Interruption

Interruption

/1 Comment/in , , /by

This shouldn’t be here.

It shouldn’t have gotten done.

But the thought of missing a Tuesday for the first time in 172 consecutive Tuesdays has me doing something I probably shouldn’t be doing. I should still be in bed. I’m very weak.

Actually, I should be in Boston to attend a conference I’ve been looking forward to for a year. But, illness can have a way a derailing all of our best laid plans.

Over the last week-and-a-half, both of my children have been affected by a different iteration of  the virus that is currently going around. My oldest took the least of it; my youngest was nearly hospitalized. I managed to dodge it, until I didn’t. It caught up to me on Sunday, the day that was all planned out: tidy up work before my trip and, of course, pack for the 5 day venture. As my condition worsened, I made the call at 5pm to cancel my travel plans. By 8pm, I was headed for emergency.

This has been the first time I haven’t gotten out of bed in 2 whole days since, well, that story is a little personal.

I have heard a disappointing number of business owners over the years express how they need to hold on to the reigns and keep control; their justification is that they need to be needed. They feel that their purpose is to control the business. How unfortunate.

What happens to the business of an owner with that mindset who suddenly took ill? Does the business stop? What should be told to customers, employees, suppliers?

If you are a business owner, ask yourself the following to gain some insight into your business continuity plan:

  1. Can your business run without you there every day?
  2. Is there someone, or several others, who know what you know so that your business can operate uninterrupted in your absence?
  3. Do you have health insurances (disability, long term care, critical illness) to cover your personal financial obligations during an illness so that you won’t be draining cash from your business during that time?
  4. Do your loved ones and/or your key people know who to contact and what to do in case of your severe illness or sudden passing?

As a solo-preneur, I am my business. If I’m not working it, my business stops. So for the last few days, things have stopped. Can your business afford to stop?

Plan for Prosperity

There are few guarantees in life, and yet it happens too often that we don’t plan for that which is guaranteed. Maybe us weak humans have difficulty facing our own mortality? Maybe it’s something more narcissistic? No matter what it is, we’re all going to get sick now and again (whether it’s a minor illness from which we recover or something more serious) and we are all going to die…someday. If we aren’t prepared for the inevitable, the people left behind are the ones who will be hurt the most.

Take some of that (perceived) unpleasantness onto yourself and do this hard work so that you can save your loved ones, your employees, and your legacy the pain of trying to keep things afloat while you’re out of the picture.

CEO Labor

CEO Labor

/0 Comments/in , , , /by

When we put autosteer in the tractor, it was my dad who said, “This isn’t farming if you’re not driving the tractor!”

It was a frustrated colleague of mine who said, “When driving tractors is more important than running the business, we’re near the end…”

My friend, Dean Robinson, published a great piece recently on how common it is in family businesses for the owner, the boss, the CEO to “regress” from being the “entrepreneur” back to being the” technician.” While this is common in family business, it seems like an expectation in farming. What I’m getting at is that successfully running a business involves thinking and acting like a CEO, while it is assumed that running a farm means getting dirty and operating equipment with the rest of the guys and gals in the operation. We all say that “farming is a business” but actions don’t appear to support that. Here is Dean’s column in its entirety; put the words in your own context to gauge how they apply to you.

Dean Robinson header

Dean Robinson photo

EDITION 67 – WEDNESDAY 3RD MAY, 2017
______________________________________________________________
TECHNICIAN – MANAGER – ENTREPRENEUR – PART 2

In last week’s edition of Growth, we talked about the evolution from Technician to Manager to Entrepreneur and how many family business owners are regressing from Entrepreneur back to Technician.

Here’s a reminder of the five adverse effects for your family business of this regression

  1. The client exposes themselves to risk if you are doing too much of the work yourself.
  2. You are not growing if you are not communicating often enough at a higher level.
  3. You put financial pressure on the business every time you hop into the rollercoaster of chasing work, finding too much of it, doing all of it, then running out of work again.
  4. Your bank is exposed to risk if the business is too centred around you and your involvement.
  5. Your team don’t see you as a leader, so might take instructions from you, but not direction and inspiration.

