value

Valued Advisors = Service of Value

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I cannot stress enough the importance of good accounting:

  • I cannot stress with enough occurrences (frequency.)
  • I cannot stress with enough emphasis (urgency.)
  • I cannot stress with enough significance (magnitude.)

You’ve read how I feel about good accounting: you get what you pay for, and if you want to go cheap you’ll get that kind of service.

In early 2015, one of my clients had decided to move their accounting to a quality accounting firm that is
strong in ag. Previously, they were using a service that, while providing a nice financial statement (more
than just a tax preparer,) offered little in the way of consult or advice. As we are trying to move the
financial reporting to the new firm, the old service provider has been unable to clarify a “due to/due
from shareholders” line item in the statements that will have significant bearing on future tax planning.
This solidified to my clients the reasons they were moving from this “low-cost” provider to a quality
accountant in a reputable firm.

As the new firm was reconciling 2014 for my clients, it was discovered that their previous accountant
had not submitted the GST reports correctly for a number of years. The impact will be tens-of-thousands
of dollars. What other information is now suspect to scrutiny? What other ramifications might there be?
In this case, there will likely be a GST audit because the old accountant’s lack of quality work will
BENEFIT my clients to a GST REFUND of an estimated $56,000!

Direct Questions

How much more money was potentially left off the table (i.e Agri-Stability) for these clients? They’ve
come off of a string of tough years due to excess moisture.

How valuable is it to invest a few thousand more each year with a quality accountant to ensure you’re
getting accurate reporting?

Do you ask questions of your accountant, or do you accept what they say without further inquiry? Have
you discussed with your accountant your long term business plans?

From the Home Quarter

It took about 2 seconds during a phone call on Friday between my clients and their new accountants for
my clients to see that the new accountants just paid for themselves. And while a GST audit will be
uncomfortable, the future comfort (and confidence) that the reporting will be on spec and on time is of
great value. We’re all eager to see what else this new firm can find.

If you, as a businessperson, don’t value the financial reporting that your accountant creates, then you
will likely see accounting as an expense that you are trying to minimize. Accounting is one of those
services where you get what you pay for, and going on the cheap can be costly, as my clients will testify.
If you cheap out because you don’t value accounting, I expect your business results would reflect it.

If you’d like help planning your farm for business and personal success, then call me or send an email.

emotion

Emotional Decisions: Business’ Achilles Heel

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I bought a used truck last week. Since I am no longer actively farming, I decided that my beautiful ¾ ton
diesel was more truck than I needed. It took me 2 years of searching to find that truck, so some people
are astounded that I would be selling it. It was still a terrific truck, and had nothing wrong with it.

During my search for another truck, I learned bits of info here & there about the good, bad, and
otherwise regarding the models I was interested in. It’s always a challenge to sort through the noise of
those who are die-hard loyalists who cannot see anything adverse about their brand and of those who
are inherently negative and cannot find anything good to say. How does a person decide?

I wanted the replacement truck to be in the 2011-2013 range. I faced the same challenge we all face
when considering a major purchase: can I find what I want within my price range, do I accept less than
what I want to stay within my price range, or do I pay more than I planned to get what I want? In the
modern age of “instant gratification,” our society typically pays more than planned.

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While some options on my list were important, others weren’t. When considering the Ford F150, I was
firmly on the fence over engine options: 5.0L or EcoBoost? As mentioned earlier, there is a lot of noise
about these engine options. I found a consistent message between 2 salesmen and felt that was the
most honest feedback I have come across. When describing what I need out of this truck, and why I was
on the fence, one salesman replied, “Well you’re just taking the emotion right out of this decision, aren’t
you?”

Yes. Yes I am.

The fundamentals of what makes a good decision are often clouded by emotion. We get so caught up in
the “want” that we blow right past the “need.” And since we as a society will typically pay more than
planned to get what we want, it creates a perfect storm. This storm has eroded balance sheet equity for
many, and left others upside-down on vehicle & equipment loans, but always negatively impacts cash
flow.

