Why Aren’t You Dancing in the Rain?

I recently listened to an excellent, brief video completed by Matthew McConaughey entitled “Motivation.” I found it very uplifting and wanted to share its message with you today.

In his video, he shared six truths that you may find helpful:

  • “Life is 100% better when people know less about you.” At first, I thought he may have shared this, following the intrusions of the public life that he has led. However, the more I thought about it, the more I felt this may be true for all of us in business. When we consider the amount of information demanded of us today, from banks & the government, the reporting can seem overwhelming. Thus, I recommend you give them everything they need but limit it to just that.
  • “Never take advice from those who are not where you want to be in life.” Instead, determine your goals, recognize the hurdles, set your standards, outline your steps, take action and don’t necessarily listen to others who say you cannot do that. Often times, they are mistaken.
  • “Eventually, everyone will show you who they are. Just give them time.” I learned this recently when a bank offered a loan proposal to a Client of mine and then reneged on the offer two weeks later.
  • “Be smart enough to create your own opportunities in life.” Don’t wait for them to come to you. Go out and create them yourself. People value ingenuity, and there are items that only you can provide to the world! Lay out your plan & take positive action.
  • “The secret to happiness is freedom. The secret to freedom is courage.” You must act. Remember, no statue was ever erected to an “observer.” They are only built for people who take decisive action. Recognize your role, build a plan & go forward!
  • “We will always have some conflict in our lives.” Learn to deal with it and adjust your perception. As the Boy Scouts of America advise: “Improvise, adapt & overcome.” As Matthew McConaughey states, “You can either cry in the storm or dance in the rain.”

What is next for you?

Please let me know if I can help you. You can reach me at john@success-strategies.com.

Let’s take your business to the Next Level!

What Is Your Next Step?

I recently completed a Keynote Address at the Amelicor Corporation’s DHIA Conference in Las Vegas entitled “The Three Pillars of Financial Success.” It was a great conference.

In my presentation, I reviewed what I feel are the three most essential items to your business success as you move forward:

  • Protect the Balance Sheet – Our primary objective here is to build your Working Capital (Current Assets – Current Liabilities). This can give you lots of options, since it means you have or will have cash on hand. Further, if your Loan to Value %’s are in line (65% Herd Loan, < 100% on your Feed Line & no more than 65% LTV on your Real Estate Loans), you have opportunities, if needed, to restructure your debt obligations.
  • Build Your Banking Relationship – Finding and keeping a strong banking team around you is getting more & more difficult. The best way to do this is to maintain the same banker, and sometimes the best way to achieve this is by making his or her job easier. How can you do this? Provide them with monthly inventories, which is not that difficult if you are using feed programs like Easy Feed, Feed Watch or the many others available to you. Just complete a physical count 2X per year to ensure that your numbers are accurate. Also, share your Year-to-Date monthly Cash Flows with the bank & then verify your results with CPA Prepared Financial Statements to let them know how you are doing and to assist them when you need some help.
  • Guard Your Cash Flow – Why would you want to do this? Let me give you five good reasons. First, you will feel more in control, which is far better than feeling out of control… Second, if you measure it, you will understand it. If you understand it, you can control it better, and if you can control it, you can improve it. Third, if you take this seriously, you will get enthused and start to think “Why ever have a negative cash flow?” Fourth, you can discuss these results with your Team and evaluate what you can do to make results even better, because they want you to succeed. Finally, you can discuss this with your vendors. They, too, want you to succeed. In fact, they need you to succeed.

So, what is next for you?

Do you want to expand your operation? You will need all three of these items to acquire the financing you need. Are you positioning yourself for a sale? Focus on the first one, strengthening your Balance Sheet. Would you like to hold and simply boost your efficiencies? Look at all three pillars and decide what steps you should take to make the improvements you want, going forward.

Regardless of your choice, all three pillars can make the difference between reaching you objectives or falling short of your goal.

What is the Next Step for you? Please let me know if I can help you. You can reach me at john@success-strategies.com, and consider the following advice:

“There ought to be ways of reforming a business, other than by merely putting more money into it.”

