Inverhuron's Philosopher's Wool is being analyzed in a case study by the Sawyer Business School at Boston's Suffolk University, as a model example of a sustainable business.
Eugene Bourgeois has made his livelihood out of sheep farming and his other agricultural practices for the last 25 years. His efforts have translated into the acquisition of five per cent of the fleece market in Ontario and a chain of dependable suppliers and satisfied producers that cooperatively aid in each other's success.
"You pay attention to your customers and see what they want and need, but remember you can't run at a loss," Bourgeois said. "If you make sure you're profitable, you can't help but succeed."
His business model will be presented on April 19 at the Knowledge Globalization Institute's 2009 Conference in Boston, which focuses on social responsibility, sustainable business and is often attended by Nobel laureates and government agencies.
Two business law and ethics professors, lawyer Miriam Weismann and her partner, picked up on his concept after reading about his farm in the book written by Eugene and his wife Ann, Fair Isle Sweaters Simplified.
"They decided to use the business model as a case study for business ethics," Bourgeois said, adding he was happy to share his ideas with the school. "I have a different measure of wealth. It's about the life you are able to live... not how much money you generate from the business."
The bestselling book, for which they developed a knitting technology to meet global standards, describes their romance with the Philosopher's Wool farm, which is located across from Inverhuron Provincial Park.
Bourgeois said his concept mimics the new business models being taught in the American business school, as a means of creating a "sphere of influence" that allows a business to benefit and remain sustainable, rather than expanding beyond its means.
Although the 40-acre farm has expanded from the 10-acres he started with when he built the house, barn and auxiliary buildings in 1975 with no farming background, it's still manageable for him and Ann. She once worked as a teacher and he obtained a degree in mystical philosophy, but also has a background in mathematics and computer science.
Starting a small sheep farm opened up his eyes to the industry, but a specific scenario triggered him to delve into the business with his own unique approach in 1983.
He stopped at the market to by some yarn for Ann, who was happy knitting their Dorset ram's wool, but preferred knitting to spinning the yarn. A sign at the store offered 20 per cent off if he spent $200 or more and he couldn't refuse.
He thought long and hard about the sale on the way home during a snowstorm and realized the current business model he was selling his product within wasn't working. While it cost him 70 cents a pound to shear his sheep, he was only earning 32 cents a pound for the fleece that was generated, which meant it cost him about $22 a pound for the yarn to break even.
He then began to buy fleece from farmers for $1.80/lb., rather than the 10-30 cents they'd usually receive.
Though unpopular with producers looking to make a massive profit, Bourgeois used the opportunity to secure a steady, reliable and quality supply for the buyers he developed relationships with over the years.
"My plan was to pay farmers radically more for their product," he said. "I set up sustainable payments to farmers so they can actually make money. It's a way of taking a waste product (like wool) and turning it into gold."
Philosopher's Wool isn't a 'winning business' in the conventional sense, he said, as massive revenues aren't generated and investors won't see a 'big bank account,' which is the reason for his success. His business is dependent on reinvesting into itself, its producers and product to ensure there is always a cycle of revenue to pay his bills, maintain his farm, feed his family and leave a bit of money to travel North America, which is their passion.
"We keep our income as inventory and assets and we haven't cashed out yet," he said. "That way there is always money to pay the farmers and suppliers."
He plans to turn around his assets to fund his retirement when they're ready to move on from farming. He or Ann can now spend about an hour or so doing the chores each day to tend to the 20 sheep and about 30 chickens they have for both meat and eggs, leaving the majority of the day to use as they like or work in the gardens.
"We traded income for time," he said.
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More info on the business www.philosopherswool.com