Direct Questions

How often have you let emotion take over your decision making process?

Do you avoid making a business case for each decision because it will prove the emotional argument to
be the wrong one?

What impact are you feeling from past emotional decisions?

From the Home Quarter

Removing emotion from business decisions is a key benefit that my clients enjoy. It allows my clients to
experience greater confidence in their decisions by having me filter through their emotions. I am not on
your farm each day, so the emotion of why you’re making the decision is not felt by me, thus allowing
me to see through it and keep you on track.

The truck I sold was rare because of its features and options. It had incredibly low kilometers for its age,
and needed nothing (I’d been through it front to back over the last 2 years.) What I felt for this vehicle
was almost on the verge of love (although I have never “loved” or “named” any of my vehicles, ever.)
And while it held a special place with me, it’s a truck, a tool, an inanimate object and completely
replaceable. I sold it when I did because I knew I could get maximum value for it now. A year from now
would be significantly less. It was advertised on Friday afternoon, it was sold by Saturday, and picked up
Monday. I found the truck I wanted the Thursday before, and picked it up a week later. I took the
emotion out of the equation.

Allowing emotion to influence your decision making is like putting on blinders: all that can be seen is
what you “think” you need and no other options appear available. Let’s take the blinders off, remove
emotion from the equation, and see if we can make a business case that offers an appropriate ROI.

If you’d like help removing emotion from the decisions you make for business and personal success,
then call me or send an email.

excellence

Seeking Excellence

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This is a verbatim copy of Seth Godin’s daily blog from April 22, 2015:

Demand higher standards.

On a long flight a little while ago, I saw two couples watch movies while they let their six kids
run around like maniacs from take off to touchdown. A seven-year old actually punched me. (I didn’t return the punch).

A few days later, I saw the now-typical sight of kids in a decent restaurant eating french fries
and chicken fingers while watching a movie on a tablet.

And it’s entirely possible you have a boss that lets you do mediocre work, precisely whenever you feel like it.

I wish those kids had said, “Mom, Dad, raise your standards for me. I deserve it.”
And the sooner you find a boss who pushes you right to the edge of your ability to be excellent, the better.

Even if the boss is you.

I couldn’t help being captivated by this simple and direct message (Seth is famous for them.) In
agriculture on the Canadian Prairies, we’ve generally been just fine by being somewhere south of
excellent. We haven’t needed to be better in business because we use excellent production practices;
Canadian farmers are arguably the best producers in the world. We haven’t needed to be better in
business because money is cheap and easy to acquire; interest rates have never been lower and lending
terms continue to be very favorable. We’ve gotten away with being mediocre, or somewhere south of
excellent, in our business skills because “the average was just fine.”

We would be happy if every year we got average rainfall, average heat units, average weed pressure,
average yields, average prices, average input costs, etc. It would be easy to farm if everything was just
average.

But it’s not.

And if you’re average in your management of your business and all its risks, it is pretty tough to expect
excellent results. We’ve enjoyed a 7 year bull run on yields and prices which has permitted “average” to
disguise itself as “excellence.” Are we still comfy thinking that recent history is our new normal? I
listened to Dr David Kohl in person 4 years ago and he said then that these highs in yield and price are a
black swan, and not the new normal. “Normal” is “the average” and since the average has managed to
disguise itself as excellence over the last several years, what will happen when this black swan migrates
out of here?

When the black swan flies away and “normal” returns, “average” will not be sufficient. We will still be
excellent in production; we may still have cheap and easy access to money. As you read in Growing Farm
Profits Weekly on April 14, 2015, farming is a lot more than just production. And easy money is
dangerous when in the wrong hands. If there are no guarantees that Mother Nature will offer a growing
season to facilitate excellent production, it will take the excellent production practices for which we are
famous to just be average. That is “average” without its disguise.

As Seth wrote, the sooner you find a boss that pushes you to edge of your ability to be excellent, the
better. If you are your own boss, like you, like me, like all entrepreneurs, we must find a way to be
excellent.

