Is it Time to Automate More of Your Business?

Have you started to automate your business yet? Before you say “No,” consider some positive areas that you’re probably not thinking about. Do you manage the finances of your business using a program like QuickBooks or are you still tracking everything with paper and pencil?

When you are considering an investment in new equipment or updated facilities, do you still study this potential purchase and its expected returns on a sheet of paper, writing only by hand? Perhaps you do this initially, but I expect that before long you are using Excel or at least a calculator. If you run a successful, growing dairy operation, are you still using paper based cow cards or have you adopted software like Dairy Comp 305?

If you answered “Yes” on any of these questions, you have already started to automate parts of your business. Whether you currently operate a dairy operation, a farming business or any other type of entity, it’s time to consider additional steps toward automation.

I regularly hear Clients saying that labor costs are rising or that potential employees are becoming less available. These two factors and the basic economics of labor efficiencies will eventually dictate more automation. I am fatigued by the ongoing discussions of the political ramifications of the U.S. lacking a positive immigration policy. Maybe this lack of supply goes beyond just that factor. Could it be that the labor supply & demand is changing in its balance, nine years after the “Great Recession?”

Further evidence of the possible need for more automation is “Skills Availability.” I was recently in a store when its registers went down. Fortunately, I was paying cash, so I could be processed okay, but… getting the correct change was another story, not exactly a testimonial to the math skills being taught in our schools today.

Here’s an idea. Start to look for items in every sector of your business that you can automate. It will pay in almost every area within which you can boost your efficiencies. If your business is the type of operation that can be “commoditized” or produced elsewhere, be cautioned that you could become a target for competition. This is just one more reason to get more efficient through automation.

Need another incentive? A recent article in Peter Diamondis’ newsletter, Abundance Insider, was entitled “Tax the Rich and the Robots? California’s Thinking About It.” A member of the Board of Supervisors for the City of San Francisco has launched the “Jobs of the Future Fund” to help California offset the societal effects of more automation. As their website describes it, “As workers are displaced, the companies continue to pay a portion of the lost tax into a fund that can then be used for education, retraining, and targeted investments in new industries.”

I thought that was why we already paid taxes, to educate and train future employees… This, in my mind, is just another reason to start to automate more. Perhaps, we can get “grandfathered” in before the Jobs of the Future Fund and its followers levy a tax on all new automation.

So, as I asked last month — if I was to ask you about your present and future labor efficiencies, how would you respond? How many units of production does your work-force produce daily? Is it more than five years ago? Are there opportunities for automation in your processes? Can you use robotics to your advantage? Even in my own business, I have started to offer more “automated services” for Clients and I believe it is the wave of the future.

I have two Clients who have expanded their dairies, and, as they added free stall barns, rather than building a new milking barn for huge money, they continued to use their older milk barn and simply add robotic set-ups in their new facilities. It’s just a different approach to expanding and applying automation without “breaking the bank.”

Please visit us at www.success-strategies.com for future updates on their automation. You may just find tools in our Financial Analysis section that you can use to evaluate your own efficiencies!

“Leave the Crown in the Garage”

In a moment, I will explain the title of this Next Level Thinking blog, but I wanted to start by sharing with you the thoughts of a business leader, whose work I recently read about on LinkedIn. Her name is Indra Nooyi, and she is the Chairman & CEO of PepsiCo. In the article, she described the seven critical lessons she has learned for running her company. I felt you might be interested in learning these, too. Here they are:

