This week, we’d like to share with you a piece that Christian wrote for the October Newsletter at Six Sigma Ranch and Winery:

We finished harvest this year  on October 2, beating by a week last year’s record-early harvest. We were blessed with an awesome crop, slightly lighter in weight than last year. With that, we put Six Sigma’s 11th harvest on the books, starting with 2004 and now including 2014. (The 2004 vintage was a mere 37 cases of Cabernet Sauvignon, but let’s count it anyway!)

Wrapping up harvest always reminds me of why I love growing wine grapes. As a farmer-at-heart, I enjoy anything that grows, from hot peppers to bitter hops, but there’s something special about wine.

Consider for example the 2005 Tempranillo, the first one we ever made. The vines captured every detail of the growing season in the vineyard. As the United States  swore in  the second George Bush for his second term on January 20th, the vines responded to freezing temperatures by forming tiny clusters inside closed buds. During the growing season, they recorded humidity, breezes, and aromas in the air from the nearby Pines and California Bay Laurel. On July 24, as Lance Armstrong crossed the finish line for his 7th Tour de France victory, the grapes were entering their final stretch of ripening, building sugars before their harvest on September 28.

When you open that wine, it tells a story of a season and a place, like a time capsule summarizing that year’s growing season. That’s one of the many things I love about wine!

Christian

Starting something new is hard. I’ve noticed that in my life, every time I start a new job, I’m terrible. It takes me a good year before I feel like I’m making any progress. The truth is that success in one field does not transfer directly to another. The same was true when I started farming.  I may have been a gymnastics coach, a finance assistant and an after school director, but had I ever been a farmer?  No.  If you are new to an industry and it feels like you’re just not that awesome, take heart; soon you will be. The discipline that brought you success in one career will eventually bring you success in another. Here is the key: Plan. Michael Hyatt, author of the book Platform, always tells people not to quit before the point of inflection. Plan for the time when learning needs to happen so you don’t have to quit due to lack of funds or energy.  And don’t quit just because you think you stink. Keep going and soon you won’t!

-Rachel

It’s a hot topic right now, this balance between work and life. And it’s a topic that I’ve at times tackled wrongly, from all directions.

The challenge for me is that I love my family, AND I love my work. And, most weeks, I feel like I’ve done neither one justice!

I’ve come to conclude that perfect work-life-balance is a myth. For me, I think there will always be a tension there.

Fortunately, working in agriculture allows for what I will call “work-life-integration.” (I imagine some other professions allow for the same.) Follow along with me here for a minute… Instead of attempting to split my time into compartments, I’ve found that there’s often a chance to overlap “work” and “life.”

For example, Rachel and I spent 20 minutes together this afternoon relocating a navigationally confused steer into the correct pasture. It was work, for sure, but also allowed for a nice stroll with my wife through sunny pastures.

Back at the house, we’ve been bottle-feeding lambs. This makes for a great family activity with a toddler and a preschooler, both of which are excited to be involved. Lambs bring a new meaning to the concept of taking work home.

Other opportunities in our industry (growing farm-to-table wine and food,) include working events and hosting wine tastings with Rachel. Both are certainly work, but can make a fun date at the same time.

If this seems to you like shameless propaganda for the family farm, you are right. Farming is a pretty great gig, one that I recommend wholeheartedly.

Christian

 If you’ve ever owned a Border Collie, you know that they have a simple purpose: Border Collies collect sheep (or ducks, or cattle, or even people at a party) into tidy groups, and move them around. For a shepherd, there’s nothing more useful than a good Border Collie to gather a flock and put it in a pen.

If you’ve ever owned a Labrador, you know that Labradors also have simple purpose: Labradors fetch ducks (or geese, or sticks or anything else that fits in their mouth) and brings them to a hunter.

For a hunter at the edge of a pond, there’s nothing more useful than a Labrador. A Border Collie, on the other hand, would be useless. The finest Border Collie in the world would not swim to fetch a duck. It’s just not in his programming. At the same time, a Labrador would never fetch a flock of sheep. He might fetch a single sheep if you shot it for him, but never the whole herd.

It turns out the concept of Border Collies and Labradors also applies to people.   Have you ever hired a person (or been hired) for a job that didn’t fit? (I’ve tried both, unfortunately!) No amount of effort or training will turn a great sales manager into an accountant. But, given the right job description and resources, that same sales manager becomes unstoppable.

Jess Arnsteen’s is. I recently had the pleasure of meeting this young fellow farmer working in California. He has a degree in History and Philosophy. When he graduated from school, people asked him what he was going to do with a degree like that. His answer was “Whatever I want.” And what does he want? He wants to farm. Jess currently is the farm manager at Parducci Vineyards, raising all kinds of vegetables, fruit, lamb and pork. That’s almost as strange as an economist turned ranch girl. I’ve seen this before.  

 Do you do what you love despite your background?

Rachel

 What is the difference between great success and financial ruin? Often, very little. But it takes quality financial statements to navigate between the two.

The two main statements are the balance sheet and the income statement. In broad terms, the first shows what you have, while the second shows how you got it.

