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Accounting Is Fun, Really!

Accounting Is Fun

Accounting Is A Chore Most Farmers Would Rather Leave To Their Accountant

If you’re thinking of starting a farm business, the visions in your head are likely those of happy livestock and bountiful harvests.  Spreadsheets,  Accounting software and business plans are probably not what you’ve been dreaming of.  If your not a numbers person, just the thought of having to deal with the financial side of your business can cause some would be entrepreneurs to never get started.  Or worse yet, to start anyway, having never run the numbers to see if they can make a profit.  Starting your own business, requires a significant investment in time and money, and you want to do all you can to protect that investment.

Farmers Love Tools, And Accounting Is A Powerful One

In my Workshop: “Can I Earn A Profit With This Business?”,  students are learning by working with data from their research on their own business.  When you understand the basic concepts and have run a few scenarios testing different levels of production and seen the affect on profitability, it gets exciting.  As someone who loves teaching, I love to see the light-bulb go on for folks. When they realize that using these tools, they are not flying blind.  They have a plan, and as they gain knowledge and experience, they have the tools to adjust that plan to meet their evolving business goals. As business owners, when we are actively involved in managing the financial side of our businesses, we are able to quickly adjust to changes in the marketplace.  Developing a business plan is about creating your road-map to success.  Laying out your mission, vision, goals, strategies and plans.  Your vision is the dream, what you hope to create.  Your mission is the reason you want to create it.  Your goals are the things you want to accomplish that are measurable and actionable.  Strategies define your direction. Plans are the steps you will take to reach your goals.  Planning your business is like planning any journey.  When you know where you are going, and how you are going to get there, journeys are fun and exciting.  Even when they involve accounting!

A Great Example of Running the Numbers on Egg Production

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Employee to Business Owner – Why Make the Transition?

The “New” Business Owner

Prior to the Industrial Age, being a business owner was commonplace.  With the dawn of the industrial age, millions moved to the cities for the promise of a decent wage and job security.  For decades it was possible to get a good job with good pay and a pension at retirement time.  Employees felt a sense of loyalty to their employer. Most workers spent their entire career working for the same company.  But in the wake of plant closings, huge layoffs, insolvent pensions and a failure of the promises Corporate America made to it’s workers, that is no longer true.

Declining Employee Loyalty

The Entrepreneurial Generation

In a 2014 survey of Millennials, only 13% of respondents said their career goal was to climb the corporate ladder, while 67% said their goal was to start their own business.

Get Things Done, Become A Business Owner

Business Ownership Advantages

Sure, when you own your own business, you run the risk of failure, but for those with an entrepreneurial spirit, the rewards outweigh the risks.  You control your own destiny.  You’ll work hard, but you will reap the benefits of your success.  You can do what you are passionate about.  And as an added bonus, business owners enjoy a number of tax advantages over employees.

The cost of producing revenue is deducted as a business expense: IRS Deductible Business Expenses

As a commuter, the money you spend to get to work is not deductible.  As a business owner, the IRS allows a deduction of 57.5 cents for each business mile driven: IRS Standard Mileage Deductions Rates

As an employee, contributions to your retirement plan are limited to $18,000 per year.  As a business owner, you can contribute 25% of your net income, up to $53,000 annually: IRS Retirement Plan Contribution Limits

As an employee, you can only deduct the portion of health insurance premiums that exceed 10% of your income.  As a business owner, it is a deductible business expense: IRS Rules for Self Employed Health Insurance

If you have been dreaming of starting your own business, the time is now.  With proper planning you can succeed.

 

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A Business Plan Matters. Entrepreneurship or Bust!

Your business plan is your compass.Do You really Need a Business Plan?

The phrase, “Pike’s Peak or Bust!”, became popular when gold was discovered in the Colorado Territory back in 1859.   It evokes images of those adventurous folk who risked it all for a chance at riches out West.   Those intrepid souls embarked on a journey into the absolute unknown. They had no guarantee of success, and relatively few succeeded.  A sense of adventure and a tolerance for risk are necessary traits in an entrepreneur. However, it must be tempered with good business sense, and a solid business plan.

According to the US Small Business Administration, over 60% of small businesses survive their first two years, and the odds of survival increase with the years.  This number is a far cry from the 90% failure rate that we often hear.  The SBA statistic is based on businesses with employees, which I believe can be misleading.  After factoring in Individual/Sole Proprietorships, that number could be closer to a 90% failure rate.  Starting a new business can be daunting.

