The Most Important Ratio You Need to Know as a Business Owner

My clients often ask me about benchmarks and ratios. They want to know how their business financials compare to industry standards. What’s the appropriate profit margin for a farm business; or what should I expect to spend on labor? There are so many variables in agricultural businesses; I struggle to give a standard answer. Do you grow organically or conventionally? Do you grow on 5 acres or 500? Do you own your land or lease? Do you raise livestock or vegetables, or both? And in what combination? What makes sense for one farm may be unsustainable to another. Instead of thinking about standard business ratios I encourage my clients to figure out what a sustainable business model is for them.

The one ratio I do talk about is the “suckatation ratio.” That is, how much of the time does your work suck? Since we know there will always be aspects of your job that you don’t like, the question is: how much are you willing to tolerate?

“Everything sucks some of the time.”

All jobs have aspects of them that we don’t like. As entrepreneurs, we go into business for ourselves because we want to avoid the sucky things that come from working for someone else: whether it’s an overbearing boss or restrictive work schedule.

When you work for yourself, you still have sucky things, they’re just *different* things. As an entrepreneur, you need to decide which things you’re willing to put up with. To expect you’ll be able to create the dream job that’s fulfilling and joyful 100% of the time is un-realistic.

The New York Times recently published an article that doing fulfilling work 20% of the time was sufficient to avoid burnout (or a suckatation ratio of 80%). I was surprised this number was skewed so far towards unfulfilling work. I have personally set my suckatation ratio to 50%. If I’m not enjoying my work 50% of the time, then it’s time to make adjustments.

To be clear, most of us don’t work solely for the money. If we did, we’d all be lawyers and corporate executives. At some point, we decided (either unconsciously or deliberately) that we’d rather work in this industry because the job requirements to earn more money would not be worth the sacrifices…. We didn’t want to work in an industry with values that didn’t match our own. We didn’t want to work at a desk, or devote as much time to our studies in college; we didn’t want to spend too much time away from home and miss our children growing up; we didn’t want to move to a large city nor work in an office all day. For us, those things suck more than not making a huge paycheck.

For 2 years after business school, I worked for “the man.” I made a good salary; earning nearly 4 times more than I had ever made before. I could afford to buy a new car, and actually started saving. In fact, after 2 years, I had saved so much that I could afford to not work for a year.

But I was miserable in that job. I didn’t like the constraints of working the traditional 9-5, Monday through Friday, in an office. The hardest thing, though, was working within the confines of the corporate hierarchy. In order to implement initiatives to grow my business unit, I had to work with the sales and marketing departments. But they were too busy on projects for the other, bigger business units to focus on my projects. So, my unit flailed, and my hands were tied.

My job fulfilled me about 10% of the time: when I was actually cooking or looking at my pay stub. For me, the suckatation ratio was too high, and I decided to quit. Since I had saved so much money, I had the luxury to explore new opportunities. It’s how I landed with my consulting practice and ultimately writing “The Farmer’s Office.”

There are still aspects of my work I don’t like. Every once in a while, I have a difficult client. And as you’ve heard me muse on several occasions: I have to write reports and do marketing. But the majority of the time, more than 50% of the time, I love my job. I get to work with creative people; be surrounded by food and nature; share my passion for numbers; and lose myself in a good excel spreadsheet.

How much are you willing to tolerate for the things you love? Entrepreneurship isn’t for everyone. For many people, the stability of a regular paycheck is more important than the creative freedom to run your own business.

If your business is not as profitable as you want, it may be time to evaluate your suckatation ratio. If you love your work more often than you don’t; then what changes do you need to make? Do you avoid business management tasks because they’re no fun? Because there are other things you’d rather do?  Remember, everything sucks some of the time. If you want to keep doing what you love, then you have to tolerate some things that you don’t.

I’ve made it my work’s purpose to help entrepreneurs tackle the not-fun chores of their business; and help them feel empowered by them.  That is the goal with both my book, “The Farmer’s Office” and my website, The Farmer’s Office – Online. And it’s why I promote bourbon😉

What is your suckatation ratio?

The NYTimes article suggests a process for determining the suckatation ratio of your work:

“For a full week, carry a notepad at all times. Draw a line down the center of a page and label one column “Love” and the other column “Loathe.” Whenever you perform a task, no matter how small, be mindful of how it makes you feel. Are you excited about it? Do you look forward to it? Does time fly when you’re doing it? Or did you procrastinate, dreading every moment and feeling drained by the time you’re done?”

It’s up to you to decide if it’s tolerable. And if you need to make adjustments, you have a roadmap for making changes.

For further reading: I’m a big fan of Mark Manson, not just because he likes to curse a lot, but because he has a lot of great wisdom about living a meaningful life and human interactions. He’s guided a lot of my thinking around how I work with entrepreneurs… I attribute “Everything sucks some of the time” and the wisdom around it – to his book: The Subtle Art of Not Giving a F**k. He just came out with a new book, Everything is F**ked.