The five reasons I have given you above are motivation enough to have family business owners stop and think about why you are dragging yourself back into the role of the technician. However, it is not the biggest.

The number one reason why you should not do this is that I hear too many family business owners expressing unhappiness as to how their day to day life in business is panning out. They are fed up with the constant phone calls, the poor performing staff, the rushed deadlines, the lack of time to do any form of business planning. Yet, they turn up to their business every day and do the same old thing.

Here’s my message:

Stop it! Stop it right now!

You cannot grow a business that is profitable, valuable and sustainable in the longer term if you, the Entrepreneur, are operating at the Technician level.

If you keep falling back into the Technician’s role, you should seriously stop thinking about growing your business and, instead, lower your expectations as to what you want out of life and how your family business can fund that. You should revert back to being a Man (or Woman) in a Van and have a limited customer base that you focus on.

Now, if lowering your expectations is not on the cards, you need to think about what you need to do to ensure you not only put yourself back in the Entrepreneur’s role, but engage the three point racing harness and stay there.

There is an important element to locking yourself into the role of the Entrepreneur. I am yet to see a family business owner that can do this alone. As a family business owner, you need someone alongside you who:

  1. Challenges you.
  2. Forces you to think differently.
  3. Encourages you when you make progress.
  4. Pulls you back on track when you deviate.
  5. Supports you in your journey.

As the owner of a family business, you have complete control over the direction of your family business. However, because you are at the top of the tree in your organisation, most people don’t question you, the decisions you make or the direction you take. Which is why at times, the direction is forward, at others it is round and round, and at others still, it is backwards.

Having someone from outside your business perform this role creates:

  1. Accountability.
  2. A sense of reporting to a higher authority.
  3. A measure of progress.
  4. A degree of perspective.

Do you have someone in your family business life that is working alongside you so that you stay in the role of the Entrepreneur?

 

This Week’s Tip

“If you as the Entrepreneur, keep regressing back into the Technician role, your life will only get much, much busier as your business grows. More work for the business means more work for you personally. Which means less time for yourself and your family. What’s your choice?”

 

ABN 77 613 885 859
PO BOX 533, CAMDEN NSW 2570
(02) 4654 5000 – 0409 207 969
DEAN@DEANROBINSON.COM.AU
DEANROBINSON.COM.AU

 

Copyright © 2017 Dean Robinson Group PTY LTD, All rights reserved.

 

To Plan for Prosperity

The risks that Dean highlighted in his column should provide adequate reason to pause and reflect. Operating at a technician level (as labor) does not afford the CEO adequate opportunity to develop and execute his or her vision. Short term decisions get made from a technician’s perspective which have long term effects that are not given sufficient consideration because the CEO’s chair remains vacant…because the CEO is running equipment and not the business.

Maybe if farm CEOs spent more time in the office and less time in equipment their equipment costs wouldn’t be so high…?

 

MISmanagement

Operational MISmanagement

/0 Comments/in , , , /by

I recently had an experience on my least favorite Canadian airline which was so bizarre that laughter was all I could do in the moment.

The original plan was as follows:

  • 5:50pm Chicago to Toronto;
  • 2.5 hour layover at Pearson, relax, eat, maybe get some work done;
  • 10:55pm Toronto to Regina.

While waiting to board the 5:50pm flight, watching time tick on and on, and even though our plane was at the gate and empty, there was still no one boarding the aircraft at 5:50pm. Yet, the information screen at the gate insisted that our flight was “on time.”  I snapped this picture and tweeted it.Operational MISmanagement

At 5:55pm, an announcement was made: due to runway construction at Toronto airport, our departure from Chicago was being delayed until 9pm. We were instructed to go relax, find something to eat, and come back to the same gate at 8pm. (If you’re keeping track, that is a three hour delay which would have us landing in Toronto at 11pm…5 minutes after my flight home was to leave Toronto for Regina. Clearly, I’m not going to make my connection.)