Direct Questions

In what areas of your business is your proficiency less than excellent?

Have you greatly shifted the parameters of what you call “average?”

Considering all the risk you face each year as a farmer, can you afford to be anything less than excellent?

From the Home Quarter

The message here is not to suggest that anyone has intentionally done a poor job of running their farm.
What is being suggested is that the recent ag environment has permitted great success without
requiring excellence across all aspects of the business. I am supremely confident that will change, and
anything less than excellence through your entire farm will offer disappointing results.

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*The Innovation Adoption Curve www.b2binternational.com

Excellence is a choice. Have your competitors already chosen excellence? When it comes to employing
excellence in business proficiency, you want to be on the left side of the curve above. I have a mentor
who helps me to be and stay excellent. My mentor has a mentor who does the same for him. It’s not
easy, but it’s worth it. As I’ve said, and will continue to say, “Do what you do best, and get help for the
rest.”

If you want more than average, call me. The Department of Excellence is open for business!

information

How Good is Your Information?

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I’ve been staunchly encouraging (ok, pushing) my clients to up the ante on how they manage their
business information. As we look at 2015, it is clear that opportunities for profit will be harder to find
than in years past and we must use every tool at our disposal to make the best decisions possible.

Enter data management.

Why do you think retail spaces are designed the way they are? It comes from the retailer devoting
incredible resources to study the habits and behaviors of its shoppers. They take that information and
then design spaces in such a way that plays to the habits and behaviors of their shoppers so as to put
the desired products in front of their shoppers at the desired time and place during the shopping
experience. For example, they have learned that typically shoppers turn right versus left as soon as they
enter a store, and thus plan their store layout in a way that panders to a shopper’s subconscious
behavior AND the retailer’s intention to sell high margin items. Maybe it’s that shoppers turn left and
not right, but you get the point, so who cares? Business cares, that’s who.

Like that retail giant, you have the ability to make important business decisions based on specific
management data. You would use your historical agronomic data to decide which crop offers the best
profitability on each specific field (relative to rotation.) You review historical financial statements to
measure actual results versus projected results. You analyze soil test reports to determine how much
residual nutrient remains in your soil before making fertilizer purchases. This could go on and on.
I spend a lot of time working on True Cost of Production calculations and building Profit Curves for my
clients. I can only do a precise job with complete and accurate information. And when you’re using that
work to make important business decisions, it is imperative that you provide usable and accurate info.
The retailer will often hire out the collecting and compiling of data as well as the analysis and the
creation of a final report with recommendations. The final report can only be as good as the quality of
the data collected. The retailer could invest millions of dollars based on the information in that final
report.

Your business is no different: you collect and compile your own data; if you need the help, there are
qualified advisors available to help you decipher it and provide recommendations; you are then more
confident in future business decisions because you make the most informed choice available.

I am often asked for suggestions as to which data management platform to use. I liken it to exercise: you
can run, bike, jog, swim, whatever…as long as you’re exercising. Same with your farm data, there are
many platforms available; find the one that feels best for you…as long as you’re using it.

Direct Questions

Does your data management practice include data as precise as pounds of nutrient per acre by crop?
Are you retaining records of historical information to establish trend lines?
Are you recording your data at all, even if it is just a pencil and a ledger?

From the Home Quarter

There’s a lot of noise out there about “big data” and ownership/use of that data, and for good reason.
I’m not condoning the perceived risks relating to big data’s custody and/or use of your info, but in reality
we’ve been letting Google do it to us for a very long time already. Does that make it acceptable? No, of
course not. But do we let that be the excuse to not collect and manage our data? The actual harm done
to our business from not collecting data is greater than the risk of harm from potential illicit use of our
data. The cost of doing nothing in this case is far greater than the risk of doing the wrong thing.
I don’t care if you use a “big data” cloud based platform, or a spreadsheet on your Windows 95
computer. You owe it to yourself and to your business to make the most informed decisions possible.
The best decisions are made with good information. How good is your information?

