From the course: Finance Essentials for Small Business

The lost farm

From the course: Finance Essentials for Small Business

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The lost farm

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- We mentioned the James Herriot veterinarian stories in our previous discussion of poor record keeping and controls. - We'd like to tell you about one more James Herriot story. This one a cautionary tale. This story comes from the book, All Things Bright and Beautiful. Now just a quick warning, there's no humor in this story and it doesn't have a happy ending. - Turns out a young farmer was fulfilling his dream of owning and operating his own small farm in the hillsides of Yorkshire. - He had worked for a number of years in the English steel mills, saving his money so that he could buy his own place out in the country. - And even though he was a city boy, he was making a good go of it. With the initial investment of his life savings and with a bank loan he expanded milk production. - He even stretched the budget to squeeze out the money to build out a new modern milk barn. He probably extended himself financially a bit too much, but he thought he could make it. - He built the walls, he poured the concrete floor himself. It was a proud structure. - Then disaster struck. His herd of dairy cows was decimated with a contagious bacterial disease that caused the new calves to die before even being born. - The cows themselves survived, but the young farmer had no new calfs to sell and the milk production of the weak and sickly surviving cows went way down. - In the end, the young farmer could see that his reduced monthly income was not going to be enough to pay off his loans. - So, he sold the cows, the barn, and the land for enough to pay off his bank loan. And then he retreated back to his old job in the steel mills. - Back to the steel mills working for someone else, minus the life savings that he had lost when he had had to sell his farm. - In the story, the veterinarian James Herriot wrote how he used to visit that farm in later years taking care of horses of the new owners. - The new owners used the proud little dairy barn built by the hands of the hopeful young farmer as a storage shed for grain for their horses. - A grain storage shed. All that was left of the dreams of a young farmer now toiling away in some steel mill somewhere. - The moral of the story, a failed small business is not just a sign of the workings of supply and demand in the market. - A failed small business represents the loss of someone's life savings. - And the loss of someone's dreams. - You don't want that to be you. This course is intended to highlight common mistakes made by new small business owners.

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