Texas Investment Network


Recent Blog


Pitching Help Desk


Testimonials

"I have been impressed with the level of contacts that I have yielded from your site. We certainly will be using the site again for capital raises for our projects. "
Aaron L.

 BLOG >> Recent

Hiring Money [Finance
Posted on September 5, 2017 @ 05:29:00 AM by Paul Meagher

One often cited classic of aglit (agriculture literature) is Maurice Grenville Kains' book Five Acres And Independence first published in 1935 and revised in 1940. The fact that it is still in print and easily purchased is a testament to its ongoing usefulness.

The book consists of 51 short chapters on a variety of critical areas of farm management from growing crops to managing finances. If you can't read the book, reading the table of contents alone (use Amazon's "Look inside" feature) is worthwhile because it is a masterful summary of the books contents.

The book contains lots of diagrams and figures because it is meant to provide practical instruction on a variety of farm matters. Again, if you don't have time to read the book cover to cover, simply browsing some of the diagrams would be a good way to quickly assimilate some useful content. For example, in the days before electric pumps, an hydraulic ram system was a way to use water to pump water. Here he shows how to setup an hydraulic ram system for use in the field:

Or in the home:

If you do have time to read the book, then you can consult the sections that are most relevant to you. The information does not seem too dated and it is useful to hear the perspective of a successful farmer from 80 years ago to see how they solved many of the same problems that farmers face today.

Some of the chapters that I read about first are his chapters on finance, capital, and accounting. In his chapter on Farm Finance I came across the idea of "hiring money". In the quote below, the masculinity of the pronouns dates the writing and the culture of farming that existed then but the points are still valid:

To determine ways to make money in farming the annual budget and the annual inventory are of prime importance. When the farmer starts business and at the beginning of each of his business years (which may be calendar or his own fiscal year, say March 1) he makes his inventory, then estimates his probable gross expenses and income for each month and for each crop or department so as to determine in advance at what time he is likely to be pinched for money, when he will have surplus, when he must borrow and when he can repay. Knowledge of business methods teaches him that hiring money is the same as hiring labor. [Emphasis mine] So he shows both his budget and his inventory to the cashier of his local bank and arranges for loans perhaps months before he will actually need to borrow. ~ p. 57

I think the notion of "hiring" money is an interesting one that potentially allows us to think more clearly about the role of capital than the notion of "borrowing" money. When a business needs money to startup, expand or as working capital that money is not borrowed but rather hired for a specific job that will ideally return an amount greater than the borrowed amount. We hire labor because their labor generates more revenue than it costs. Likewise, we hire money when we see an opportunity to generate more revenue than it costs.

The metaphor of hiring money encourages us to think about treating any money we might require to finance operations in the same way we would treat money used to hire labor. It needs to generate similar returns to be worth hiring. The metaphor of borrowing money is unhelpful in this regards - you are just putting it back into the original storage without any suggestion that it needs to generate a good ROI for the employer of the capital.

One other aspect of the book that intrigues me is the value assigned to "independence" in the title of the book. In these days of social media, I'm not sure you would be successful promoting the virtues of independence, but there was obviously a time when independence was highly valued, perhaps in the same way that resilience is valued today.

Permalink 

 Archive 
 

Archive


 November 2023 [1]
 June 2023 [1]
 May 2023 [1]
 April 2023 [1]
 March 2023 [6]
 February 2023 [1]
 November 2022 [2]
 October 2022 [2]
 August 2022 [2]
 May 2022 [2]
 April 2022 [4]
 March 2022 [1]
 February 2022 [1]
 January 2022 [2]
 December 2021 [1]
 November 2021 [2]
 October 2021 [1]
 July 2021 [1]
 June 2021 [1]
 May 2021 [3]
 April 2021 [3]
 March 2021 [4]
 February 2021 [1]
 January 2021 [1]
 December 2020 [2]
 November 2020 [1]
 August 2020 [1]
 June 2020 [4]
 May 2020 [1]
 April 2020 [2]
 March 2020 [2]
 February 2020 [1]
 January 2020 [2]
 December 2019 [1]
 November 2019 [2]
 October 2019 [2]
 September 2019 [1]
 July 2019 [1]
 June 2019 [2]
 May 2019 [3]
 April 2019 [5]
 March 2019 [4]
 February 2019 [3]
 January 2019 [3]
 December 2018 [4]
 November 2018 [2]
 September 2018 [2]
 August 2018 [1]
 July 2018 [1]
 June 2018 [1]
 May 2018 [5]
 April 2018 [4]
 March 2018 [2]
 February 2018 [4]
 January 2018 [4]
 December 2017 [2]
 November 2017 [6]
 October 2017 [6]
 September 2017 [6]
 August 2017 [2]
 July 2017 [2]
 June 2017 [5]
 May 2017 [7]
 April 2017 [6]
 March 2017 [8]
 February 2017 [7]
 January 2017 [9]
 December 2016 [7]
 November 2016 [7]
 October 2016 [5]
 September 2016 [5]
 August 2016 [4]
 July 2016 [6]
 June 2016 [5]
 May 2016 [10]
 April 2016 [12]
 March 2016 [10]
 February 2016 [11]
 January 2016 [12]
 December 2015 [6]
 November 2015 [8]
 October 2015 [12]
 September 2015 [10]
 August 2015 [14]
 July 2015 [9]
 June 2015 [9]
 May 2015 [10]
 April 2015 [9]
 March 2015 [8]
 February 2015 [8]
 January 2015 [5]
 December 2014 [11]
 November 2014 [10]
 October 2014 [10]
 September 2014 [8]
 August 2014 [7]
 July 2014 [5]
 June 2014 [7]
 May 2014 [6]
 April 2014 [3]
 March 2014 [8]
 February 2014 [6]
 January 2014 [5]
 December 2013 [5]
 November 2013 [3]
 October 2013 [4]
 September 2013 [11]
 August 2013 [4]
 July 2013 [8]
 June 2013 [10]
 May 2013 [14]
 April 2013 [12]
 March 2013 [11]
 February 2013 [19]
 January 2013 [20]
 December 2012 [5]
 November 2012 [1]
 October 2012 [3]
 September 2012 [1]
 August 2012 [1]
 July 2012 [1]
 June 2012 [2]


Categories


 Agriculture [77]
 Bayesian Inference [14]
 Books [18]
 Business Models [24]
 Causal Inference [2]
 Creativity [7]
 Decision Making [17]
 Decision Trees [8]
 Definitions [1]
 Design [38]
 Eco-Green [4]
 Economics [14]
 Education [10]
 Energy [0]
 Entrepreneurship [74]
 Events [7]
 Farming [21]
 Finance [30]
 Future [15]
 Growth [19]
 Investing [25]
 Lean Startup [10]
 Leisure [5]
 Lens Model [9]
 Making [1]
 Management [12]
 Motivation [3]
 Nature [22]
 Patents & Trademarks [1]
 Permaculture [36]
 Psychology [2]
 Real Estate [5]
 Robots [1]
 Selling [12]
 Site News [17]
 Startups [12]
 Statistics [3]
 Systems Thinking [3]
 Trends [11]
 Useful Links [3]
 Valuation [1]
 Venture Capital [5]
 Video [2]
 Writing [2]