Confession: I don’t much like the grunt work it takes to produce good statements. Its hard work, and I’ve put it off once or twice. But I love what good statements can do for a company. Thus, I encourage you to stay on it, and include an accountant to help you set them up right. Now back to the story…

 Balance Sheet – This shows all the assets (money and stuff) that your company has to work with at any given point in time. The basic equation for a balance sheet is:

 Assets = Liabilities + Owner Equity

 In other words:

Assets = What the company has today

Liabilities = What the company owes (debt)

Owner Equity = What the company is worth

It goes without saying that a healthy, growing organization gets to see an increase in assets and owner equity from year to year. A particularly savvy one will even eliminate the “liabilities,” making it almost unshakable in adverse conditions.

How do you tell if a company is making progress toward that goal? A big part of the answer to that question is the:

Income Statement – This shows a company’s profitability. It is also referred to as the Profit/Loss Statement. If the balance sheet shows how far you’ve traveled, the income statement shows how fast your motor is turning to get you there.

The income statement is my favorite. It starts at the top with Net Sales for a given period, and then subtracts expenses until the “bottom line” shows profit or loss. Thus, the equation for the income statement is:

Sales – Costs & Expenses = Income 

In other words:

Sales = Everything sold during a given period

Costs = Direct costs of producing products sold

Expenses = Other money spent in the period, like selling expenses and utilities

Income = What’s left over (profit!)

Now let’s sample the magic that comes with good financial statements, using a simple example:

Imagine Farmer Brown sells a case of honey for $14. Without good accounting, he may not know it took $15 to produce it. Obviously he’s losing money on the deal. 

BUT, if Farmer Brown figures out his costs, and can sell it for $16, he makes a $1 profit. (I promised this wasn’t complicated =) If he can sell it for $17, he makes $2 profit (double!) on each sale.

If Farmer Brown’s miscellaneous expenses are $20,000, he needs to sell 10,000 cases at $17 to break even. If he increases the price to $18, he makes $3 per case, resulting in a $10,000 profit on 10,000 cases after covering the $20,000 in expenses.

In this case, what’s the difference between great success and financial ruin? About $4.  

I recently read an article by a popular blogger in a reputable magazine on “How to become an overnight success.”  The premise was that it once took years to become a success.  Now, according to the article, a new product or service can become a success overnight.  This writer is in good company; there is a blog on every corner with a guide to instant fame and riches.

I was appalled by the article.  So appalled, in fact, that I confronted the man about it.  While I agree that ideas travel faster in our world of technology, I think his premise is a lie.  Let me explain.

If I shoot a great cat video, it can go viral. My video may spread across the internet in a matter of days.  But does that make me a “success?”  I don’t think so.  Does it create a lasting brand?  Of course not.  Even if I create an app and sell it to Google, and make a lot of money, does that make me a success?  I don’t really think so!  (Nor is anything worth Google’s attention created “overnight.”)   

The truth is that it takes sweat and blood to build a lasting company, brand, or anything else deserving the title “success.”   The danger of spreading the instant-success-myth is that it discourages people.  “What if I’m not a success overnight?  What did I do wrong?”  Nothing!  Nobody is a success overnight!  Ask any recipient of a lifetime achievement award in any industry, and he or she will tell you some version of what Dave Ramsey says about his company Lampo Group:  “We spent 20 years in the trenches, and THEN we became an overnight success.”  Any other outlook on life will only end in tears.  

Christian  

I’ve been wrestling with a topic this week. The idea comes from Eric Ries in his excellent book The Lean Startup.  Ries’ idea goes as follows (my paraphrase):  Any new company is wise to launch with an MVP (Minimum Viable Product.)  The MVP is an incomplete product with errors.  It is just good enough to see if an idea gets a warm welcome in the market.  After the market accepts it, the entrepreneur should begin tests to improve it, based on empirical data.

If you have an entrepreneurial spirit, I imagine the idea of an incomplete, buggy prototype hitting customers will bother you also.  Every entrepreneur dreams of walking on the stage with “the perfect product.”  The crowd goes wild, and sales skyrocket, because the entrepreneur and the team did such a great job researching the market.  That’s the way the story is supposed to go.

But Ries says those stories are fairytales.  When they happen, they are all over the news.  But they are one in a million, and they mislead the rest of us.  He suggests that there is no such thing as good market research (or else fewer companies would go wrong after spending a fortune on it), and the only real way to see if an idea floats is to put it in the water.  He also suggests that customers, especially early adopters, will forgive the product that wasn’t finished when they first saw it.  And they will be happy (even proud) to help improve it.  

I appreciate his logic in my mind, but haven’t yet embraced it in my heart.  His argument is compelling.  His list of companies that grow this way is impressive.  But it seems so clumsy, and why not just get it right before you go to market?  

I think Ries would suggest that “right” is a big question mark.  In an example, he shares how his team once cut a huge corner in programing an avatar (apparently a small figure that travels across a computer screen) to jump to a mouse-click instead of walking dramatically across the screen like those from the competitors.  His team knew it was hokey, and their peers likely laughed behind their backs.  But customers didn’t know it was a programming shortcut, and they loved it.  The overwhelming response was that the new “click” innovation made the avatar better than the competition.

I do find some peace in the MVP concept.  The idea, embraced, would say that launching beef with uninspired packaging, a mowing company without a logo, or a tasting room with not-yet-done landscaping, is a fine approach.  Even better, it is the recommended strategy by one of the finest minds from Silicon Valley.  If only I had known that all along =)  

Christian