VANCO Financial Group
In a recent episode of “This Old House,” Jenn Nawada, the gardener, helped a homeowner adjust his automated sprinkler system. It was inefficient. It lost water high in the air to evaporation, washed the side of the house and drenched the driveway, walks, and a rock garden. Her answer was to change the heads on the sprayers, re-aim some and eliminate others. She also replaced those by the house with a drip system. Her final solution was to add a sensor to monitor the humidity, ending unneeded watering. Elegant, simple, intuitive – and totally unexpected. It was better than that – effective, efficient usage at less cost with less waste.
That is the kind of solution we should all have controlling our investments: elegant, monitored, and tailored to its terrain and its objectives.
I am also reminded of a client whose small farm was completely surrounded by the town. Developments hemmed the property limiting it to barely 50 acres plus a small apple orchard. His family rotated plowed crops of corn, wheat, and a few vegetables sold at nearby markets, but only the apples were reliable, having been pre-sold to a local bakery.
Shortly after inheriting, he found a study done by a university in Michigan that documented the success of a small “truck gardener” in a similar situation with even less land. The Michigander had the university test his soil and tell him what items could be grown and how long a season he could expect. The study became a ‘test project’ with startling results. The ag scientists listed over 40 different crops and herbs that could thrive. Some, like Bok Choy, were obscure and others (lavender, blackberry), quite unexpected. Within three years, the ‘pocket farm’ was supporting the family at a growing profit.
With help from Rutgers, my client followed the Michigan blueprint. He divided the non-orchard property into plots for herbs, a greenhouse, and rows for X crop to be followed by Y (tomatoes, then asparagus; onions and sweet potatoes). Plant rotation was mapped and even areas to be clovered were scheduled.
Over the next months the family worked hard planting and harvesting the new produce including strawberries, rhubarb and sunflowers along with greenhouse-started plants and flowers. Along the way they discovered what thrived or died and carefully recorded their findings. By the third year, their new farm stand was booming. They no longer felt a single dropped market could wipe out their efforts or drain their savings. In year four their profits exceeded anything they had earned before.
It was an amazing transformation that required new skills, open minds, determination and hard work. Farming is not a haven of predictability or security. A risk? Yes. But, well planned, thought out and researched. In fact, they planned to lose money the first year, but actually broke even. The family is now producing enough to send extra loads to city markets and is considering some of the more remunerative ‘certified organic’ produce.
Why bring up their success? They stepped away from their known, comfortable farming model and turned to a different universe of new products which they cultivated and monitored. They planted year two based on their first year’s journals (learning by doing) and searched for what they could do to be more efficient. They were also realistic: the boysenberries and blueberry bushes might not fruit until year three – or not at all.
Think again that this is your portfolio – or even your life — and see how you could simply manage that portfolio yourself with a little help (the college ag department), sticking with what you know, while learning more and planning to do and learn more. You don’t do it alone and you don’t allow yourself to get discouraged.
No surprise, this family’s land inside town limits is worth more than most farms. It’s also the fifth generation. They have no plans to sell, but if they do so, it will simply be to move the operation to another site.
Their children are still young. There is a chance they will choose to become lawyers or coaches or employees. If that happens, the contingency plan (for now) has been written. The property will be required to be used as farmland for a period of at least 10 years, perhaps by tenants, if not family. Life insurance should be enough to cover estate and inheritance taxes and any major final expenses.
As farmers, they are a success. As a family and as business owners they recognize the values of planning and working the plan while staying flexible. They have learned they can cope with change and measure and accept risk while choosing to hedge some of it (insurance, the apples).
Have you considered your options? Is your traditional model working for you, or is it time to explore and discover what else or what more could work for you and your family? Is it possible you are losing money unknowingly and unnecessarily? The answers to these queries are seldom apparent. They can be a simple yes or no — or just maybe. If either of the latter two, you need to look further. The solution may be straight forward and, yes, even elegant.
What is required, most of all, is an open mind. What if what you know to be true about personal and business finance turned out not to be true, how soon would you want to know?
About the author
G. Holland vanValkenburgh, principal at VANCO Financial Group has over 40 years of experience finding answers to tough questions.