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!

BANKING ON RELATIONSHIPS

One of the most common problems faced by many business people today revolves around their ability to obtain the financing they need. This challenge becomes even more pronounced when we are faced with a tight lending environment. It also shows the importance of maintaining a solid relationship with your lender. Whenever someone gets turned down on a loan proposal, we have to review the facts and explore possible “whys”.

  • How do the historical numbers look? i.e. has your business been profitable in the past?
  • How reliable are the numbers in your financial reports to the bank? Are they CPA prepared?
  • What do your current cash flows look like? Have you completed some projections, and if so, do the projected trends look positive or negative? Even if they look soft in the interim, is there a projected turning point sometime in the future?
  • What are your plans for the next 12 months? In less detail, how about the next two to five years?

I’ve never seen a loan turned down without reasons. All loan officers have a dual and often difficult role to play. They are attempting to accommodate your need for loan funds, while protecting the assets (i.e. loaned money) of the bank. Most lenders are willing to provide you with their reasons for turning down a loan request. Let’s review common reasons for a loan request being denied and what to do in response.

  1. Weak financial history. Often this can be countered by a plan to implement changes. Can you suggest changes in your operation that make economic sense? “Insanity” has often been defined as “doing things the same way and expecting different results.” Make sure you are making changes to “turn the corner” and get back on the track to profitability.
  2. Lack of a clear plan. Do you have a defined plan and established goals for your dairy business?
  3. Maybe they are correct. This is a tough one, but if we cannot justify our investment in the proposed financing, perhaps we need to consider other options.

We each need to remember that a banking relationship, just like a good marriage, is a two way street. We need to always be showing improvement in our operating results, demonstrating we have a clearly defined plan with reliable historical numbers and sound cash flow projections. After you plan your work, then work your plan. Fine-tune your agenda as needed. At that point I believe lenders will be looking for you!

Redirecting Your Business Focus

Recently, I read a great article on business focus in the January 2017 issue of Inc. magazine entitled “Keep Your Head in the Clouds and Your Feet in the Mud.” While I found the title, in and of itself, interesting, I thought it would definitely be worthwhile reading this at length. It was authored by Gary Vaynerchuk, founder of Wine Library, whose book I had read several years ago. He started out by saying: “If you’re an entrepreneur who is struggling with average results, there’s a good chance you’re stuck in ‘the middle.’” Interesting, I thought, particularly with the average results we have been seeing in the dairy industry with its low milk prices during these past two years. He went on to explain: “By the middle, I mean you’re probably too focused on the minutiae, the 99 percent of the stuff you encounter every day that has nothing to do with what you want out of your business and is not part of the hard work it takes to get it.” Wow! This is true for so many of us that run our own businesses, including myself. I would like to suggest that we start to focus on the items that really matter, the reasons you are actually in business to begin with. Aside from providing for your family, what are your specific reasons? Do you want to provide consumers with the #1 beverage available? Do you want to develop the very best genetics in the marketplace? Is it your goal to successfully continue your ancestors’ dream farm? Whatever that objective is for you, this should be your primary focus today. As Vaynerchuk explains:   “The clouds are a metaphor for strategy. They’re the high end beliefs that are at the heart of everything you do, everything you want out of your business.” It’s easy to shift our focus away from these when we are in difficult times.   It should certainly not be whether the banks are going to start calling in their lines and loans since dairies have not been cash flowing with $13/cwt milk, even if you have been hearing such rumors. One of the best practices I have utilized over the past 19 years as an entrepreneur is to simply ask myself: Will this activity get me closer to by goal? This forces me to do two tasks. First, it helps me to consistently focus on my objectives for my business. Additionally, it reminds me that, in order to reach those objectives, I need to remain focused on the items that will guide me toward them. You probably know the Biblical reference that stated: “What got you out of Egypt is not necessarily what’s going to get you to the Promised Land.” It is the focus on your strategic initiatives and “Why” you want to reach them. If you know your “Why,” you will undoubtedly figure out the how of accomplishing these objectives. The “dirt” that Vaynerchuk describes refers to all the detailed items that have to be done to succeed. You know, within your expertise, the many things that you need to execute correctly. While these all need to be done by you or someone on your team, the problem lies with our inability to get above these tasks. If we are not careful, spending too much time on these activities can put you in a vulnerable position! We all need to look up occasionally and check out the macro-economic trends and what is happening in your marketplace. This is precisely why I hold regular Management Team Meetings with my Clients, to make certain that we periodically look at what is going on around us, in addition to how we are performing vs. our goals, and to check what we are truly focused on. This process should also include one other item. While having the answers can often be beneficial, remember that asking the right questions can often be even more powerful. Think about it. It’s your business!

