Matters Column

In business, as in farming, there are certain irrefutable truths

December 13, 2013
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We are going through another one of those periods where we are being told there is a new and better way to do things financially. During the dotcom bust, we were told profits were not necessary for a successful company. Billions were lost by investors. Then there was the mortgage crisis. We were told the ability to pay back a mortgage was irrelevant because the collateral value would always be there since real estate always goes up in value. That almost tanked the world economy. 

Now leaders are saying deficits don't matter because they can always print more money. We all know where that's headed. There must be some sort of contaminant in the Potomac River that causes financial delusions.

In the midst of all this, I headed out to trim my black currant bushes. I grow them on a farm near Cheboygan that has been in my family since 1863. The original barn and log cabin, built in 1870, stand just outside the berry patch. Having just been watching the news and the Obamacare mess, I was in deep thought as I trimmed.

Our ancestors were a lot smarter than we give them credit for. They could have foreseen what was going to happen in each crisis. They didn't go Harvard, Princeton or even University of Michigan; they worked their farms and learned from what was happening around them. 

There are a lot of parallels between growing crops and running a business. There are certain irrefutable truths about being a successful business owner that come to light from farming.

If you look at a black currant bush at this time of year, it looks dead. It isn't — it is resting. If you look closely you will see little green buds stretched evenly over the branches. That is next year’s production. Those buds are like your work in process. If anything happens to those buds, next year’s crop is lost. There are things you can do to protect them. For instance, deer love them, so I spray them with a mixture of rotten eggs and garlic. Then there are things that are harder to deal with such as a late freeze. Nothing you can do about that. If you were operating a commercial farm, you would do everything you could to prevent the preventable and have a back-up plan for the uncontrollable. Growing a variety of crops with different cold tolerance periods helps ameliorate the risks.

Have you heard the term “cutting out the deadwood”? That is what pruning is. Failure to prune will drastically affect berry production. My brother Jim was told by a central Illinois fruit farmer that you should have someone who hates you do your pruning — the point being that most pruning is underdone. Old wood does not produce. Wood more than three years old is marginally productive but drains the bush of nutrients needed for the more productive younger wood. That is not arguable or legally actionable when referring to berry bushes.

We all know the same is true of people. Since I retired, I can accept that. Prior to retirement — not so much.

The grower must provide the environment the berry bush requires or the plant will under-produce or die. You need to get a soil test and make the soil adjustments required. If you don't want to take the time or spend the money to give the bush what it needs, it is not going to give you what you need. 

Business is like that. Customers, employees, vendors, etc., have requirements that, if not met, will preclude you from attaining the profit level desired. That is true, and your feelings about it are irrelevant.

Coming to a wrong conclusion is worse than coming to no conclusion at all. I have been growing fruit for 25 years based on an every-other-weekend drive from Grand Rapids to Cheboygan. Only being here twice a month, I did not experience the weather events that affected the bushes. I assumed it was cold and disease that caused bushes and trees to suddenly die. So for 25 years, I tried to improve the health of these plants and failed. 

Then I began to spend more time on the farm. Weather and disease are problems but not the major problem. The plants were subject to weather and disease damage because they were not getting enough water. Heavy applications of mulch and an irrigation system has had a major positive affect. 

When you are running your business, make sure you are embedded enough in it to be truly aware of the challenges. If you are addressing the wrong problem, you are wasting assets that may not exist while the real problem is eating the core out of your business. 

There are things you can argue about plant health, and there are simple irrefutable truths of growing crops that are not arguable. The same is true of the monumentally stupid things Washington and Wall Street have done in the last decade and continue to do now. 

There may be things you can argue about the economy, but these are not among them: People who borrow money must be able to pay it back. Period. A business that does not make a profit is a bad investment. Period. You can't spend irresponsible amounts of money you don't have or earn. Period. There is no free lunch. Period.

I wonder what other people think about while they trim berry bushes.

Paul Hense is the retired president of local accounting firm Hense & Associates. He also is past chairman of the Small Business Association of Michigan.

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