Wisdom gleaned from my dad’s 50+ years as a small business owner:
Bill’s Win-Win Year End Profit Top 10 list…
My father, Bill Calton, was a fan of good, honest profit – AND of making the profit work for you. A very generous man, Bill also preached against allowing the government snatch away profit in order to hand it to someone who hadn’t worked for it. So, for anyone interested in keeping profit “paid forward:” Here’s a roundup of Bill’s Top Ten on how to handle your end of year profits…
1). Get In Gear Before End of Year: Its Best to target putting your End of Year investments to work before the year’s end. Its our mission for purchases to be in-use by the end of the year. Smart end of year profit investors get their paperwork in motion to be in place by year’s end.
2). Long Term Benefits: Purchase products that deliver long-term returns: “Ya get what you pay for.” Although these purchases may cost more, (end-of-year money is still precious), you want to be able to walk over to your investment and pat yourself on the back for making the right choice. With the right product, you can be assured to do this five or twenty five years down the road.
3). Generational Payoff. Bill loved to invest in steel because he knew it would pay off, ‘generationally.’
Choosing the right products with end-of-year profitability means passing that good choice down to grandchildren and great grandchildren. That’s how Bill thought about investment.
4). Buy Inflation-Proof: We’d love it if a $100 cash had the same purchasing power it did 50 years ago. But, that’s just not the case. New vehicles lose ~20% of their value within two years. Due to inflation, if cold-hard cash is just left sitting, it slowly loses value. Some choices, however, can deliver the same value decades down the road. Bill sought out ways to put his money into steel at a good deal because he knew it’d have a solid value next year, or 25, or 45 years later.
5). Buy What WORKs: My dad’s parents were forged in the Great Depression. Bill was reared to see the unseen value in steel that could be useful in a hundred ways, even decades later. Bill invested in types of steel that could be re-worked, redeployed, cut, drilled, hammered, welded and/or bolted, used over and over, or just put in place and expected to do their job forever…
Bill’s values remind us that when times get hard, when ‘gadgets‘ lose their luster, we’ll lean on the products and people that keep working hard, even in the harshest conditions .
Bill Calton valued products that could keep up with the story on the farm.
6). Peace of Mind – is valuable. If we ‘have to spend money,’ lets spend it on something that fits and benefit the business. If that investment can also create a solid peace of mind… that’s even better. Bulletproof livestock containment cuts countless hours of wasted time and costly repairs.
On the other hand, cattle on the hoof can move pretty fast. Anytime cattlemen are forced to chase down their cattle, we usually get a call soon after they get them put up again. One customer talked to us after he had to shoot his wayward livestock – just before it wandered into nearby 70-80 mph traffic.
7). Turn Profit into a Profitable Action Plan. End of year purchases can actually push us into make decisions we needed to make anyway – and that’s not always bad. Producers often reach out to us when planning on constructing a new set of windbreaks for dairy or feedlots. Sometimes they’re working on a plan to build better fence or rebuilding or expanding a cattle working corral, crowding pens, or sorting pens. Investing in a solid, proven cattle fence forces us to keep profit moving forward, by positioning us to make even MORE profit.
8). Buy What You Need – Talk to your CPA about dialing in on the right range of end of year spending you need to do, and spend the right amount.
Spend the RIGHT money: Not too hot. Not too cold. Just Right.
Not too hot: If a business that needs to spend $20K purchases a vehicle for $40,000, that business may be choking off $20,000 of future cash-flow, which could mean sacrificing future investment potential, profitability and maneuverability.
Not too cold: Let’s say your business that needs to spend $20K but you only spend $10K. Then, your business may be taxed more heavily if you’re left with “profit on the books.”
Juuuust Right: Bill maintained that spending the right amount helped him to avoid un-necessary taxes while keeping a healthy cash-flow. And, YES, this can be done while setting the yourself up for next year’s success!
9). Have Your Cake and Eat it Too. (You can).
Its good to purchase an item(s) that saves you money. Its good to purchase a product that makes you money. But its way better to do BOTH.
Dad was always happy when he scored a “Triple Crown Cash-In:”
a). He’d buy his steel in large/wholesale lots, which would save him money.
b). He’d have a sizeable amount (not all) earmarked for a profitable project.
c). Over the next year or so, he’d sell the surplus steel for retail / cash / net profit. Bill would smile all the way down to the bottom of that leftover pile. When the next year rolled around, he was ready to do it again.
10). Work the List: Most importantly, when Bill was able to make a purchase that wove together several of his ‘Top Ten’ as possible — that gave him confidence to move forward. Because Bill believed it was best for hard-earned profit to be put to a good, solid use, he often brought home this win-win-win.
These Top 10 End of Year Guidelines came through for him again and again.
We hope these hard-earned words of wisdom will stick around for decades and bless farmers, ranchers, producers, businesses and households, both young and old, for generations to come.
A Happy Profit to All!!