If you’d like help planning your farm for business and personal success, then call me or send an email.

sustainability

Sustainability

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I very briefly got into a Twitter discussion on Sunday with a few farmers when the question was posed
about sustainability, specifically if the ag industry in western Canada is actually advocating for
sustainability or just preserving the status quo. I waded in because “what is sustainability?”

My tweet was a question: How do you define sustainability? Is it agronomic, environmental, financial,
family? There are many factors to consider on the farm.

Sustainability means different things to different people. Kind of like the term “organic.” Neither are
clearly defined anywhere in a way that is unanimously accepted. Both then are open to individual
interpretation. I’m not treading into the organic/conventional battle here; I’m talking about
sustainability.

The responses to my tweeted question were all about soil and how if soil health is the primary focus,
everything else *should* fall in line. I respectfully disagreed. Good soil stewardship + poor financial
management ≠ sustainability. I was not trying to discount soil health, just hoping to expand their line of
thinking. I left the conversation at that point. The parties continued to banter about tillage, irrigation,
crop rotations, etc. I just wish we could see that there is more to farming than production.

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Agronomic Sustainability

If you don’t know what Cation Exchange Capacity is, what your C:N ratio means, or how to calculate
SBU, then hire an agronomist (of which I am not one.) Agronomic sustainability is as much an art as it is
a science, and if you’re not well versed in the art, or the science, of agronomy then being sustainable
might be a stretch.

Environmental Sustainability

This is a slippery slope with a whole lot of noise out there. Who should you listen to? I’m not touching it
with a 12’ pole. But all farmers know that the environment is critical to our success. ‘Nuff said.

Financial Sustainability

I could write a book on this. From cash management to proper use of leverage; from strategy to
operational efficiency; from knowing your numbers to management process, the pages would flow!
Same can be said here as for agronomy: if you’re not well versed, hire an expert!

Family Sustainability

This hits me directly right now. Since I made the decision to retire from active farming to focus 100% on
my consultancy business, the family dynamic has changed drastically. Looking back I can identify things I
should have done differently, but those choices were not apparent at the time. One choice that was
apparent was to set expectations very clearly on Day 1. It is safe to surmise that didn’t happen. Whoever
said “It’s never a problem until it’s a problem” is very correct in their vagueness. We all took for granted
that the family will work together and get along, a gross miscalculation as it turns out.

Direct Questions

When you hear the word “sustainability,” do you cringe expecting an environmental sermon?
How many distinct ways can you identify opportunities to improve or incorporate sustainability in your
business?

Are you putting in adequate effort to prepare for the unexpected so as to remain sustainable in all
aspects of your business?

From the Home Quarter

I fear for those who don’t recognize that their farm is about more than just production. I’m not
suggesting that production take a back seat because is it critical to success, but we must expand our
perspectives beyond the crop and the field to the markets, to the balance sheet, to macro-economic
forces, to family dynamics and HR issues, etc. This list could be endless, and everything on it must be
“sustainable.”

None of this is new news; we all know that we must be sustainable in all facets of our business to
survive. But I ask if we are all able to recognize the opportunities and threats to our sustainability in a
way, or in time, to do something proactive about it.

If you’d like help planning your farm for business and personal success, then call me or send an email.

planning

Decision Making with Incomplete Information

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“We rob ourselves when we make decisions in the moment with no thought of how those decisions will
impact our futures.” – Andy Stanley

It’s easy to look back at decisions we have made and say we could have done better. Are you ready to
head down “Metaphor Avenue”? Hind-sight is 20/20, so don’t beat yourself up; next time you’ll knock it
out of the park!

Why can you say that you could have done better in making past decisions? It is likely because you were
working with incomplete information. However, considering the vast availability of information today
let’s also suggest that too much information contributes greatly to incomplete information. There is a lot
of noise out there, and sorting through it all can be overwhelming.

So how does one make better decisions when working with incomplete information? It’s difficult, and
risky, especially considering the financial repercussions each decision can hold. Yet these decisions get
made regularly often based on emotion, a hunch, or some gossip.