Winston Churchill

Let’s take your business to the Next Level!

Are You Facing Adversity?

Lots of people are facing challenges today. Some of these are financial, and some are managerial. They are asking what they can do & why things do not work – they used to. The challenges of these times are not for the faint of heart.

However, it is time to grasp reality and realize that we are not going back to the “old normal…” On the contrary, things are changing so fast, especially with the recent introduction of Ai, we must learn to respond & act more quickly. As I recall when I became a green belt in Taekwondo in the early 1980’s and started training with black belts, my instructor yelled, “Mr. Ellsworth, you are in with the big boys now. You must kick faster!”

It turned out that this was good advice. The same applies to us today. There is no time to meander. As they said in Alice in Wonderland, “If you don’t know where you are going, any road will get you there.” However, you are better than that. You do know where you want to go. You must simply define it.

Determine what your desired destination will be, because the prize ultimately goes to “the decided.” Take the following steps:

  • Define your goal clearly in your mind & write it down.
  • Now the fun begins – you will face obstacles. My Business Coach Dan Sullivan says these are the raw material for your success. Identify them and discuss them with your Team.
  • Determine how you can overcome them. Again, outline these steps with your Team.
  • Establish dates for their completion.
  • Go forward, adjust course if necessary & win!

If you need assistance, you can reach me at john@success-strategies.com, and consider the following advice:

“Keeping a little ahead of conditions is one of the secrets of business…”

Charles M. Schwab

Let’s take your business to the Next Level!

How Can I Decide?

Ah, the art of decision making. It can be a genuine challenge today for several reasons. Sometimes, we have too much information. Often, we are afraid we might make a mistake (Oh, heavens…). In both cases, we can simply become overwhelmed and keep people from making much-needed decisions.

Here is my suggestion to you: Don’t delay! Realize that you have 9-10 other decisions to make today, and there will be more tomorrow. Having stated that fact, here is a process I like to use:

  • Determine the objective, i.e. where do I want to go?
  • Identify the challenges as much as possible.
  • How can I overcome these hurdles, knowing what we know today?
  • Consider what the best & worst outcomes could potentially be & can you live with them?
  • Choose your best option and “pull the trigger.”

Realize, of course, that none of us gets every decision correct, but as I said previously, you probably have 9-10 other decisions to make today. Deferring action to another day can often have other implications. Please allow me to share an example with you.

Six months ago, I had a dairy client who was completing an expansion of his operation. He had just added another free stall barn and needed to buy more cows to complete his growth process. Young cows were then $2,000 each, and he said “That’s ridiculous. I could have bought those last year for $1,500. I think I will wait.” Fast forward six months, and they are now at least $3,000, if you can even find any to buy… In hindsight, he could have bought them for $2,000 per head and then sold their calves for $600 each, netting his cost at $1,400 apiece, essentially less than ½ of today’s cost. He would also now be selling their milk at $22-23/cwt, rather than being short on his overall milk sales.

This is just one simple example, but it is a good one to illustrate why we cannot delay decisions. Everything keeps moving at such a rapid pace. How do you decide? Look at your goal, consider potential challenges, select what you believe is the best option (based on some market research, not just your neighbor’s opinion), and then pull the trigger!

Ultimately, have a plan, study your options and make it happen. No one ever built a statue for anyone who didn’t take action! What is the Next Step for you? Please let me know if I can help you. You can reach me at john@success-strategies.com, and consider the following advice:

” Let’s go invent tomorrow rather than worrying about what happened yesterday.”

Steve Jobs, Apple Co-Founder

Let’s take your business to the Next Level!

What Do I Do Now?

A lot of businesses, especially in the dairy industry, have run into cash flow problems during the past 18 months. Of course, this has also put negative pressure on their working capital position, i.e. the amount of short-term inflows of cash minus their immediate obligations for outgoing disbursements.

