In the last ProfitTips I asked you if you owned a business or a job. I offered Robert Kiyosaki’s criteria from his book Cash Flow Quadrant: Could you leave for a year and come back to find your ranch working even better than when you left it? If so, Kiyosaki says you own a business. If not, you own your job. But that’s only one way to look at it. Here are some others:
- Would you react to a new idea that would increase your profit by thinking, “When will I find the time to do that?!” If you would, you own a job and the last thing you need is another one. A business owner would think, “How can I get someone to make that happen?”
- If you sold the ranch would you only be selling a collection of assets? If you were selling a business, in addition to the assets you would be selling documented production, sales, finance and management systems that show how to use those assets to serve customers and produce a profit.
- Does your ranch have a purpose beyond profit and does it serve someone other than you? The purpose of a business is to serve a customer. Only by serving a customer can a business make a profit and serve the owner.
- Does $2,450 (the tuition for the Ranching For Profit School) seem like a lot to spend on professional development? It is a lot to spend on doing your job better but it’s a drop in the bucket to invest in building a better business.
- Have you ever said: I really ought to manage this as though it were a business? This phrase acknowledges that the ranch isn’t a business. We can act as though it is for a while, but it isn’t sustainable to pretend.
- Does your ranch make an economic profit? Without the subsidies that most ranchers use to survive (e.g. off farm income, inherited wealth, working for less than it would cost to replace themselves), would your ranch be able to cover all of its costs and have a healthy return on investment? If it isn’t profitable, it isn’t sustainable. In fact, it isn’t even a business. It’s a hobby. Most ranches are very expensive hobbies.
If you are ready to transform your ranch into a real business, then you are ready to take or repeat the Ranching For Profit School.