After to speaking face to face with an airline “customer service agent” (you can infer that the quotes are meant to imply sarcasm) I was informed that there were no other flights on other airlines that might get me to Toronto to make my connection. When asked who would be picking up the cost of my hotel room in Toronto since it was clear my connection would be missed, the response was “We (the airline) don’t do that. But I can give you a food voucher for here (Chicago O’Hare), just be back by 8pm to board this flight.” He hands me a $15 voucher, which was about enough to buy a bottle of water and a piece of gum in O’Hare…

As I begin to circle around to find somewhere to eat, I find myself walking right past my gate, and see a line of people boarding the plane!! The information screen at the gate now says the flight will leave at 6:50pm (If you’re keeping track that is 1hr delayed from the original schedule, but a full 2hrs ahead of what was we were told 15 min earlier.) So I board the plane.

Despite the posted 6:50pm departure time, an announcement from the flight deck is made at 7:15pm: “We’re just waiting on a few passengers and then we’ll push back from the gate. Due to runway construction at Toronto Pearson, we will be unable to reach our gate in Toronto upon arrival. So we’re going to push back and sit on the tarmac in Chicago for 1 hour; we can sit on the tarmac here or in Toronto, it really doesn’t matter. So you know, it’ll be about 1hr from push back to liftoff.” I still can’t understand why we needed to board just to sit in the aircraft when we could have remained in the terminal and actually had something to eat…

Finally we have inched our way to the runway. Wheels up at 8:10pm. One hour flight to Toronto, plus the time change, and we touch down at 10:10pm. Because it’s Toronto, there is 15 minutes of taxiing; we’re at the gate at 10:25. I have 30min to clear customs, clear security, and make my connection home. Now if only the 22 rows in front of me on the flight had been courteous enough to let those of us with a connection off the plane first… To their credit, the airline did request that other passengers without a connection remain seated. No one complied.

long lineMy legs still ache from being at a dead run, with luggage and wearing a suit coat, for what seemed like a mile despite likely only being half that. My Nexus card allowed me to bypass the 308 people in line at customs (I was at a dead run, no I didn’t stop to count them) and thankfully at 11pm, there was no line at security. I am grateful to my fellow passenger coming from Chicago, just as late as I, trying to catch his connection to Montreal. He new where to go to get to our concourse (his departure gate was 2 down from mine.) I would have been lost had I not been following him.

They closed the doors to the jet bridge as I ran up to my departure gate. Through gasped breath, I explained in 2 sentences why I was late (regretfully, I may have used a few expletives.) The gate agent was without a doubt the best person I’d been in contact with from this airline on this day. She let me through, I boarded, and got home as planned.

 

To Plan for Prosperity

Operational MISmanagement costs airlines millions of dollars and immeasurable goodwill. Just have a look at United Airlines’ woes over time… Here are my questions relative to my experience described above:

  1. Runway construction at Pearson did not start unannounced on that day. The airline would have known about it for a long time. Why would we only be notified AT the time of original departure (5:50pm)?
  2. How can a 3 hour delay turn into a 1 hour delay in 15 minutes?
  3. Why rush to board only to sit on the tarmac for an hour before liftoff?
  4. People actually missed that flight, and in my mind it was because the airline told them to come back to board at 8pm but was now leaving the gate by 7:20pm. Part of the delay pushing back from the gate was because their luggage was being removed from the plane. I can’t even formulate a question for this, it is so asinine!!
  5. I was likely to miss my connection due to no fault of mine, yet the airline wouldn’t offer to pay for my hotel. How much do they value their passengers?

M-I-S is capitalized because if refers to your Management Information System. Your Management Information Systems, whether you’ve formally addressed them or not, are put to the test as you approach spring seeding. Tracking inventories (seed, fertilizer, fuel, parts, etc.), people (who is operating what & where), and cash (keeping vendors paid, moving grain as required) are all part of your M.I.S. Lose control of one piece of your M.I.S. and see how things are affected.
What are the impacts of seeding too soon, seeding too late, missing a pesticide application window, running out of fuel, or running out of capital…?

You have a system to get your crop seeded, to get it harvested, to manage all aspects of your business in between. It keeps your business running without a glitch, or in the case of a hiccup it provides adjustments to get back on track.

If Air Canada has any sort of “system,” it’s not working. I’m not sure how they stay in business. They could benefit from a good business advisor…

Who is your customer

Who’s Your Customer?