Much of this negative financial pressure could have been avoided, but sometimes politicians overlook the “unintended consequences” that can accompany their efforts at “vote buying…” Unfortunately, with the advent of excessive stimulus money, we were rewarded with increased inflation and higher interest rates from the Fed, as they attempted to rein in the effects of inflation.

As a result, most businesses were hit with higher costs, including labor. Of course, workers also need to survive financially, necessitating higher wages. Regardless, this is where we are currently.

So, “what do I do now” is a question many producers are asking today. Should I sell out while asset values are elevated to new highs? Will there ever be a better time to exit?

These are both great questions. However, I believe a better question to ask is this: “Is it sustainable? Can you cash flow, given the current & expected economic variables?”

For example, in the dairy industry of 2023, milk prices were average at best, and feed costs were exorbitant. Add to that the rising costs of supplies, repairs, labor and fuel, and we are in a perfect storm of negative cash flow and weakened working capital, as described earlier.

The problem is that for most businesses, they cannot borrow their way out of this, and even if they could, banks have been unwilling to provide the necessary refinancing needed. Thus, we need to look at the sustainability of these operations. I would invite you to look at the Cash Flow Analysis tools offered at https://success-strategies.com/shop/ to help you in your measurement. There you can run your YTD Cash Flow Analysis & complete some “What If” scenarios. For example, what if I could lower my labor expense by one Full Time Equivalent (FTE)?

If your operation is sustainable, at least at more normal Revenue & Expense levels, is it still something you want to do? Alternatively, do you want to exit and capture the Equity that you have built up over the prior years? Please take the time to truly consider your “Why?”

Believe me, if you know your “Why,” the “How” part becomes more straightforward. Is your “Why” for the family to continue for many more generations, is it to put your children through college or some other reason? This answer is crucial for you to reach.

To recap, to answer the question of “What Do I Do Now?”

  • Consider the business’ sustainability.
  • Really identify your “Why.”
  • Then, if you wish to move forward, study every Revenue source, potential new ones, and opportunities to diversify your operation.
  • Finally, study every cost & ask yourself, if I needed to cut my costs by 5% to reach break-even levels, could I do it? What would I reduce? Your answer will follow this process naturally.

This should provide you with methods to find financial relief for your business. What is the Next Step for you? Please let me know if I can assist you. You can reach me at john@success-strategies.com, and consider the following advice:

” Some men have thousands of reasons why they cannot do what they want to, when all they need is one reason why they can.”

Willis R. Whitney

Let’s take your business to the Next Level!

How Do You Spell Relief?

The last few years have been fairly challenging in terms of inflation, the resulting higher interest rates, considerably higher operating costs and only average revenue streams to offset these higher expenses. It’s been a classic “Cash Flow Squeeze.” I imagine that the sales of Rolaids are higher as a result…

While this has been challenging, we need to set a course of action that will be beneficial to you and your business. As prices received start to rebound and some costs begin to decrease, it’s crucial that we put a plan in place. Here are five suggestions:

  • Talk with your vendors about price relief or better payment terms. Remember, they only thrive if you survive. Customers going out of business are of no help to any vendor. Their policies, while they may seem tough, were put in place because of customers who went broke &, hence, left the vendor unpaid. The same policies were not necessarily set up for you, so communicate with your supplier.
  • Build your banking relationship through better reporting, closer monitoring of your cash flows and then communicating with your loan officer, rather than surprising them with unwelcome news at the last moment.
  • Diversify your operations when it makes sense. I know, someone is going to say that they diversified their operation by adding almond & walnut orchards to their dairy, and now they are all hurting. However, you must admit that this scenario is rather unusual. They will bounce back. Methane production may fit your dairy facility, positioning you to take advantage of the growing demand for energy.
  • Is expansion the answer? Greater efficiencies and economies of scale can be positive factors as your industry rebounds.
  • Are you following the advice of your CPA, your Attorney or other Consultants you use? Why pay for their advice and then do nothing? I believe that is the definition of insanity – doing nothing and then expecting different results.

