In my last post, I talked about my efforts to buy a 50,000 cattle business called a “Feedlot.” I spent a lot of time studying the business, and the industry, in which it operated:
I read tonnes and tonnes of documents and studies, and also spoke to as many experts as I could. And even then I never got to a place of comfort about my knowledge of it. I needed a few more years, to understand such a complex business. So I did not buy it, even though I might have invested in it, for just a small stake, but not for control. Unfortunately, this was an opportunity to buy the whole business, and take control.
1. Superficial understanding is not enough. Don’t rush off based on 1 hour search on the Internet. You have to dig really deep. I would have done this, even if I had been offered an opportunity to buy a chicken rearing business.
2. There is a big difference in the knowledge you need to buy a controlling stake in a business and the knowledge to invest for a small stake. I can bring myself up to speed to invest and have a small stake, in almost any business, but it requires much more knowledge to own and operate a business; in any industry.
… Many people have been burned because they did not understand this difference.
It explains why someone can be a great investor in a business run by others, but when that person takes over a business, to run it, they fail completely. These are profoundly different issues.
Always approach anything you have not done before with deep respect and humility. It’s what positions you to learn what you need to learn. King David, speaking of those who “scoff” (are dismissive of things they don’t understand):
“stay away from such people, they are doomed to failure”; He was a wise king.
The fact that a business is a good business, and the fact that it is in a good industry.. Does not mean it is a good business for you, personally.
I see many business opportunities (much more than you could ever imagine); nine times out of ten, I refer them to someone that I think is best qualified for it.
I always, always want to check my motive. I don’t want to go into a business for the purpose of bragging to others.
There is always space for you to play, but approach it with diligence:
A great King once said:
Be thou diligent to know the state of thy flocks, and look well to thy herds.