/0 Comments/in , , , /by

Twitter was (are you ready for this) “all atwitter” recently over the forcible removal of a passenger from an overbooked United Airlines flight.
I recently picked up on a Twitter conversation where a farmer was railing on “family farms” that are bigger than the family can operate (his logic was around size & scale of a farm that needs hired help is no longer a “family farm.”) His argument focused on how consumers hear “family farm” yet see large businesses that are worth millions, and how that could affect credibility.
I spent this past weekend in Las Vegas; my first time. It was easy to spot variations in customer service that range from excellent to hardly adequate. (FYI: I specifically chose to not use the term “barely” adequate because in Vegas, that has no many other meanings…)

One might think I spend too much time on Twitter. Actually, I find myself spending less and less; I am not an ideal social media marketer.

Regarding United, they made the decision to overbook this flight (and probably hundreds of others in any given week.) They knew it would inconvenience their customers and might even lead to a firestorm on social media (which it did.) By these actions, United has done a poor job of understanding its customers.

The farmer twitter bit about how consumers might perceive the message of “family farms” has some merit. We’ve learned that consumer perception need not be confused with facts (this is known as the post-truth phenomenon) and no matter the message, truthful or otherwise, belief rules all. Notwithstanding all that, the agriculture industry has done a poor job of connecting with consumers to create sufficient trust to ward off this post-truth B.S. we’re now swilling in…

Service in Las Vegas, a city built on tourism, is varied. Cocktail servers in most casinos were terribly uninterested and submissive, while dealers were all pleasant and engaged. The hotel housekeeping staff always offered a smile and “Good Morning!” to everyone that passed by. Servers in restaurants were generally outstanding.

Recognizing who your customer is and how to connect with them stems from culture. Culture is driven by the organization’s leadership, and is reflected in the environment it creates for employees to interact with customers.

To Plan for Prosperity

It matters not if you are United Airlines, a farm, or a Las Vegas hotel & casino, your customer are not your shareholders, your employees, or your suppliers. Your customers are those who purchase or consume your product or service. Your customers are how you monetize the work you do. How are you making it easier for your customers to want to do business with you?

 

Super Bowl Management Quality

Super Bowl Management Quality

/0 Comments/in , , , /by

They should have seen it coming.

Didn’t some pundit declare something like a 99.9% chance of a Falcons victory with about 8 minutes left in the game? Somebody please clarify if that was actually the case.

A rather pompous thought that I kept to myself while watching Super Bowl LI, after Atlanta took a 28-3 lead, was “Brady’s just smiling at the bigger point differential that he’ll get to cover on his way to a win.” In hindsight, that comment would have been brilliant…had I actually said it.

They should have seen it coming.

Yes, it is easy to prognosticate in hindsight, but that’s not the point here. What did it take, what did the New England Patriots do to win another championship, aside from setting 24 new Super Bowl records and tying 7 others?

  1. People
    Bill Belichick has been the head coach of the New England Patriots for 17 seasons. He is in the top 5 winningest coaches in NFL history.
    Tom Brady has virtually cemented his place as the NFL’s greatest quarterback of all time. Based on the last 17 years of performance, he was a steal in the 2000 NFL draft, going in the 6th round (199th)
    The rest of the team contains very few “superstars,” yet when their superstar QB was suspended for 4 games to start this season, the team went 3-1.
  2. Management
    This starts at the top with vision. In the five seasons before Robert Kraft bought the franchise in 1994, the team was 19-61 (a .238 winning percentage). In 1994, the team made the playoffs, and did so 4 of the first 5 years under Kraft’s ownership.
    Management’s plan clearly put great emphasis on people. Since Kraft took ownership, the team has only had 3 head coaches, with Belichick, the current head coach, being in place for 17 of 24 seasons of Kraft ownership. The team is part of a privately owned family enterprise.
  3. System
    What words could you come up with to describe the system that has propelled, and maintained, team success for so many years, including the greatest comeback in Super Bowl history? Many had felt that the game was over at half-time: no team has ever come back to win the Super Bowl from more than 10 points down, Atlanta was dominating both sides of the ball (offence and defense,) and New England was making mistakes (turnovers, dropped passes, missed kicks.) Yet, the Patriots found a way to win. They had a system, and stuck to it, never giving up, never quitting. It would have been easy to deviate from their system in the face of such adversity; it would have been easy to lose motivation under what was deemed to be an insurmountable deficit.