This brief list provides you with several ways to find financial relief for your business. What is the Next Step for you? Please let me know if I can assist you. You can reach me at john@success-strategies.com, and consider the following advice:

“Everyone who got where he is had to begin where he was.”

Richard L. Evans

Let’s take your business to the Next Level!

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How Do You Prefer to Spell It?

I was recently thinking about two words that are quite similar. Those words are Creative and Reactive. They contain the same letters but have different meanings. In business, as in life, they represent vastly different approaches.

Let me provide you with some real-life business examples:

  1. Your bank emails you and suggests that your Inventory Report is late. You react by finally submitting it to them. The creative approach would be to already have submitted the report. Hence, in response to their request, you forward the completed report that you’ve already submitted 2 weeks earlier. Check mate!
  2. In a reactive state, you wait until you have substantial Accounts Payable past due over 120 days and then attempt to figure out how you will ever get them caught up… A more creative approach might be to discuss the tight cash flows with some of your vendors to see if you can get better payment terms or talk this over with your banker, in anticipation of upcoming budgetary challenges. Then, you will be prepared through a credit line increase or a possible real estate refinance.
  3. A reactive borrower waits until interest rates are supposedly at the absolute lowest point, even though the Prime Rate has been at 3-3.5% for 15 years. A creative borrower looks for a fixed rate that he can live with, in terms of his budget, and gets it locked in before rates climb 5.50%, as they have during the past two years.
  4. A reactive person asks, “Why put pricing options in place? Why spend the money for options when prices are so good?” A creative person considers putting a floor under his prices as a form of insurance to protect his margins in good times and in periods of low prices, rather than just in times of calamity.
  5. A reactive businessperson simply calls 911 when a worker gets hit with a heart attack or other serious ailment & hopes for the best. A creative one sets up protocol to not only call 911, but they also have employee meetings where workers can learn about safety issues and even learn CPR.
  6. Going back to fixed rate loans, when rates were lower & times were better, the reactive person suggests they can always fix rates later. The creative borrower watches rates closely, because you never know when an industry can be hit with a downturn, low revenue streams or higher input costs, as we have seen during the past 24 months. He fixes rates when it makes the most sense, not in the middle of  a cash flow squeeze when banks may be reluctant to offer new financing.

As you consider these comparisons, which one best describes you – Reactive or Creative? This is a crucial question for you to address. Your future success depends upon it. Please let me know if you would like some assistance at john@success-strategies.com, and consider the following advice:

“You, too, can determine what you want. You can decide on your major objectives, targets, aims and destination.”

W. Clement Stone

Let’s take your business to the Next Level!

What If They Left?

About five years ago, I suggested that banks were making it more difficult to acquire operating lines of credit, especially in the dairy industry. In fact, I predicted that within ten years, they may not offer these credit lines.

I wish I had been wrong, but the reality is that it is becoming more challenging to acquire these lines of credit, especially given the challenging profitability levels throughout agriculture these past several years.

In all fairness to the loan officers who provide these lines, they have a tough role to play. They are caught in a difficult balancing act of serving the needs of their bank customers for loans, while also protecting the assets (loan dollars) of the bank from default.

What can you do? If you can acquire these lines of credit, be prepared to provide monthly inventories & position reports. Does this sound like a lot of work? It may be, but it also represents the best way to protect your Balance Sheet. One of the biggest shortfalls I’ve observed in operations with financial challenges is negative Working Capital.

For example, the past 18 months have seen high prices for feed & commodities, hurting the profitability of dairies, and pushing their Loan-to-Value % up on their lines of credit. This may also have happened with dairy operations on their Herd Loan LTV %, as they bred with more beef semen and thus maintained fewer dairy heifers. The resulting feed costs are lower, but LTV % may suffer.

What’s the answer? Monitor these items every month, and if you see a deteriorating trend, do something about it. This is all part of protecting the Balance Sheet of your operation. This, combined with a regular monthly Cash Flow Analysis, will build your business profitability and also boost the relationship you have with your banker.

This tripod of developing a stronger Balance Sheet, protecting your Cash Flow, and growing your bank relationships will help position you for greater success.