Stick with your Strategic Plan

The strategy you have established for your business should rule when attempting to make decisions
with incomplete information. Any option that leads you to deviate from your strategy should be quickly
discarded. If a decision takes you away from your original strategy then either there are extenuating
circumstances or business has changed and your strategy wasn’t changed with it. Either way, you’ve got
some more work to do.

Follow your Tactical Plan

Strategy is what you want to accomplish and why. Tactics are how you will get it done. These 2 plans
should be closely aligned. Don’t get caught using justification that is “tactical” in nature to permit a
decision that goes against your strategic plan. To paraphrase the quote above, how will this decision
affect your future?

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Get Advice from Trusted Sources

Ideally, a trusted source has no vested interest in one decisive outcome over another. Although, a
trusted source can be someone who may have a vested interest, but whose integrity is above any
question you may have about his/her judgement. When information is incomplete or confusing, seek
out someone who has expertise and knowledge to help you sort through the noise and clear your focus.
A naturopath will always have a miracle product that can cure anything that ails you; a surgeon’s advice
will always insist that surgery is the best option. Vested interests….get a second (or third) opinion.

Direct Questions

Do you make business decisions without adequate information, basing your choice on emotion, a hunch,
or gossip?

Do your major decisions reflect your strategic plan? (Do you have a strategic plan?)

Do you have trusted advisors who you can call on for help?

Are you contributing to incomplete information from your own habits of improper data management?

From the Home Quarter

If we waited for perfect information before making every decision, we’d never make any decision. We
have always had to proceed with the best information we had at the time. And the fact is information is
never perfect. But don’t let that fact be an excuse to allow yourself to not manage your own business
information adequately. You have a responsibility to ensure that you provide yourself with information
that is as complete as you can make it. Business moves at the speed of the internet, so we must be in a
constant state of information management. Advisors can bring immeasurable benefit to your decision
making by either removing emotion or by providing insight from a position of unique expertise. And at
the end of the day, your best allies in decision making are planning and discipline.

If you’d like help planning your farm for business and personal success, then call me or send an email.

trees

Always Growing…Growing All Ways

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“Think of your business like a tree. What is a tree doing all the time? It’s growing. And if it’s not growing,
what is it doing? It’s dying. Your business is the same: if it’s not growing, it’s dying.”

I made this statement to a <2,000ac farmer at Canada’s Farm Progress Show in June 2014. He gave his
head a quarter turn with the slight tilt that indicated he thought I was nuts. Remember, this was still in
the period where Main Street of many small towns looked like a drag strip when word got out that there
was land for sale. Farm trucks from all over the area were burning rubber to get to the banker as fast
they could to get the loan and make the deal before anyone else. It was a period of “growth at all costs.”
His reply was, “I don’t want to grow. I’m happy with my land base as it is. My debts are almost gone,
why would I want to get back into debt? Then I’ve got to buy more equipment, hire some help!”

So I quantified my statement. “Growth doesn’t have to mean acres. There are many ways a business can
grow. If a farm can increase gross margins from better marketing, isn’t that growth? If a farm can
increase profits from better awareness of cost control and management of those costs, isn’t that
growth?” Reluctantly, he agreed.

Ever since the boom in ag took hold in 2007, farmers have increased acres and increased equipment
lines faster than ever. The truth of that statement can be read in the smile of every farm realtor and
farm equipment salesperson on the prairie. But why when we think of “growth” do we limit the scope of
our thinking to “size?”

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Increase Operational Efficiency

This is purely process management. How can you make improvements to processes on your farm that
will increase overall efficiency? For example, on our farm we run a single shoot drill. In order to apply
the volumes of fertilizer that our agronomic plan requires, we need to cover the entire farm twice: once
with a fertilizer blend in a band, and a second pass with seed & the fertilizer blend for the seed row.
Increasing operational efficiency for us could be trading up for a double shoot drill (although I’d prefer a
triple shoot), using a larger cart to reduce the frequency of stopping to fill, add a liquid kit to the existing
drill, or even utilize the high clearance sprayer to apply liquid fertilizer later in the growing season. There
are more options, but you get the drift. Naturally, each option has pros & cons and must be evaluated
from a management perspective to measure cost versus benefit.