  • “Everyone needs a vision.” – When she became CEO of PepsiCo, she decided that she wanted to bring a new sense of meaning to the work she and her employees did every day. With this in mind, she added that, in order to continue recruiting and retaining world class talent, they needed to meet the changing expectations of a new generation of employees. Sound familiar? I know it’s getting tougher to hire top talent in many industries, and the key will be to provide your Team with a vision that not only illustrates the direction of your business, but also inspires your employees to make it a reality. Are your people inspired?
  • “Think hard about time.” – By introducing these new programs, she felt they were now focusing not just on the short term, but on the long term as well. For many in agriculture, for example, 2015-2016 have been financially devastating years. Yet, this is an excellent time to think long term. Are you looking ahead and doing all that you can to boost your efficiencies for the long haul?
  • “Ensure that culture change sticks.” – Whenever you initiate programs that change items in your business management, you can expect to face resistance. To minimize this factor, be sure that you are getting “buy-in” from your Team. You will undoubtedly need their support, so be certain that you send them a clear & positive message.
  • “Listen carefully.” – I’m sure you’ve heard the expression about each of us having one mouth and two ears, meaning that we should listen twice as much as we speak. Believe me. I’m guilty as anyone of violating this rule. However, the point I want to share here is that often there are people in your business who have great suggestions on how to do things differently, often in ways that are far better than how we currently complete them… My question for you is this. Are you truly listening to their suggestions?
  • “Be a student for life.” – Do any of us know it all? Of course not. In all my business travels, I grasp every opportunity I can to learn more about how other people do certain tasks in business. Trust me – flying over 100,000 miles a year will provide you with plenty of lessons about how you should (& sometimes how not to) do numerous tasks in business. Are you learning new things daily? I offer you a suggestion: Please take a moment and visit success-strategies.com where you will find new items, such as articles, blogs and videos, posted every week. And, the good news is that many of them are free!
  • “People are everything.” – I wish someone had told some of my prior “bosses” this. Your Team is one key to your success. Be sure to thank your people when they do things well. A “Congratulations” today will lead people to back you up when the going gets tough, and at some point, it gets difficult for all of us.
  • “Leave the crown in the garage.” – Now for the explanation on the blog title above. Indra, the day she was promoted to President of PepsiCo, went home and told her Mother, who was visiting, that she had a big announcement. Her Mom told her that was great, but first she needed to go to the store and buy some milk. She went to the store, and then told her Mom the great news. She said that was great, “but when you step into this house, you’re a wife and a mother first. Nobody can take that place. So, leave that crown in the garage.”

Her point was that we all have to determine our priorities, so she reminds us to never forget the multiple important roles that we play. I’m often reminded that all our employees have lives beyond their job responsibilities. I am sure you’ll agree that these roles are essential to their overall success, too.

I hope you’ve enjoyed these seven crucial lessons from Indra Nooyi, CEO of PepsiCo, and that you will find a solid application for some or all of them in your company. Remember, it’s your business!

Banking on a New Future

I wanted to share with you an excerpt of an article written by marketing expert Seth Godin, simply because I believe it has a powerful message, one that could serve as a sound directive to get our industry and, more specifically, our businesses back on track in so many ways. I hope you enjoy his thoughts, which fit any industry:

“New polling out this week shows that Americans are frustrated with the world and pessimistic about the future. They’re losing patience with the economy, with their prospects, with their leaders (of both parties).

What’s actually happening is this: we’re realizing that the industrial revolution is fading. The 80 year long run that brought ever-increasing productivity (and along with it, well-paying jobs for an ever-expanding middle class) is ending.

It is one thing to read about the changes the internet brought, it’s another to experience them. People who thought they had a valuable skill or degree have discovered that being an anonymous middleman doesn’t guarantee job security. Individuals who were trained to comply and follow instructions have discovered that the deal is over… and it isn’t their fault, because they’ve always done what they were told.

This isn’t fair of course. It’s not fair to train for years, to pay your dues, to invest in a house or a career (or business) and then suddenly see it fade.

For a while, politicians and organizations promised that things would get back to normal. Those promises aren’t enough, though, and it’s clear to many that this might be the new normal. In fact, it is the new normal.”

 

As I said in my first book A Roadmap for Success written in 2005, “Welcome to the Age of Possibilities.” Just as Seth Godin points out in his article above, the rules have changed. Is it fair? No. Is it pleasant? Not really, but it’s all we’ve got. It truly is where we currently reside in the management of our businesses, amidst uncertainty with a number of moving parts and variables that can often surprise us. I would suggest that we can no longer depend on politicians to help us out. Some things they complete are helpful, but we need to become more refined in our approach to business.

