Hope is not a Strategy!

I recently was visiting with a prospective Client who made the statement, “Well, we’re hoping to get above 80 pounds per cow this year.”

That’s a fabulous goal, but not a very defined strategy. Now, just so you understand, this was an operation on its third generation, and they had never consistently been above 72-73 pounds per cow per day. As a result of our discussions that day, they did become Clients of mine, but only after I convinced them that they needed a more refined strategic plan.

We started with the following steps:

  1. Regularly scheduled Management Team Meetings – During these, we established this new goal of hitting 80 pounds per cow per day, focusing on cow comfort, fine tuning of their feed rations and getting their Days-In-Milk to be consistently in the 160 to 170-day range throughout the entire year. We also developed some plans for ways to holding this production level consistently by focusing on Close Up management and milking frequencies on fresh cows.
  2. Regularly scheduled Finance Team Meetings – Within these sessions, we directed our discussions to their Debt Structure, various Financial Challenges, and opportunities with programs such as DRP, PPP, EIDL, CFAP and EIEIO… Just kidding on that last one! All of these programs, except the last one, offered some serious benefits to producers if they were used in the right circumstances.
  3. Regular measurement of Actual Results vs. Projections – This is crucial on your financial numbers, as well as on your Management Results, such as DIM, Pounds per Cow, Herd Health and many other measures.
  4. Fine tuning our strategy, as needed. This is just like an airplane pilot. They have a travel plan, but they then adjust course throughout the flight, based upon changes in weather patterns and other items.

This type of strategic planning has worked very effectively for over 21 years for my own Clients. I will leave you with just one question: Have you developed your own strategy to succeed at a higher level? Our industry is changing very rapidly, so don’t delay. Take action now!

If I can assist you in any way, please let me know at john@success-strategies.com or 209-988-8960.

 “Wherever you are in life, you made an appointment to be there.”

                                                                                    Les Brown

Have you Given Up or Given Your All?

While I realize that the last few months have been difficult with the onset of the Corona-Virus and the severe decrease in milk prices, I hope that you are currently regaining focus and setting new objectives for your operation.

I know what you’re thinking… “Geez, we just got through the four & a half years of low prices, I was making some progress on my credit lines, and then BAM! The markets tanked again!” I don’t blame you for being disappointed by this downturn. It’s not your fault. However, it is your responsibility to take the steps necessary to move forward.

I recall one of the “turn-around” situations that I was consulting on during the 2015-2019 downturn. When I arrived, the Client had essentially given up all hope of recovering. That was the first item that needed to change. It was imperative that they believe that it was, at least, remotely possible to be more successful. Then, with that behind us, we set a strategy to help them achieve this goal.

Of course, this was not exactly easy with their banker trying to force them out of business. Now, at some point they may want to exit the industry, but no one should be forced to do this at the “bottom!” Thus, once I got the bank to back off and actually work with us, we developed a plan for greater success. After six months, the bankers actually started to believe that this producer could succeed, but they added, “Let’s see what the year end financial statement looks like…”

In the end, this is what happened. This dairy operation achieved a turnaround in excess of $1,100,000 versus the prior year. After the previously mentioned “change of thinking,” these were the steps we took to get their operation back “in the black” in terms of profitability:

  1. Set some challenging Objectives.
  2. Share these with your Bankers. Besides giving yourself some objectives to achieve, this does two other things. First, it keeps your Lenders informed, and it also let’s both of you know how you did vs. the goals.
  3. Measure your outcomes regularly. How else can you know with any degree of certainty how you are doing? Knowing this and then adjusting your course, as needed, is crucial to helping your business survive & thrive.
  4. Move the bar up! As you achieve better results, keep your Team informed and involved, and then keep setting higher objectives. These goals must be achievable but also challenging!

Regardless of what your position is today, you can, indeed, bounce back. I’ve seen so many scenarios like the one described above, where the participants had given up, but we still were able to succeed. I wish you the best of success in that endeavor, and if I can assist you in any way, please let me know at john@success-strategies.com or 209-988-8960.