The New England Patriots are by all accounts a highly successful business. How does your business compare? Can you reach top decile?
People: do you have the right people in the right place? It does not matter if they are family members or not, evaluate everyone, even yourself.
Management: does your management team have a vision and a strategy to achieve results that would put you in the top 10% of comparable businesses?
System: have you developed systems that are proven to work year in and year out, providing you with dependable efficiency and results? Or is every year a new roll of the dice?

Management has a vision, they put the right people in place, and everyone executes the system.

To Plan for Prosperity

Set yourself up for success. Model your business, and your approach to business, after other successful enterprises. We may not be New England Patriots fans because we envy their consistent competitiveness and success, similar to how we may not be oozing with adoration for the most successful farms in our area, but doesn’t that make them a great model to follow?

For the record, I’m not a Patriots fan, I am (at best) a casual NFL fan. I was actually hoping Atlanta would win Super Bowl LI (for no specific reason,) but I’m not disappointed with the outcome; it makes for some great storylines and it forces everyone to admit some admiration for an enterprise with the success rate of the New England Patriots.

weakest-link

You’re Only as Good as…

/0 Comments/in , , , , /by

I had the Cowboys-Packers game on in the background this past weekend when I heard the comment from one of the broadcasters: “Your passing game is only as good as your 3rd receiver.” The 3rd received being the “weakest,” this suggests that even if you have the #1 receiver in the entire league along with the last and second to last receiver, your offence will suck. Interesting theory. How does this apply to your farm?

  1. Production: all the nitrogen in the world won’t grow you a crop if the plants are lacking other nutrients. Even something as overlooked (but gaining more attention) as micro-nutrients, a crop will grow and produce, but will it be the winner you need?
  2. Marketing: “If all you have is a hammer, everything looks like a nail.” Certainly we have progressed beyond selling our entire crop into a cash market; most producers now are using forward pricing contracts. Without them, even grain delivery is left to chance (many grain buyers won’t accept deliveries that haven’t been contracted in advance for that time period.) What about hedging accounts, foreign exchange risk, direct shipping, cross border delivery, etc? Forward pricing contracts today are the minimum, kind of like hauling a load to town and taking the price of the day was the minimum practice 30 years ago…
  3. Human Resources: “Hire for attitude, train for skill.” If you’ve done the opposite (hired for skill,) you’ve likely “fired for attitude.” Your team is only as good as its weakest link. While we can fire a non-arm’s length employee for cause, it is a lot tougher to fire a parent or sibling! Often times, we are not utilizing our team in the best way; many people who might not seem to “fit” can be redeployed, or re-purposed, in a manner or task that allows them to flourish. Training, not only your team for the work you expect of them, but for yourself to be a more effective supervisor, is indescribably critical to success.
  4. Management: “You don’t know what you don’t know…” I find myself spending time with some very successful farmers who don’t have a basic understanding of their financial statements, nor the financial ramifications of many business decisions. They are happy to garner the knowledge and happier still to be able to use that knowledge to improve profits and protect cashflow. Others do not have a game plan, choosing instead to focus solely on operating their farm, and making financial decisions reactively instead of proactively. The reduced tension that can be seen when they understand the benefits of strategy is often quite remarkable.

It’s easy to see how a small oversight in one area of your business, whether it be production, marketing, human resources, or business management, can have significant impact on your financial results. An oversight can be excusable, but negligence cannot. It is up to you as the CEO of your business to identify your weaknesses, evaluate their potential impact, and establish strategy to mitigate the risk. Help is a phone call away if you are not confident in tackling this important management function.

Direct Questions

What are you doing to identify weaknesses in all aspects of your business?

How to you engage in risk mitigation strategies?

What do you do with the weakest link?