My suggestion is that we all need to focus on achieving greater efficiencies. In a recent discussion with one dairy industry Client of mine, he suggested that our primary focus should be on achieving greater Feed Efficiency and Labor Efficiency. Are you maximizing how much milk you are producing for each pound of Dry Matter that you are feeding your herd? How efficient is your labor force? If they have less to accomplish on their shift, do they simply move slower to “fill in the rest of their 8 or 10 hours?

Consider that there is a reason that more and more fast food restaurants are going to a fully automated ordering process. Even at mid-price restaurants like Olive Garden, they are offering mini-computer terminals at their tables, so you can order & then pay for your meal without using a waiter or waitress… It is a prime example of those businesses attempting to achieve improved labor efficiencies, partly in response to rising minimum wage laws and maybe, at least in part, due to a reduced availability of workers. Can you relate to that recently developed challenge?

So, if I was to ask you about your present and future labor efficiencies, how would you respond? How many units of production does your work-force produce daily? Is it more than five years ago? Are there opportunities for automation in your processes? Can you use robotics to your advantage? Even in my own business, I have started to offer more “automated services” for Clients and Prospects. I believe it is the wave of the future.

On July 31, 2017, our completely redesigned website at Success Strategies, Inc. went live, so take a look at our new monthly Success Videos and Tele-Seminars, which will be listed under our Financial Techniques at www.success-strategies.com. Take a moment and view a free sample video within the Success Videos section today. This is all new material, and, in conjunction with our Financial Analysis Tools included there, it might just be what you need to evaluate your own efficiencies!

Are You Really Prepared?

Following the dismal prices of the last three years, especially in the dairy industry, I am certain that if I asked anyone if they were prepared to receive higher prices, they would respond by saying, “Of course, I am. Are you kidding me?” Yet, I would ask, once again, are you truly prepared? Are you 100% ready?

Here is how you will know. As prices in your industry rise, are you totally prepared to hit the ground running? I know it’s been tough the last three years in the dairy industry (and this can apply to any industry), but if you are really prepared, you should have a plan to complete the following tasks:

  • To move forward & return to profitability. A sound financial projection will tell you how soon you can expect to reach this level.
  • To catch up on any and all Accounts Payable that are not current.
  • To pay down your Lines of Credit as much as possible, as soon as you can.
  • To make the changes & improvements necessary to boost your Profitability.

If you don’t have this plan in place before your revenue levels increase, you could fall into the trap I’ve seen so many times before:

  • You slog along with your Accounts Payable, reducing them somewhat, but with a fear that if you pay them all the way down to current levels, you might need that money later. While that need may be partially true, if you get these paid down, I’m sure your Vendors will be more willing to work with you in the future. Likely, your banker will be, too.
  • You resist reducing your Lines of Credit, fearing, once again, that you may run short of cash & justifying this inaction by saying, “Hey, it has been rough.” No one will disagree that it has been difficult, but lenders can only work with you within their standard lending guidelines, so do all you can to reduce your lines of credit when you are able to do so.
  • You just get your plans in place to initiate the improvements you know you have needed to complete, and then, “BAMM,” you are hit with low prices again.

There is a better way. Here is your Call to Action:

  • Develop a Plan, as outlined above.
  • Set your priorities. If you are behind on Accounts Payable or other items, you may not be able to correct them all at once. However, do not let what you cannot do (e.g. paying them all back at once), keep you from doing what you can do (e.g. an orderly repayment of Accounts Payable).
  • Determine what you will need going forward to make your business more successful. Then, you won’t get caught flat-footed, wishing you had taken action sooner. Instead, maybe you’ll be talking to your banker about your next great move forward!

If you would like some assistance with this process, I offer you the following. On July 31, 2017, our completely redesigned website at Success Strategies, Inc. went live. You may want to take a look at a new video series we call The Strategic Gameplan Series, which will be listed under our Financial Techniques at www.success-strategies.com. Check it out. It may be just what you need for an entirely new game plan!