 “All you can do is all you can do, and all you can do is enough.”

                                                                                    Les Brown

Maximizing Your Forward Progress!

In my last blog, I described the process introduced by Dan Sullivan, President & Founder of the Strategic Coach organization, in taking you to the “New Normal” for your businesses. Dan explained that as you move to your “New Normal,” you will be defining a better future for yourself.

I went on to say that once you define what, exactly, that new future includes, it is essential that you outline the steps to take you there. You may recall that I suggested you make the future outcome you desired specific, measurable and attainable, while providing you with a foundation upon which to build your bigger future.

With these points in mind, I hope that you set future objectives that are challenging and exciting. However, please don’t get frustrated if your progress is slightly slower than you want it to be. The key is to keep moving forward.

In uncertain times, we don’t always have 100% control over the outcome. However, that is no reason to not continue to push forward. I recall coming home from a Duke basketball game that my daughter Melanie and I had attended in North Carolina. While we thoroughly enjoyed that game, we were both anxious to get home. However, while we both had plans for the next day, the weather had different plans for us…

In spite of an ice storm, we were able to get as far as Washington, D.C., but after a five-hour delay, our pilots became “timed out” and couldn’t fly again until the next day. As it turned out, we were blessed with an overnight stay at a very nice hotel in the area, compliments of United Airlines. Additionally, we were treated to a nice breakfast the next morning. As I recall, I think we even received a free pound of Dunkin’ Donuts coffee out of the deal! We returned to Kansas City by noon the next day and barely missed anything.

Using this example, let’s say that one of your “New Normal” objectives is to return to profitability and achieve this on a consistent basis. This is an admirable goal, but I think it is safe to say that you may not have complete control over this outcome. The current state of our economy & the milk markets could slow your progress.

However, it is still important that you outline the steps you can take to move closer to this goal. Can you use DRP, contract more of your feeds or negotiate some of your costs? Speaking of costs, are there some items that you need to improve? Instead of maintaining a fleet of equipment and doing all your own farming, should you consider hiring a custom operator? Could you be that custom operator for other producers?

While your progress can be slowed down by factors beyond your control, the key is to consistently take action. Former Navy Seal Pat Dosett and Stanford University Neuroscientist Andrew Huberman state that “It isn’t about how much you do, but that you do something specific you are certain you can complete.” Forward progress here is key. They go on to say, “By taking action, you train your brain to repeatedly release dopamine, enhancing your energy levels and creating an outsized effect on your thinking, mood, and sense of what you can control.”

This perceived control will move you closer to your objectives! I wish you the best of success in that endeavor, and if I can assist you in any way, please let me know at john@success-strategies.com or 209-988-8960.

 “Planning is bringing the future into the present so that you can do something about it now.”

                                                                                    Alan Lakein

When We Return to “Normal” Again…

As I write this blog, there is still a great deal of uncertainty in our industry and, frankly, in the entire world economy. I’m sure that, as you read this, you, like me, are ready to get back to “normal.”

Will that actually happen? Maybe, but I’m not sure that any of us knows with any degree of certainty. With that in mind, please allow me to suggest a new way of thinking about this future challenge.

In a recent presentation by my Business Coach Dan Sullivan, President & Founder of the Strategic Coach organization, he asked listeners to answer this same question. Dan then explained, in his positive manner of challenging our thinking, that it was probably unlikely that we would return to the “old normal.”

In fact, he went on to ask, “Why would you want to return to the old normal?” Why not head directly to a “New Normal,” one that is superior to the old one? In essence, why not make your “New Normal” far better than your “Old Normal?”

To achieve that, he suggested that there are two questions that must be answered, and I have been challenging my Clients to start thinking about these:

  1. In the “New Normal,” what do you want to see happen? What items do you want to see changed from the old normal? What has to get better? What improvements do you want to see in your business? What are you fatigued with & thus needing to change?
  2. After you have identified what you want to see happen that is new, different & improved in your future “New Normal,” what steps do you need to take to ensure that you can achieve these new outcomes? As you outline these steps, please try to be specific, establish some deadlines (more on this in my next blog), determine how you can measure your progress, and specifically how you can build upon this objective as you move forward.

