Have you managed to take a breather from all the trade-shows lately? Why is the trade show season
scheduled as such (Jan-Feb)? Because this is when we’re planning the new crop season that is merely 8-10 or so weeks away now. Exhibitors want to influence your thoughts for when you’re making planning
We know what you are planning, but what aren’t you planning? Here are the 3 biggest issues that
farmers tend to not plan, based on nearly a decade of my experience in the banking and financial
1. Anticipating Cash and Operating Credit Requirements
What is worse than running out of cash when you need to make a purchase? Running out of
credit when you need to make a purchase! With the incredible highs and lows of a farm’s cash
position through a one year cycle, this is a CRITICAL planning process to undertake. And once
that’s done, work with your banker so he/she is not getting a 5-alarm phone call begging them
to extend your limit.
2. Creating a realistic capital expenditure plan
CapEx drives as many urgent financing requests as anything else. “Hello, Banker? I just bought a
sprayer at the auction. Can you make sure the cheque clears? I’ll be in tomorrow to apply for a
loan.” CapEx should be part of the overall business plan, not a knee-jerk reaction in response to
that hair-trigger you pull when the auctioneer is looking your way.
3. Being Unaware of Family Aspirations
Can you picture what a combination of fear and obligation look like? It’s what a banker sees in
the face of a client who just came in advising that his/her son/daughter wants to farm, so “we
need to add land and equipment.” Fear over the volume of debt that is needed (likely requiring
the parents to co-sign.) Obligation because “the kid needs to get a start somehow.”
I wasn’t a family negotiator then, and I’m not one now. If you need that kind of help, speak to a
family coaching or mediation expert (I know some good ones, so I can help.) But for crying out
loud, please start talking to your family early about their intentions. A farm is more akin to a
barge than a ski-boat: it’s not highly responsive, takes time (and room) to maneuver, and can’t
hit top speed without a whole lot of things going according to plan!
Do you know how much operating credit you’ll need this year? Will you just rely on cash advances when
your line of credit is at limit?
When you acquire assets, is it “because it seemed like a good deal at the time” or because it fits your
overall business plan?
Do you assume you know what your family wants, or have you sat everyone down to talk? Don’t know
how to have that talk? Pick up the phone and get some help; your legacy (meaning your family and your
farm) are too important to let this slide.
From the Home Quarter
There are many factors that can affect your plans for the new crop year and if trade show exhibitors can
provide some of that influence, then they’ve succeeded in their plan. I’m suggesting that you have your
own plan in place, and whether you’re at the show or at your kitchen table, seek out the advice that
provides the most value to your business based on your plan.
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.
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.
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.
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.