 

What’s the Difference?

I’d like you to think about two words and compare what they can mean to you as you move forward in your business and life.  The two words are “Reactive” and “Creative.”  While they are both spelled with the same letters, they have quite different meanings, don’t they?

When I am working with my clients to develop their business strategies, one of the greatest gifts that I believe I can give them is to teach them to be more creative and less reactive.  This is especially true when we are seeking financing from their bankers, and I will get into that more in a moment.

I believe it is crucial that we always remember that each of these Clients, or any other person for that matter, is going through a transition.  This is their “journey,” if you will.  Whether they have been on the brink of a financial disaster and want to restore their solvency and then go on to higher levels of prosperity, or they simply desire to get better at what they do, they all want greater levels of clarity.

To achieve this, the key is to know where you currently are in terms of your finances and proximity to your long term objective.  Understand what you want to accomplish, and just as significantly, understand your “Why.” Why do you want to expand your business?  Is it to earn more, to allow for your son or daughter to join you in the operation, or is it to position your business for a better sales price when you decide to retire?

Believe me.  If you know where you currently are, what you want to achieve, and have a firm grasp of “Why” you want to accomplish this goal, the steps you’ll need to take will become much more evident.  You will start to see what you are lacking and then be well positioned to obtain those necessary items.

This has always been the case whenever you need new financing to complete your goal.  If you can explain to your lender what your goal is, why you want to pursue it, and the steps necessary to get there, most bankers are quite good about providing the funding you will need, assuming it makes financial sense.

I believe that if you really want to accomplish anything in life, this is the process you need to follow.  Know your starting point, where you want to end up (the Goal) and then evaluate what you are lacking in order to refine the steps you should follow to get it done!

On August 1, 2017, our totally redesigned website at Success Strategies, Inc. will be completed, so you may want to take a look at a new video series we call The Strategic Gameplan Series, which will be listed under our Financial Techniques at www.success-strategies.com.  Check it out, because it may provide you with the foundation you need for an entirely new game plan.  I think you will be glad you did!

Building Your Business Confidence

Have you ever had a time in your life when you didn’t necessarily feel like your confidence was as high as you’d like it to be? I have. In fact, I think we all have some times like this, especially when things around us are not going as smoothly as we had planned for them to go…

It’s hard to feel very confident when industry events put you in a position of losing money regularly. Unfortunately, negative financial returns can cause us to start asking ourselves some tough questions: “What am I doing wrong? How long can I hold on, given my losses and my current equity levels?”

I am sure you’ve heard the age old advice: “Be careful what you ask for. You just might get it.” With that in mind, let’s shift our focus to a much more proactive approach, because these negative questions can, indeed, take you to some very disappointing and depressing results. I have had the honor of being directly involved in the financial turn-around of numerous businesses during the past 19 years. However, in each of these circumstances, I felt it would be beneficial, rather than focus on how long this Client could “hang on,” to shift our attention to a far more proactive direction.

While the “dangers” of their financial situation were always in the back of my mind, I believed their business turn-around would require us to correct their course and get back on track. Oh, wait a minute. Getting back on course would require us to know what our destination actually was. It would require us asking: “What’s next? What do we want to achieve? What do we need to do in order to get there?”

My advice has always been: Slow down, Think & Plan. Remember, if this was easy, everyone would do it. However, it isn’t always easy, and so, people don’t do it. We all like shortcuts, but don’t fall into that trap on this task. I want you to be different. I want you to do better. I want you to succeed!

Rather than focusing on what can go wrong or how long you can hang on, focus on something totally different – what you want for your outcome! Following this strategy has served me well in these turn-around situations. I’ve seen businesses that lost $2.5 million one year turn a profit of $39,000 the next year. Was that phenomenal, in and of itself? Probably not, but even their banker had to admit that there was some hope going forward, which allowed them to work with us to get the business refinanced. They did go on to turn larger profits in future years, and this was a much better outcome for all those concerned, including the lender, as we moved forward.