Once you have started this process, you will be well on your way to greater levels of success, because I believe that simply overcoming the inertia of our current situation is the key to a brighter future!

I wish you the best of success in that endeavor, and if I can assist you in any way, please let me know at john@success-strategies.com or 209-988-8960.

 “An intelligent plan is the first step to success. The man who plans knows where he is going, knows what progress he is making, and has a pretty good idea when he will arrive.”

                                                                                    Basil S. Walsh

This Can Still Be A Year for Winning!

As I write this blog, there is a great deal of uncertainty in our industry and, frankly, in the entire world economy. Our domestic milk markets are down 30% on price, and our export markets are being held back by a myriad of factors. However, despite all the gloom and doom in the current forecasts, we all need to realize that we can still make this into a winning year. Why would I suggest this? Please allow me to give you several reasons.

  1. It has just begun. While our markets have taken a downturn for now, it is far from over. I am encouraged that so many people across the entire globe are all pulling in the same direction. That, in itself, is a truly great achievement. It is unlikely that the entire world can be overcome, so I am confident that this many forces pulling together can result in a more positive outcome than what we are currently anticipating. As Yogi Berra once said, “It ain’t over ‘til it’s over!”
  2. If you maintain and even “fine tune” the basics in your operation, particularly in the areas of cow comfort, feeding, breeding and management techniques, you will undoubtedly be ahead of the game. This is not a time to take “shortcuts” in these areas. As we saw in 2009, people who took shortcuts paid for those over time though lower production, poor breeding results and numerous other areas. Do the best you can to “stay the course” on these essential basics!
  3. Manage your Revenue & Expenses as best as you can. None of us are miracle workers, but we can monitor these items more closely than normal. Doing so can pay huge dividends in both good times and tough ones.
  4. Focus on the items that you can control. Once again, this includes the productivity of your operation, the feeding and breeding results you are achieving, and the morale of your employees. They are your “Team,” so it is essential that you communicate with them even more than normal. They watch the news, and it is likely that they are worried, too. However, I am confident that they want you to succeed, so be an effective “Head Coach” for them.
  5. Remember, no game was ever lost in the first half. Ask the recent Super Bowl winning Kansas City Chiefs, who were down by as much as 24 points in their three post-season games that led them to their championship. Now, I know you’re probably saying, “Yes, but they had Patrick Mahomes and Andy Reid.” They most certainly did, and they are phenomenal in their respective roles, but if you’ve survived the prior downturns of the dairy industry, you’ve already proven yourself a winner. I believe you can do it again!

I wish you the best of success in that endeavor, and if I can assist you in any way, please let me know at john@success-strategies.com or 209-988-8960.

 “With every challenge you face, there is an opportunity hidden.”

                                                                                    Stephen Richards

Overcoming Adversity!

For the last five years, with the exception of the second half of 2019, the dairy industry has been a very difficult place to operate. Despite feed costs dropping considerably during this same time period, the decrease in this expense area pales in comparison to the precipitous drop we have seen in milk prices from 2015 to mid-2019 and now again in early 2020.

Believe me: I do understand how difficult it has been for all producers. We are in a very scary time, financially speaking. There is a great deal of uncertainty in both exports and in our domestic markets.

I recently re-read a great article by New York Times best selling author Brendon Burchard (visit www.brendon.com). Whenever I get worn down by events, I love to read some of his work or listen to one of his presentations. In this particular article, he discussed how we can deal with adversity when it strikes and outlined five major points:

