How Does Rural System Propose to Make Money?

Our staff is often asked, “How does Rural System make money?” Recently a reader also sent us the following question about the profits reaped by the community:

 “I understand [Rural System, Inc.] to be a system of land management that generates profit, both for the people who live in rural areas and for absentee landowners. What I’m less clear about is exactly how it does that.”

We’re happy to answer these questions! There are many layers to how our company proposes to achieve “profit” and we’ve touched on aspects of economies of scale, groups, reduced waste, reasonable expectations, and what we offer the landowner. But the real key to Rural System’s success can actually be understood not as profit per se, but as savings. The profit ceiling may not change much if at all, but the profit margin is wider because costs have decreased – the idea behind “lean manufacturing” practices. Thus, more money is conserved within the company and invested in the community.

savings

The process by which Rural System conserves money and widens the profit margin is two fold:

1)    Within Rural System, Inc. we implement economies of scale, promote efficiency, pool resources, and reduce waste. The nature of the highly informed system with feedback and feedforward allows for more intelligent logistical strategies. Essentially, we are better able to hover around optimal cost-benefit ratios.

2)    Aside from increasing the profitability of managed land for landowners, our services in the community help reduce costs for families, small businesses, and land managers while spurring job creation and new business markets.

In the words of our founder, Dr. Giles:

“[Within areas where Rural System is active], when analyzed for the average family at the end of a year, the families will be [in better shape] financially from savings due to injury reduction, first aid training, nutrition, waste reduction, and good parenting [more so] than for the sale of produce from the land ownership. We work for net gains towards a profit index. After years of exploitation, there may be little reliable production left from the land, even if very precisely and carefully used.  Knowing this, Rural System gains will be from [the sum] of land gains, reduced land losses, reduced wastes, and reduced family costs related to health and wellness.”

He likes to refer to this as “conservation economics” or profits from money saved. And that, in a nutshell, is how Rural System makes money.

The profit index Dr. Giles mentions is unique to Rural System. Profit indexes are used in many industries in many ways, however the Rural System index is special in that it includes, and strives to appropriately weigh, intrinsic value and aesthetics. Most mathematicians, appraisers, and managers struggle to assign numeric value to these phenomena and yet we all accept that intrinsic value and aesthetics not only exist but truly influence our choices. Consider the process of buying a home and the priceless aspect of a nice neighborhood. How about historic land and the natural beauty of land with rich flora and fauna? As a society, we know these things are important and that we value them but we can’t say how much. Dr. Giles believes defining “goodness” can be done. We can begin to assign numerical values to these qualities as “aesthetic units” and further that they should be weighed alongside other values in our future land management decisions. This concept can be encapsulated by the idea that managers should consider qualitative attributes so that the overall outcome reached is improved community health.

What Rural System proposes to do for a community and arguably for society, is to link profit with the seemingly-ambiguous-but-omnipresent value of community health. We aim to demonstrate, through a computer-guided business aimed at optimal land management, that profit and goodness are not mutually exclusive.

As an ecologist first and entrepreneur second Dr. Giles thinks in terms of energy balance in a healthy system. Energy drives natural systems and can be measured numerically, much like money, and it is a limiting resource, much like money. Resources are resources, regardless of whether you are discussing a modern human system or a natural system – everything costs! The problem is that we have not been appropriately valuating the intrinsic and aesthetic components of the equation and thus are suffering greater costs by not assigning profitable gains from community health.

Sometimes things that “feel good” are good, we just haven’t been able to define them.

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About Risa Pesapane

Risa is the Project Director for Rural System, Inc. and is an experienced research biologist and wildlife ecologist.

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