From the Home Quarter

In football, players recognize that they are only as good as their last game. There is always someone else who is eager for a chance to take the position on the roster of a player who hasn’t performed to expectations. Reputation will only take a professional athlete so far, they still have to perform. Same can be said for your business. Your reputation with your creditors and vendors is important, and can get you through an occasional “difficult time,” but at the end of the day, they still want to be paid. It’s your performance, not your reputation, that will get them paid.

A chain is only as strong as its weakest link…
Your production system is a chain.
Your marketing practice is a chain.
Your HR approach is a chain.
Your management strategy and execution is a chain.

Your farm’s success is linked by production, marketing, HR, and management. Ignoring the trouble spots makes you the weakest link…

inaction

Critical State – Inaction

/1 Comment/in , , /by

Inaction, or procrastination as it is sometimes called, is the antithesis of entrepreneurial success.

It is true that there are many other factors that can contribute to a lack of success for entrepreneurs, but in farming, the effect of inaction can have immediate and catastrophic consequences. When we opened this dialogue on Critical State, a list of excuses for inaction were provided: not monitoring bins; too cold to haul grain; can’t scout the crop for bugs/disease, we’re at the lake. We all know of these circumstances, and others, as exhibited by our neighbors, shared during a presentation at an industry event, or as we may have learned the hard way ourselves.

If it was someone else’s inaction, we can easily see the effect, quantify the financial ramifications, and then wonder “how could they let that happen?”
If it is our own inaction, we downplay the effect and the financial ramifications, and then bemoan our “bad luck.”
This is not meant as a condemnation. It’s just human nature.

In my work with my clients, I encourage (almost to the point of insistence) that management processes and standardized workflow be developed and implemented. Consider for a moment virtually any business you deal with ever. Here are some examples:

  • Your crop inputs supplier has consistent procedures surrounding safety, receiving & storing inventory, and invoicing.
  • Your grocery store works within minimum and maximum inventory levels on a week by week basis.
  • Your accountant follows a standardized workflow for receiving, sorting, & compiling your information, and for preparing your financial reports.
  • Your favorite restaurant has a protocol for greeting patrons, seating them, & ensuring they are eating in a reasonable time, not to mention criteria for food quality, safety, and handling.

Following a set plan of action almost completely eliminates the risk of inaction. Grain will never heat in a bin if you check it on a set schedule with a short frequency. Crop pests and disease will not bring catastrophic damage to your crops is you scout regularly with a short frequency. And yes, hauling grain in very cold weather is not fun and it does bring about other unpleasant challenges. However, if you, or someone you know, has been unable to move grain on time due to no space at the elevator, no trains, etc, then you know how that can affect cash flow, which leads to late bill payments, or poor revolving of the line of credit, etc. If that LOC has an interest rate penaly for late payment, your profit could disappear to cover that interest penalty. Still think it’s too cold to haul grain?

Direct Questions

Every decision has consequences, be it positive or negative. How do you accurately weigh the consequences when making operational decisions?

Describe how the pleasure of inaction now is more positive than the risk of harm later.

How do your operational decisions impact your financial outcome? If you have trouble making this connection, please call me immediately.

From the Home Quarter

Entrepreneurs are renowned for their tenacity and vigor in achieving their goals. Yet many entrepreneurs fail for many reasons, one of which is inaction. But cut yourself some slack: every entrepreneur does not instinctively know exactly what to do and when to do it, many need guidance. Enter people like me who help our clients in areas where they are not instinctively excellent. One of my favorite phrases is, “You don’t know what you don’t know.” But being oblivious to better ways can become an excuse for inaction. As a farmer, you take far too much risk for margins that are too thin and unpredictable to leave anything to chance.

swathing-canola

Making Noise on (Emotional) Business Decisions

/0 Comments/in , , , , /by

There has been a lot of noise this week about canola seed prices for the 2017 crop. Figures as high as $700 per bag (about $14/lb) for a sclerotinia resistant variety have been thrown around. As a moderate fan of Twitter,  I had to laugh at one particular tweet from @DavidKucher: “I’d have to #SellTheSwather in order to afford next year’s Invigor seed price increase”. This, of course, refers to the now popular production practice of straight-combining canola versus the traditional practice of swathing then harvesting.