  1. “Have confidence.” – He goes on to explain that this is a natural outgrowth of believing that you can overcome the difficulty you are facing. Becoming negative will do nothing but lead you into depression, so simply remember that you can, indeed, figure things out.
  2. “Keep perspective.” – Regardless of how difficult things may seem, it is quite likely someone in the past, probably even you, has faced the same problem. If others have overcome this, you can too. He also reminds us that each of us has survived hardship before, and we can do it again.
  3. “Schedule Action.” – A far superior course to waiting to see what happens would be to make certain that you schedule specific actions to deal with your problem. Set action steps you can take each and every day to handle this. Do not, under any circumstances, delay action. Avoiding actions will only make things worse. This is an ideal time to “step up” your action levels on cow comfort, breeding, feeding and overall financial management. Do not “cut corners” in these areas. It will hurt you down the road.
  4. “Ask for help.” – Believe me. In nearly every one of the financial turnarounds with which I have been involved, I only wish the Client had come to me for assistance sooner. It amazes me how many times during the past 21 years of consulting I have found myself saying, “Man, I wish they had gotten me involved six months ago…” As my business coach Dan Sullivan says, “The challenges & obstacles you face are actually the raw material for reaching your goals.” With this in mind, don’t give up. Get the help you need and develop your success plan!
  5. “Honor the struggle.” – Brendon explains that this represents a crucial element to having success in life. Sometimes we have to face adversity because we simply cannot control everything. Just accept that, control what you can, and guard your attitude.

I hope you find Brendon’s thoughts and my application of them to our industry helpful.

“How to Solve Problems!”

Solving problems is a large part of what I do with Clients. My goal is to get them to think things through and be better prepared for that day when a new challenge, whatever it is, may arise.

My business coach Dan Sullivan of the Strategic Coach organization stated that: “The challenges and obstacles you face are actually the raw material for reaching your goals.” That is why this process of recognizing these obstacles for what they really are is so crucial to your results!

So, should we welcome these problems and challenges at all times? Not necessarily. I’m not always thrilled by the challenges my Clients and I face. Yet, if we look at them as new potential opportunities, rather than as a calamity (You know, “Woe is me…”), you will undoubtedly be better off.

Let’s say, for example, that you’re not as profitable as you’d like to be. Imagine that happening in the dairy industry… Try out the following steps:

  1. State the Objective or Desired Result as specifically as possible. For example, you might say “Boost my Net Profit.”
  2. Next, get more specific on your goal: For example, “Achieve Net Profits of $200,000 this year.”
  3. Make a list of all the Obstacles that oppose that goal.
  4. Set a Target Date for this goal to be reached, e.g. by 12/31/2020.
  5. Identify the “Payoffs” for reaching this objective.
  6. List the primary Obstacles in more detail: Low Milk Prices, Operating Costs being too high, Excessive Debt per Cow, High Labor Costs…
  7. What Strategies can you utilize to overcome these Obstacles? Write them down.
  8. List who can help you complete the tasks necessary to overcome these Obstacles.
  9. How soon can these steps be taken? What specific actions will it require?

It’s a lot to think through and implement, but remember: No one plans to fail. They just fail to plan! In the words of Alex Morrison:

“You must first clearly see a thing in your mind before you can do it.”

That’s true for this process as well. See you at the Finish Line!

Our new Success Strategies Business Navigator Program is now available on line and begins April 17th. If you are open to learning new concepts and discussing them with other producers, you should take a look at this new program. It’s completely online, freeing you from travel but offering you an opportunity to learn from industry experts in the areas of milk marketing, management, financial analysis & banking/finance. For the value of the milk production of one 85 lb cow for a month, you can enroll in this quarterly workshop program for one year. What have you got to lose? Check out our 30 minute “Free Preview Class” at:    

https://success-strategies.webinarninja.com/automated-webinars/6585/register?wid=229414

You won’t regret it. I wish you the very best for a success-filled year!

“Staying the Course!”

I understand that there is a great amount of concern about the Coronavirus, particularly considering its potential impact on international dairy trade. Yet, if you’ve been reading my material for very long, you probably already understand that I tend not to overreact to events like this for several reasons. In a globally connected world, where every single announcement is spread quickly, we shouldn’t be too surprised by items like this. There also isn’t much I can do to impact the situation, other than praying, so I don’t think worrying about it will help.

Referring back to the global economy, of which we are an intricate part, did we ever think that we’d go through 12 months without something impacting our prices, despite the prior financial pain from 2015 to mid-2019? After all, we are part of this global economy, so numerous variables can impact our industry.

