leah Smith. This article appeared in the February 2019 issue of Acres U.S.A. magazine.
Leah Smith works on Nodding Thistle Farm with her family in mid-Michigan. She has been involved in home and market gardening since she was very young. After graduating from Michigan State University, Leah returned home to continue the farming life and to devote time to writing.
Acres U.S.A. magazine is the national journal of sustainable agriculture, standing virtually alone with a real track record — over 45 years of continuous publication. Each issue is packed full of information eco-consultants regularly charge top dollar for. You’ll be kept up-to-date on all of the news that affects agriculture — regulations, discoveries, research updates, organic certification issues, and more.