What to do?

  1.  Set your Goal.
  2.  Know “Why” you want to reach this objective.
  3.  Lay out the necessary steps to achieve this.
  4.  Put dates for each of these action steps.
  5.  Take Action and continually move forward.

If you follow this process, I assure you, it will build your confidence and prepare you to discuss these steps with your lender, simply because it will equip you with answers to the questions that she will be asking. What do you want to achieve, why do you want to do this, and what are the actions necessary to accomplish this? With the answers to these questions in front of her, we can both be more confident she will be better prepared to help you.

If you would like some assistance with this process, I offer you the following. On August 1, 2017, our redesigned website at Success Strategies, Inc. will be completed, so take a look at a new video series we call The Strategic Gameplan Series, which will be listed under our Financial Techniques at www.success-strategies.com. Check it out. It may provide you with the foundation you need for an entirely new game plan.

 

The More it Changes, the More It Stays the Same…

Recently at the Western Dairy Management Conference in Reno, Nevada, we heard an excellent presentation by Mike Lormore, Director, Cattle & Equine Technical Services at Zoetis, regarding the various profitability variables all producers contend with in their daily operations. The presentation, entitled “What Drives Financial Success on a Dairy?” was based upon extensive research with Ag Star, a leading dairy lender in the upper Midwest.   I believe this presentation was exactly on target with what I have seen in my consulting work during the past 19 years. While there are many profitability variables to contend with, and this research does not suggest that ignoring one of the lower correlated variables would ever be a good idea, the top three are all ones that I have had the opportunity to deal with in each and every financial turn-around situation. They are the ECM level of the dairy operation, its 21-Day Pregnancy Rate and its heifer survival rate.   Let’s explore why these are the top factors:

  • Energy Corrected Milk per cow per day – This is fairly basic. Most dairies get paid for the amount of milk they ship to their creamery, whether it is higher in components or simply greater in milk flow quantity. As long as they are keeping feed costs and other expenses in line, the higher ECM herds will tend to be more profitable. Now, before you write me to tell me about the exception you found to this rule, please remember that we can always find exceptions to every rule, but this rule holds for most herds. Somatic Cell Count is also a factor here – think milk bonuses! Creameries only give these financial incentives for lower SCC.
  • 21-Day Pregnancy Rate (or risk) – I have seen this in so many difficult financial situations. Low Pregnancy Rates equal financial challenges ahead. Simply stated, a higher pregnancy rate leads to more pregnant cows, which leads to more fresh cows, which then leads to more milk, which certainly helps to pay more bills, assuming all other factors are consistent within a given dairy business. More ECM, as outlined in #1 above, is more profitable. For most dairies, this higher ECM only comes via more fresh cows, which is a direct result of getting cows pregnant sooner. I have Clients who regularly push a 30% PR, and their higher PR leads to more fresh cows and higher levels of ECM.
  • Heifer Survival Rate – It is incredible to me how many operations that have financial challenges ignore their heifer survival rates. Do so at your own risk. Keeping more heifers alive is like putting money in the bank. Often, I hear that selling heifers is the last step before the death of a dairy… I say, not so fast. Selling heifers, if it is part of your regular financial plan (and not a “fire sale…”), can generate some nice cash flow, which, if you sell them as fresh two year olds allows you to be taxed only at Capital Gains rates (and you can keep their heifer calves, too, adding more to the value of your herd!).

These are just the top points from Mike’s excellent presentation. However, if focus on your level of ECM, your 21-day Pregnancy Rate and your Heifer Survival Rate, your profits will not only increase, but many of your related variables will also improve.   Remember, as I previously stated in my February 28, 2017 blog, and as presented by Dan Sullivan, Founder of The Strategic Coach:   “If you measure something, you can understand it. If you understand something, you can control it. If you can control something, you can improve it.”   I hope you find these discussion points helpful. If I can assist you with your business in any way, please let me know. Be sure to watch for upcoming announcements of my new program entitled Six Hours to your Best Year Ever! available at www.success-strategies.com soon.