So, what can we do? I believe there are six steps you can take this year:

  1. Always have a plan in place. It may be somewhat late to be contracting milk today, but if you know your Break-Even Levels, you should take action to develop a solid marketing plan for your milk, especially with the availability of DRP and its related 40% government subsidies on the cost of its put options.
  2. Speaking of Break-Even Levels, do you know yours? If not, take some time to figure out what your levels are for milk pounds, milk price and feed costs. These are crucial to your milk marketing program.
  3. Is this a crisis? Yes, but are there other potential opportunities that may present themselves as a result? Probably. If exports are slowed on the selling side of our industry, there may be opportunities to lock in lower feed prices, too. If so, grab them when they become available.
  4. Measure your revenue and expenses regularly. With items such as Labor Expense going up every year, are you aware of your true costs? Remember, if you measure it, you can understand it. If you understand it, you can control it, and if you can control it, you can improve it. That’s what success is all about!
  5. If you have plan in place, stay the course. Your revenue may be lower, but it’s not going to go to zero, and your expenses won’t double, so keep a close watch on both items, know what your costs really are and then adjust them where you can. However, try to avoid making cuts that will impact your herd’s performance. That can be very costly long term.
  6. If you are in the middle of changes such as an expansion, do what you can to stay on track with your plan. The current downturn isn’t forever, and if it made sense in your prior analysis to expand, make more milk per cow per day or plant almond trees (diversify) in 2015-2019, it likely still makes sense today! Play the “long game.” Unless you were planning to sell out this year, you’ll probably be okay.

Our new Success Strategies Business Navigator Program is now available on line and begins April 17th. If you are open to learning new concepts and discussing them with other producers, you should take a look at this new program. It’s completely online, freeing you from travel but offering you an opportunity to learn from industry experts in the areas of milk marketing, management, financial analysis & banking/finance. For the value of the milk production of one 85 lb cow for a month, you can enroll in this quarterly workshop program for one year. What have you got to lose? Check out our “Free Preview Class” at:    

https://success-strategies.com/navigator-program-for-dairy-farmers/

You won’t regret it. I wish you the very best for a success-filled year!

“What’s the Best Ratio?”

The January 31, 2020 issue of the Daily Dairy Report, which I highly recommend, was entitled “Heifer Supplies Shrink.” Essentially, the report told us that during the past 10 years dairymen in the U.S. have culled heavily and still were able to expand the milk cow herd. How was that possible? It was due to the large heifer numbers in the U.S. dairy herd. Producers have been carrying a large inventory of heifers because they may have been expanding and, for some, it seemed to serve as a security blanket.

I often hear, “Well, I need these extra animals because, if I ever need cash, I can always sell them to raise some capital.” I’d suggest that worked out OK when you could raise them for $1,200 and sell them for $1,500-1,800. However, when it costs $1,300 to raise them to two years, and they only sell for $1,200 or less, that doesn’t work so well… You certainly can’t “make it up on volume.” In fact, if we hadn’t been spending money feeding these excess heifers, maybe our cash position would have been improved.

I am often asked by producers, “How many heifers should I keep in my herd?” My answer is normally, “It all depends.”

Depends on what, you might ask. Great question. It absolutely depends upon what your business objectives are. Are you expanding your operation, perhaps in an effort to fill your current facility & maximize its efficiencies? Is your son or daughter home from college & you’re planning to increase the size of your operation to accommodate two families?

If your annual Cull Rate is 40% and you are freshening your first lactation animals at 24 months or less, why would you need more than 80% heifers to cows? “Oh, I need a cushion against possible heifer losses because we’ve had some big ones in the past” is one statement I’ve heard. Perhaps you would better served if we figured out what was causing these severe death losses. If you are having this concern, then keep 90% heifers to cows, but most importantly, correct the facility problems or whatever is causing the deaths. In any event, you shouldn’t need 100% or more heifers to cows.