As you consider these challenges, do you have a plan in place? Please let me know if you would like some assistance at john@success-strategies.com, and consider the following advice:

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”

Winston Churchill

Let’s take your business to the Next Level!

What’s in Your Future?

Today, we hear a lot about the advent of automation in our business operations, especially with the introduction of Artificial Intelligence and other new technology. I find it interesting that Warren Bennis, professor of business at U.S.C., offered the following thought back in the early 1980’s:

“The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment.”

This sounds like a fully automated system. Are we approaching this point with the introduction of more and more automation & technological advances? Quite possibly.

My first Client to automate a major task was through using a robotic machine to push up feed throughout the day. I believe at the time it cost about $40,000. However, it replaced one full-time employee, paying for itself in less than one year. More significantly, it enabled them to complete a task that was not being completed consistently. As a result, the Client’s milk production per cow has climbed by ten pounds per cow per day, offering an even bigger payback.

Comparing the Labor costs on dairies with robotic milkers vs. conventional milking setups is eye-opening. Our experience is that it is 1/3 of the cost of the conventional setup. Additionally, there is little cost for the robot’s time, there is no overtime pay and they don’t require Worker’s Comp or Benefits coverage. I estimate that the payback on these units is easily within 5-6 years, to say nothing of the improved production, herd health and other benefits.

The point is this. Automation is becoming more and more available. Fortunately, it is surfacing where I hear the most common complaints from Clients – in the challenges of Labor.

My advice? Take positive action today and check out the payback on these automation options. Warren Bennis alluded to their benefits 40 years ago, and now we are there.

Are you prepared for this challenge? Do you have a plan for overcoming its obstacles?

I’d love to visit with you more about my work with other Clients on these areas and how you, too, can achieve an improved outcome. Please let me know if you would like some assistance at john@success-strategies.com.

Let’s take your business to the Next Level!

Are You Caught in the Great Meltdown?

Recently, I was reading a book by my Business Coach Dan Sullivan entitled The Great Meltdown. In it, Dan describes how our entire world is experiencing a “meltdown” in which bad news of high costs of Money, Energy, Labor and Transport (MELT) are wreaking havoc on many operations’ results.

Dan states that “the costs of MELT determine economic growth and progress or decline and collapse. Their combined, interactive costs are one simple, helpful indicator of the direction of economic performance in any market or industry. In short, when the cost of the four MELT factors goes up, progress goes down.”

He goes on to say that “when the MELT costs rise, there’s a dramatic separation between people’s circumstances.”

With that factor in mind, what’s your plan? As bank financing gets tighter (and more expensive, what are your options?

  • If borrowing Money becomes more challenging, can you shift some of your short-term loans onto longer term assets such as real estate? Loans with a longer amortization period can help immensely with your cash flows, by lowering your monthly payments.
  • Energy has become more expensive for all businesses. Part of this has been caused by government restrictions on oil exploration in the U.S., and part of the increase is a result of the transition, successful or not, to new forms of “green energy.”
  • On Labor, we all know that the cost is increasing (just to keep up with inflation), but what about productivity? Are we making gains there? The cost per hour is unlikely to drop in the short term, so unless the “productivity” per hour jumps, we will be faced with some genuine problems…
  • The cost of all Transport has been rising as result of both the Energy & Labor costs climbing. This has become clearer as we require 5 days to simply deliver a letter that used to arrive in two days and as we observe that the time & costs of getting equipment parts has grown considerably.

As you consider these challenges, do you have a plan for overcoming them? This is not a task that can be overcome in one meeting. However, I do believe that if you measure these items, you can better understand them. If you understand them, you can undoubtedly gain more control over them, and if you can start to control them, you will be able to improve them.

I’d love to visit with you more about my work with other Clients on these areas and how you, too, can achieve an improved outcome. Please let me know if you would like some assistance at john@success-strategies.com, and please consider the following advice:

“Let our advance worrying become advance thinking and planning.”

Winston Churchill

Let’s take your business to the Next Level!