Increase Size and Scale

Bigger is better, right? Not always. Are you confident that your net profit per acre is linear? What I mean
by that is, if you currently enjoy a net profit of $75/ac on your 3,000ac, will your net profit per acre
change if you increase to 6,000ac? 7,500ac? 10,000ac? The answer is Yes, it will change. Net profit per
acre is not linear and if you haven’t created realistic and honest projections when considering scaling up
your farm size, you might be surprised at the end of the year.

I often get asked by people who grew up on small farms in the 60’s and 70’s about farm size and just
“how big is too big” when it comes to farming in current environment. Is it 5,000ac, 10,000ac, more? I
always answer the same way, “I can tell you exactly when a farm is too big. It’s the moment that a farm
has expanded beyond the owner’s management capability. For some that’s 400ac, for others that
40,000ac. It depends.”

Increase Gross Margin

This one is easy to identify, but not always easy to do. Easy to identify because this is where profitability
on your farm begins. Not always easy to do because there are many factors out of your control. But as
you’ll recall from Growing Farm Profits Weekly Issue #2, I won’t dwell on what we can’t control.
Focusing on what we can’t control is passive and it concedes that outcomes are beyond our control.
Plus, it’s total BS.
Increase your gross margin by doing one, or all, of the following:

  • Increase your yields and/or quality
  • Reduce the costs of your direct inputs (seed, chemical, fertilizer)
  • Increase realized prices for your crop

Reduce Costs

Beyond the direct inputs as described above, cost control is a major issue on a lot of farms today. It
begins first and foremost with knowing your costs. How much are you spending on equipment, hired
help, fuel, parts & repairs, interest, etc? These are all controllable costs, and if you haven’t had a handle
on them to date, the current environment of narrow margins dictate you better get on it soon.
Now I’m not suggesting that you eliminate these costs, because you can’t if you want to keep farming.
But knowing where you can “trim the fat” is critical, and it also relates to operational efficiencies.

Direct Questions

Have you limited your view of growth to only “size and scale?”

How many different growth metrics can you identify on your farm?

What is the threshold of your management ability? Have you exceeded it, or do you still have capacity to
expand?

If you reduced each of your controllable expenses by a mere 5%, how much would your net profit
change?

From the Home Quarter

Growth as it relates to business does not purely mean “get bigger.” Remember that the purpose of your
business is to increase wealth, and size does not have a direct correlation to wealth. Size is one factor,
but we must not ignore all the others. I believe in the mantra that “better is better before bigger is
better.” Growth can manifest itself many ways, and we must examine all ways to grow if we want to
always grow.

horizon

Planning With a RESULTS Mindset

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I was listening to a local radio station the other night and heard an interview with the hockey coach of
the local junior team. What caught my attention was the comment “every game matters now, every
shift matters now as we try to make our way into the playoffs.”

So did every game and every shift matter less early in the season? Why would the team accept
mediocrity at the beginning of the season only to urgently try to find excellence at the tail end in a mad
dash to make the playoffs and maintain fan support?

It sounds to me like they didn’t have a plan when they opened Game 1 of the current campaign. If their
plan at the beginning of the season was to actually make the playoffs, then every shift and every game
would have mattered all season! Granted, that would not have guaranteed entry into the post-season,
but it’s about mindset. Did they have winning as a frame of mind all season? That is what I question.
How does this apply to your business? Simple: examine honestly and critically what is your frame of
mind going into the growing season.

Believe it or not, mindset will ultimately create your results.

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For example, a mindset of “don’t lose any money” will create an attitude of risk aversion, and a that would likely prevent you from forward pricing any new crop before it’s in the bin. The results would be lost pricing opportunities and likely lower profitability.