In Defense of the “Mean” Vendor

I recently had a very interesting conversation with a producer. After asking him how things were going, he replied, “Man, these feed companies are really getting pushy. They expect me to be current every month.” I thought to myself, “Oh really… so does Wal-Mart.” I am not making light of the fact that the dairy industry has had a tough 2015-2017, or, for that matter, that all industries have their moments when cash flow is tight. However, the vendors that he was referring to had been extending him as much credit as they possibly could these past 27 months. However, they were running into two big issues: 1.) Their own cash flow was being pinched. 2.) Their lenders were pressuring them to clean up their Accounts Receivable. We have been through an interesting evolution. 40 years ago, supposedly no dairy ever made any money… Yet, they still were able to pay for their herd, their feed & operating expenses, provide owners with a living and an eventual retirement. 20 years ago, our markets changed to a global outreach, putting additional pressure on our revenues as we attempted to compete more with the entire world. Costs increased but at a fairly reasonable pace. However, the last 10 years, particularly during 2008-2009, the global swings have been wild! Despite assurances from the Federal Reserve Board that we have only minimal levels of inflation, almost all fixed and variable costs have climbed dramatically, pushing our break-even price levels to all time highs. Often, these were even pushed above a reasonable level. Suddenly, more businesses, particularly dairies, started to fail financially or, at best, began to liquidate. As a result, some vendors, whether secured or unsecured, received far less than what was owed to them. Not only did this crimp their margins, but the legal fees and other costs associated with collections became overwhelming. Even if they collect the 18% interest they often charge on “past due” balances, does that cover the cost of their financial manager or legal fees? I doubt it. Hopefully, this will provide you with some perspective the next time you hear about a “vendor coming down on one of your neighbors.” Remember, most vendors are in this game for the long haul (and those who aren’t will sort themselves out…), but they can’t very well serve your needs if they aren’t around any more. Think about it.

Changing the Way We Look at Business

As you proceed through this year, it might be beneficial to change the way you approach your operation. No doubt, most producers will be excited about changing the way they look at their business, particularly following the blood shed on dairies the last two years. However, the first step to attaining different results will be to change the way we think. In their book entitled Change the Way you See Everything authors Kathryn Cramer and Hank Wasiak remind us that we need to “Leap out of bed with Your Vision Turned On! The difference between a person who is vitally engaged in life and someone who is merely going through the motions is a vision fueled by passion.” They go on to describe some of the “side effects” of this passion: Enthusiasm, Confidence, Optimism and Unbridled Conviction. Sounds like a very positive change after 2015-2016, doesn’t it? So, how do we get there? How do we increase our passion levels for the dairy business, given the “pain” inflicted these past two years? To start, I believe it is beneficial to review what one of my favorite economists of all time had to say. The Italian economist Vilfredo Pareto stated that: “Increased productivity comes from continually identifying areas where you can achieve 80% of your results from 20% of your efforts.” You know this as Pareto’s Law or the 80/20 Rule. Can this work on your dairy business? I believe so, but this is not an invitation to take shortcuts. Rather, it is a chance to identify those areas with the greatest payback for your efforts and to spend your time on those specific areas to produce the most optimal results! So what are those areas that will produce the most optimal results? Only you can answer that question. However, I am happy to provide you with a couple examples. I work with a client with whom I hold Management Team Meetings once per month. During a recent meeting, one of the partners mentioned to me, in private, that his brother was not spending as much time as he was “out with the cows.” While I recognized this, I believe it is important that we apply Pareto’s 80/20 Law here. The same partner who was not spending as much time with the dairy herd had just completed a negotiation with two of their vendors that provided them with a savings of $125,000! Could your operation have benefited from an extra $125,000 last year? That result appeared to me to be an excellent example of applying Pareto’s Law. A second example that comes to mind was with a Client whose son was also not spending as much time with the herd as his Dad would have liked. However, the son had managed, through the use of a combination of fixed price contracts, Put Options and several Call Options, to achieve an overall milk price of nearly $14/cwt for all of 2009. Was this smart? Absolutely! Can he pull this off every year? Not likely. However, his actions in 2009 provided their business with a substantial benefit at a crucial point. Management Guru Peter Drucker stated that “the business enterprise has two basic functions – marketing and innovation. The rest are all costs.” Managing this producer’s margin was an excellent example of how using innovation can provide your business with genuine benefits. What are the specific areas within which you need to focus more of your efforts? What activities will provide you with the largest return on your investment of time? Is it your milk marketing? How about your business planning and goals for this year? You are probably the one best suited to decide. However, I am confident that if you put your phone on “silent” for 60 minutes and give this issue some serious thought, you will come up with the right answer. As a result, you will likely hit your business objectives this year by focusing on your desired outcome. Give it a try. Remember, it’s your business!  “Wherever you see a successful business, someone once made a courageous decision.” Peter Drucker    