This opens up the perennial challenge for farmers: costs are increasing with no guarantee that production prices will increase as well, margins become questionable, and emotional decisions get made. Is it better to keep the swather and plant cheaper canola seed? Or follow through with straight-combining canola, sell the swather, and grow the expensive variety that works better with straight-combining?

Aside from the cost/benefit sermon that would fit very well here, I believe that the real issue is differentiating between emotional decisions and informed decisions.

While I could go into a diatribe that includes harping on the how and why, instead, I’ll offer a list of questions that may help you determine whether or not to “sell the swather.”

  1. Will the more expensive seed provide enough extra yield to offset the added cost?
  2. Have you included the savings to your operating costs from eliminating the expense of swathing the crop?
  3. Does that saving to your operating expense include staff costs for you, or hired help, to run the swather?
  4. Have you considered the cost of owning the swather, and how eliminating it affects your fixed/overhead costs?
  5. How have you substantiated (actually measured) the seed loss from straight-combining and compared it to the loss from swathing?
  6. How cheap can you get new canola seed without sacrificing yield?
  7. What other benefits are you prepared to relinquish by opting for cheaper seed?
  8. Which canola variety matches your crop rotation, pest pressure, and operational timing & strategy?
  9. Which canola variety is most profitable?
  10. If you literally need to sell the swather to afford canola seed, can you see that there are bigger issues at play?

Selling assets to generate sufficient cash to cover operating costs is the beginning of the end. Selling assets that are minimally used to free up cash & leverage that could be redeployed elsewhere is a good strategy.

The answers the questions above are yours, not mine. There is no solution that I am prescribing by posing those questions. The solution will come from your answers. What I am prescribing is taking the time required to make informed decisions.

From the Home Quarter

Emotional decisions, made in haste, like shooting from the hip, will offer benefit…to someone…but not you.

Informed decisions keep you in control, on plan and on task, by ensuring there is benefit to you, your business, and your family.

For personalized guidance on determining if selling the swather is the right decision, call or email and ask about our Farm Profit Improvement Program™.

 

failure to communicate

Critical State – Inability to Communicate

/1 Comment/in , , , , /by

A few weeks ago, we opened a dialogue on Critical State which is defined as “the point at which something triggers a change in the basic nature or character of the object or group,” or to paraphrase: something can be referred to as being in a critical state when at the point of significant change.

Inability to communicate is, in my opinion, the greatest single cause of breakdown in relationships of all types and sorts. While many other factors come into play, and often bear most of the blame, the primary cause is communication and its lack thereof.

There are virtually countless books, courses, and resources dedicated to improving communication in almost any circumstance: marriage, parenthood, employee, co-worker, sibling, etc. etc. I have only read a minute fraction of what is available on this topic, so I cannot offer insight as to which are most beneficial. But, like you, I have a lifetime of experience in communicating with others. It is fair to say that all of my communication experiences could use improvement, because to say otherwise would indicate that there was, at times, perfection in my communication interactions. Let’s be honest, there is always room for improvement.

Here are some of the most important relationships in your business that need solid communication:

Bankers/Lawyers/Accountants

Often times, when hearing banker-ese or legalese, we tend to not ask that which we do not know or understand for fear of appearing, well let’s say it, stupid. Many people have signed onto something that they did not want, nor did not understand because they were unable to communicate their questions, their fears, or their outright disagreement. The future ramifications of a lack of clarity in matters of borrowing or of law can be monumental.
When I was still in banking, I had a husband & wife client where the wife would apologize for asking what she called “stupid questions” about the terms and conditions of their borrowing package. She could have silently signed her name to the documents and fretted over her lack of confidence in what she just did, but instead she chose to ask. For her own clarity, her own comfort, and her own peace of mind, she asked. For that, I was grateful; it strengthened our business relationship. When I told them I was leaving the bank, she hugged me saying “I’ve never hugged a banker before!” I replied with a wink, “I’m not REALLY a banker; just a farmer who’s working at the bank!”