There are only two real reasons I can think of to have extra heifers, particularly with the advent of sexed semen and other reproductive technology & advances. One would be if you are expanding your operation, as outlined above. However, during the last three years, you could have probably bought them cheaper. The second sound reason would be if you are running a consistent ongoing program of selling springers or fresh two-year olds every month (i.e. not 20 head every three years…).

So, what should you do? Go through the same process I suggest with all business challenges. Review your current situation in comparison with your business objectives. Ask yourself what needs to change & outline potential steps to take. Finally, move forward and implement your plan.

Future success in our industry, as with any business, will go to the players who seek the best outcomes by fine-tuning their operations. What action(s) do you need to undertake this week?What will you do differently, going forward?

I invite you to sign up for our new Success Strategies Business Navigator Program. If you are open to learning new concepts and discussing them with other producers, you should take a look at this new program that will start soon. It’s completely online, freeing you from travel but offering you an opportunity to learn from industry experts in the areas of milk marketing, management, financial analysis & banking/finance. For the value of the milk production of one 85 lb cow for a month, you can enroll in this quarterly workshop program for one year. What have you got to lose? Check out our “Free Preview Class” at:    

https://success-strategies.com/navigator-program-for-dairy-farmers/

You won’t regret it. I wish you the very best for a success-filled year!

“Here’s to Your Best Success!”

As you may recall from my last blog, I suggested that this year will present some solid opportunities for you to succeed. Yet, several years ago, I had a conversation with a producer who said, “Gee, I was going to call you, but I wasn’t sure you could help me.”

Wow, I thought, what harm would there be in asking for assistance? He was truly in a jam, financially speaking, and maybe selling would be his best option. However, wouldn’t it make more sense to check out all his options first? Why not give it a try and make some genuine operational changes?

You know what – two years later, he is making some very nice profits. You might say, of course he is. That’s because milk prices have gotten better. I would agree that higher milk prices have helped, but there were a lot of other changes he made to get to a level of solid profitability. Here are the steps he took, which might be worthy of your consideration if you are having some challenges:

  1. If you are lost, normally the best thing to do is to ask for directions. Talk to someone who knows and can guide you onto a path for success.
  2. He, like so many of my Clients, is fatigued with hearing me talk about how we need to watch expenses. I’m not advocating a massive cost cutting process, especially if it impairs your herd’s performance in any way, but we already have solid industry standards to compare our performance against. If the industry is averaging $0.65/cwt on Supplies, and your cost is $1.00/cwt, we need to look under the hood and see what is going on… Remember that you can also dilute any cost per cwt by making more milk per cow. That’s not “Cost Cutting.” That’s just enhancing performance, the by-product of which is a lower cost/cwt!
  3. Are there some items that you spend money on that really aren’t needed? Ask yourself: Is this item really necessary? Does it pay for itself somehow through improved milk production or by reducing some other expense? Think about it.
  4. Bring your “A-Game!” In one of the first Jason Bourne movies, I recall the line where he was told, “This is not a drill soldier.” Likewise, this is not a scrimmage for you and your Team either. This is the real deal, so bring your best game. As the “Big Dog” clothing line ads used to say, “Attitude is everything.” Better production per cow, more cows per hour through the barn and greater labor efficiencies are the name of the game. It was tough enough to cash flow with $10 per hour labor. Greater efficiency is the only answer when this is changing to $15.
  5. Need some fresh ideas? Charlie “Tremendous” Jones once said that your results will only be as good as the books you read and the people you meet. I believe that this has been true for me, and would challenge you to seek new answers when you are feeling challenged in your business. Perhaps the following paragraph will provide you with a low-cost option to assist you.

I’d like to invite you to sign up for our new Success Strategies Business Navigator Program. If you are open to learning new concepts and discussing them with other producers, you should take a look at this new program that will start soon. It’s completely online, freeing you from travel but offering you an opportunity to learn from industry experts in the areas of milk marketing, management, financial analysis & banking/finance. For the value of the milk production of one 85 lb cow for a month, you can enroll in this quarterly workshop program for one year. What have you got to lose? Check it out at:    

https://success-strategies.com/navigator-program-for-dairy-farmers/

You won’t regret it. I wish you the very best for a success-filled year!