But if you are planning, I mean really putting effort into planning, the whole scheme changes.

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The essence of planning puts the focus on results. If you focus on results and therefore create a “results
mindset,” your attitude and your actions will reflect as such.

I contest that if that junior hockey team began this season with a results mindset, then every game and
every shift would matter right from the beginning of training camp. They’ll have about as much success
making the playoffs with a sub-.500 record in February as your farm will have in trying to turn an
average crop into a bumper in August.

Direct Questions

You are crop planning. Hopefully you’re market planning as well. Are you “business” planning?
Are you prepared to get dirty with some ground level business planning in 2015?

From the Home Quarter

In a recent issue of the blog, you were asked to think about how you define wealth,
because it would provide clarity in how you run your business. This week, you’ve been challenged to
think about your mindset at the beginning of this crop season. Intention sets direction. Clear goals set
the roadmap. As the CEO, you are the captain of your ship. Are you using any guidance tools, still
holding on to the compass and sextant, or consulting the GPS?

Over the next few weeks of Growing Farm Profits Weekly, we’ll dig deeper, and get a little dirty
regarding business planning. It can be messy, but it’s still cleaner than trying to deal with the unforeseen
when we’re not prepared.

Think about this: every enterprise that you do business with has a business plan.

Planting the Seed

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Every spring, farmers take to the fields to begin planting. With careful agronomic planning and an
immeasurable amount of faith, farmers depend on a lot of factors going their way, 3 of which are
sunshine, moisture, and the farmer’s ability to nurture the crop.

Sunshine

The provider of light and heat, critical to plant growth & development, inadequate amounts of either
light or heat will delay plant development. Your business is no different. Your business requires
adequate sunshine – what provides the sunshine to your business? It’s you. As the owner, president, or
CEO, you are the source of light and heat in your business, and the light and heat you need to provide is
strategic leadership and management process. It is your vision, your ability to enact on that vision, and
the manner in which you lead that will have the greatest effect, positive or negative, on your business.

Moisture

Plant’s roots are trying to find it. Nutrients aren’t absorbed by the plant without it. All things being
equal, by and large throughout documented agricultural history (recent seasons of excess moisture
being the exception,) moisture has been the most limiting factor in crop production. The moisture in
your business is working capital. Working capital is often the most limiting factor in a farm business, and
access to adequate working capital will become a serious challenge in the future. Your business cannot
function without working capital, like your plants cannot function without moisture. Drop dead
minimum working capital needs to be 50% of your annual expenses, with the target being minimum
100%.

Nurture

You nurture your crop the best way you can. You fertilize using the 4 R’s (right source, right place, right
rate, right time), you apply herbicide and fungicide at precisely the right time, and you scout for disease,
bugs, weeds, etc. all growing season. You do all of this because you know that your efforts will grow a
better crop. And while you nurture your crop, don’t forget to nurture the rest of your business. Your
people, be they your staff, your family, and yes even you, need to be looked after as well as you look
after your crop.

Direct Questions

Are you, as the owner, president, or CEO, generating enough sunshine (strategic leadership &
management process) for your business? How are you determining if your sunshine is providing positive
results? If you’re not talking about this with your people and your advisors, start now; you can’t
diagnose yourself.

Are your moisture levels (working capital) adequate to carry your business through the year? Can you
get through unforeseen and unplanned draws on your working capital? If you have inadequate working
capital, what are you doing about it? Don’t wait until spring, take care of it now!

Are you nurturing your business, your people, and yourself, as well as you nurture your crop? The “offseason” is a great time to show appreciation to your staff, family, and yourself.

From the Home Quarter

Your business is like your crop. It requires constant attention. It requires quick action when situations
arise. And it is far easier to act fast if you’ve put the time into preparing contingencies. Your business
needs to be nimble and act fast when appropriate. Information is coming at us faster than ever, and in
greater volumes. Business happens at the speed of the internet, and knee-jerk reactions are rarely the
best business decisions you can make. Every year you put together a full crop plan; do you do the same
for your business?