A Business Plan is Like a Map

No matter how you fold it, starting a new business is not without risks. However, we can mitigate those risks with proper planning! A Business Plan is like a road map to success.  It does not guarantee that your business will succeed. It does provide  you with the tools to make smart decisions about your business.  Creating your Business Plan will clarify your Mission and Vision. This will help you to define measurable objectives for your business.  Setting goals as well as formulating strategies and plans for how you will market and sell your products. Again, proper planning will help you navigate the road blocks and  hazards you’ll encounter on your entrepreneurial adventure.  When you understand the story that the numbers tell you, you can adjust your course and reach your destination.

 

Additional Articles and Resources:

Small Business Administration – 9 Steps to Starting a Business

Entrepreneur.com – 7 Key Steps Toward Starting Your Own Business

Forbes – 16 Surprising Statistics About Small Business

 

 

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In Business Knowledge is Power, as Long as You Use It

Business Cliches are Sometimes True

We have all heard the business cliche “Do what you love and you will never work a day in your life.” When it comes to deciding on the type of business you want to start, doing something you love and are passionate about will stack the odds in your favor. However, passion alone will not insure success. We need the tools and knowledge to make smart business decisions. We need to always remember that the motivation for going into business is to earn a profit. If you allow your passion to overrule your business sense, you can fail on an epic scale. I know from experience.

How I Failed in Business

For close to 30 years, I have earned my living as a Corporate Controller. Back in 2When business is fun, it doesn't feel like work.004, while working for a New York company, I had the opportunity to work exclusively from home. In addition to my work as a Controller, I was following my passion for horses and had a successful Riding Instruction business where I traveled around to students’ farms to give them riding lessons on their own horses. This side business, where I was charging $65 per hour, had extremely low overhead; the wear and tear and fuel for my vehicle, liability insurance and my time. As such, it was a very profitable business.
When the opportunity arose to be able to “work from home”, I decided to follow a long time dream and open my own riding school. I purchased a house and land (with a mortgage), and used most of my life’s savings to install the infrastructure and equipment that was needed: barn, fencing, riding arena, tractor and tack and equipment. I had 3 horses of my own which I converted to business assets, and purchased 3 more horses. I put up a website, and I was in business. It was immediately successful. Business was booming, until 2008.

When the bottom fell out of the economy, my business was effected, but not as much as one would expect. What really changed for me was my approach to riding and training horses. In my evolution as a horsewoman, I came to discover that most of the problems riders struggle with are their own, and not the horse (who is usually blamed). Lack of leadership and problem solving skills that are endemic in our society are multiplied when a rider is attempting to control a half ton animal whose instincts give them two choices: follow a leader or be the leader. I repeatedly witnessed horses that are happy and willing to work under a calm and assertive rider, turn into raving lunatics under a nervous or aggressive one. The result of this was that my product changed. I went from offering people solutions to their horse problems, to offering horse’s solutions to their people problems. The only problem was, most people did not want to buy this product. In our “take no responsibility” culture, telling clients that the problem (and therefore the solution) was within them, did not go over very well. It didn’t happen overnight, but I gradually began to lose clients. But I was on a mission, like an evangelist, I was passionate about what I was teaching (and I had small number of equally passionate students) and convinced that I could rebuild my dream around this new model.

I Made the Transition and So Can You

For the next four years, I struggled to make it work. I had the money (unfortunately) to float the losses from my salaried “work from home” job. And the losses were huge. I had gone from near zero overhead, to supporting 6 horses, a mortgage and all of the expenses of running a farm which was generating very little income. Now remember, I was a Corporate Controller with years of experience helping companies control costs, maximize profits and make smart business decisions. But in my own business, I ignored all the signs. I had the knowledge. I knew the numbers. I just simply did not listen to what they were telling me. I allowed my passion to overrule not only common sense, but my business sense as well. In late 2011, the company I had worked for for fourteen years closed its doors and I lost everything. It was failure on an epic scale, but I learned from it. This adversity forced me into an important realization; the numbers don’t lie. Upon this realization, I really only had one choice – to let go of the failure and move on. When you pay attention to the business side of your business, the numbers tell a story about the past, present and future of your business. That knowledge is power, as long as you use it.

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