Employees

Everybody is rowing their own boat in life. It does your business no good whatsoever if your employees are not rowing in the same direction as you. Setting goals and expectations for your team, and sharing the overall business goals with your team can carry significant weight in efforts to get everyone “rowing the same direction.”
I’ve learned about a number of farm businesses that have taken the proactive approach: involve the team in goal planning, provide regular feedback, reward good performance. The most successful farms treat their employees not like employees, but rather like trusted partners who have a vested interest in the success of the business, and communicate with them accordingly.

Family and/or Primary Relationship

I will go on record saying that all “problems” in family and/or primary relationships will trace back to communication. Whether communication be the final straw or not, communication likely led to the behavior that became the final straw.
I was very impressed in meeting a young farmer earlier this year. When he came home to farm a decade or so ago, with his would-be wife, his father made clear with him and his non-farming siblings how the farm would transition. There was no ambiguity; no one could complain; there are no hard feelings today. Consider how things could be today when we acknowledge how successful this farmer now is, and how much wealth he has built in his operation…lack of communication could lead to unreasonable demands from family members, and the potential for critical state.

Direct Questions

Does fear ever affect your communication? How do you manage it?

How would you rate your ability to share positive feedback versus negative?

From the Home Quarter

Lack of communications, or an inability to communicate, will lead to critical state in a sneaky kind of way. If one doesn’t notice that communication is breaking down, over time it will snowball into a major issue. Everybody has a breaking point. It’s usually wise not to let things get that far, not matter which relationship we talk about.

 

go fishing

If You Are Happy Just Floating Along, Go Fishing

/2 Comments/in , , , , , /by

I wasn’t trying to be funny when I quipped what is the title of this commentary while in a meeting with an excellent banker and the exciting young prospective client he introduced me to. It just sort of rolled off my tongue in the moment. It was a hit; both men enjoy fishing.

The premise of that particular conversation was profit. In my work as a lender and a consultant, I venture to say I’ve looked at hundreds and hundreds, maybe thousands, of financial statements. Those statements have told a vast array of stories, from the depths of successive and devastating financial losses to the opposite end of the spectrum with profits that make you wonder if your’re drunk when reading it. Many hang around the middle, somewhere south of an impressive profit , but still north of a fundamentally adverse loss. It is sad to discover than many farmers create this break-even situation by choice.

The choice is often centered around tax and the great lengths taken to avoid payment of income tax. The list is long and arduous; it won’t be found here.

Let’s put this in real terms. Most farms I’ve analyzed range from approximately $250/acre on the low side to $400/acre (or even higher) as the figure that represents whole farm cash costs. That is the amount of cash required to operate the entire farm for one full year. Now, I got my math learnin’ in a small town school, long before calculators were allowed in the classroom, back when cutting edge computer technology was the Commodore Vic 20, but math is math, so if we consider a 10,000ac farm with $400/ac costs, we’re looking at $4,000,000…each year!

Granted, there aren’t too many 10,000ac farmers who are happy to break-even each year, but they are out there. At the end of the day, I don’t care if you’re 400 acres or 140,000 acres, expect a profit!

Farmers take far too much risk each year to not expect a profit. If you walked $4,000,000 into any bank, could you get a better return than 0%? Of course! You could get a risk free rate in GICs that would probably approach 3% (or maybe 4%…any bankers reading this what to comment???) So I ask why, if you could get a risk free rate of 3% or 4%, why would you take a sh_t-ton of risk to accept a 3% or 4% return farming?

Direct Questions

Investing $4,000,000 in GICs and getting a risk-free 3% annual return grosses $120,000 per year before tax. Could you live on that?

Land owners/investors demand a rent that mimics 5% return on the value of the land. If you invested $4,000,000 in land, you could earn upwards of $200,000 gross in rent, plus enjoy the long term capital appreciation…could you live on that?

What is an acceptable return to demand from your business…based on the amount of risk you take each year?

From the Home Quarter

Farming is not for the faint of heart. Farmers accept the financial risks that come with farming because they understand them. The opposite if often true of stock markets: farmers aren’t typically investors in equity markets because generally they don’t fully understand the risks. But savvy stock investors who do understand the risks still expect a positive return, they aren’t happy “just getting by.”

If you’re happy just floating along, go fishing.

If you expect to get well paid for the risks you take, call me.