Are You Putting Your Business at Risk?

When I meet with my Clients, I often remember reading an article in Inc. magazine written by Adam Hanft that was entitled “The Risk of Doing Nothing.” I thought the article had some themes that were particularly fitting for the dairy industry. I realize that it is often more comfortable to do nothing when so many items look bleak.  However, doing nothing can often put you at greater risk than boldly moving forward with what looks like the correct option.  Look what happened to Montgomery Wards as they stood by and watched Wal-Mart become, not only the largest retailer around, but also one of the largest companies of any kind.  As I write this blog, I am comfortably seated at my favorite café owned by a company called The Roasterie in Kansas City, Missouri. While they appear to be thriving, think about the comparison between this company and Folgers, who also had a large operation here at one time. Wow! The key is to break the “Continuum of Paralysis.”  As Adam Hanft so accurately states, “No one decision to defer action ever looks all that monumental at the time.”  However, over time, look out!  The sad part is that indecision rarely punishes current management, but it often “mortgages the future.”  Thus, for those of you with another generation potentially coming into your business, can you do better for them? Here are some things to do to get through the current situation:  

  • Do not misinterpret the industry situation of the last two years as an excuse to keep your finger on the Hold Button.

 

  • Rather, look at your Costs/cwt, your Volume of milk produced, Labor Utilization, and how you might spread your Fixed Costs out even further.

 

  • Just as important – Ask yourself, “Is there a better way we could do this…?” Often, your Management Team can offer you some suggestions.  Recently, one of my clients made some simple changes in their feeding program and also changed the age at which their heifers were being bred.  These adjustments boosted production nearly five pounds per cow per day and reduced their heifer raising costs.  This has been very helpful to their bottom line!

 

  • Along that same line, be open to new ideas. We must overcome the ongoing temptation to think that it is more risky to try new ways of completing tasks than it is to keep everything unchanged.  In this dairy industry environment, doing nothing can get you run over!

 

  • Put together an ACTION AUDIT and see how well you stack up against the rest of the industry. Are you currently doing everything you can to stay competitive?  Are you taking the time to complete and measure the small tasks that can have a large impact on your operation?  This is not just about costs per cwt.  It is also about how your operation is faring in terms of Cows Milked per Hour, Labor Efficiency (cwt shipped/employee), Heifer Efficiency (e.g. age at first calving) and many other items.

 

  • One other thought as you compare yourself to the industry. You will likely notice that you are doing better than others in terms of costs/cwt in some areas and not as well as other producers on other items.  Sometimes your facility can restrain your performance in comparison to a new operation, but how are you doing compared to your results five years ago? Are you doing better or worse?

  To summarize, don’t just resist change.  Remember that the best time to plant an oak tree was 20 years ago, but the second best time is TODAY!  Make an appointment with greater levels of success.  As one of my favorite motivational speakers, Les Brown, said about making improvements in your business, “You gotta be hungry!”  Consider the possibilities of his statement as you continually strive for excellence. Remember, it’s your business!