Where are you now? Do you know where you are headed?

Let’s face it. This year and 2015 have both been tough financially! So, how are you faring these days? You know, recently I thought I was having a rough day when I completed four flights in two days and then six flights in four days… until I was sitting next to a lady who had recently experienced an “emergency landing.” Apparently, one of the jet’s engines had stopped functioning, all of which wasn’t leading to a very positive outcome…   So, just as with my bemoaning the numerous flights in one week, things are often a direct result of how we look at them. With that in mind, as part of a new program that I am presently developing entitled “6 Hours to Your Best Year Ever,” I am introducing a new self-evaluation tool entitled the “Know Your Score,” which you can use at your convenience and at no cost by using the following link:   http://knowyourscore.coach/scorecards/c36a14133f28f0d3edca51f685c161a4/surveys   As you take this evaluation tool, ask yourself two questions: 1.) What are my scores today? 2.) What do I want them to be in five years? As you find yourself struggling with the current negatives of our industry, please understand that you are not alone in these challenges. I understand how you are feeling. Every one of my Clients is feeling much the same right now. In fact, I’ve felt the same challenges almost every time I talk to one of them, but what I am finding is that if you remember that this, too, shall come to pass, it can really clear your thinking.   I recall the story about the professor who, on the first day of class, told his students that they could earn an A, B, C or F in his class. He outlined the requirements for each specific grade. Their assignment before tomorrow’s class was to simply decide which grade they wanted to receive and turn it in to him. They could move up (in grade) or out of the class, but if they stayed and skipped any of the required steps for a given grade, they would receive an F. Sounds just like real life, doesn’t it? What “grade” do you want to receive?   After you have determined where you currently are in your thinking and where you would like to go in the future, can we help you get to where you want to go? If you would like a follow-up call, please shoot me a quick e-mail at john@success-strategies.com, and we’ll schedule a 15 minute call. Know anyone else who can benefit from this tool? Please feel free to forward this to them with its link, or if you’d like, just share their e-mail with us and we will do it for you. Thanks!   My business coach Dan Sullivan, who developed the original Mindset model called the Optimum Maximizer™ said you should always talk yourself into a better future, not a worse one! Of course, that is the objective with this model. I hope you find it helpful.   “Success is not a matter of where you stand, but in what direction you are moving.” Quote on Excellence from the Successories™ Calendar

Measuring Up To Success

Recently, I was introduced to a concept by my Business Coach Dan Sullivan that I believe is very applicable to any business today. He stated:   “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.”   Wow! It sounds so simple, but let’s explore this quote more deeply. We all know that it is important to take measure of many facets of your business operations. Yet, many of us, in spite of knowing this is true, still don’t do it. I am not certain why many people resist doing this, but, frankly, it’s the best way I know to make any type of improvement. For this reason, I have spent years putting together measurements of my Clients’ business results. Please allow me to provide you with several examples:   As a follow-up to completing Annual Cash Flow Budgets for my Clients each year, I also track their Actual vs. Budget results every month. Obviously, this is the measurement part. Understanding this information comes from the analysis we do whenever an item is “highlighted” for being more than 5% over our budget. One of my Clients calls these his “Amber Alerts,” because they point out the areas we need to focus on improving or, at a minimum, grasp a better understanding of why these items are over budget. Sometimes these cost over-runs are out of our control, but 95% of the time they can be controlled. Just understanding what is going on within your business provides you with an opportunity to control it, and, clearly, if you can control an item, you can also improve it.   My Management Team Meetings with Clients also measure their results compared to six months and 12 months ago. On a dairy operation, these are items such as Milk Production per cow per day, their Pregnancy Rate, Heat Detection Rate, Percent of the herd that is pregnant and many other items. These are the measurements. We can grasp a better understanding of these simply because we measured them vs. prior periods’ results. If we understand these items, we can understand why they are getting better or worse and gain better control over our outcomes. As I said before, if we can control something, we can improve it.   I also work with Clients who have fairly labor intensive businesses. In their case, because they can automate some tasks rather quickly, we measure their cash flow results, not only vs. their budget, but also on a “per hour billed” basis. Completing these measurements helps us understand what the results are, but also gives us a grasp of the trends in our expenses per hour billed. Once we understand these items, we can take steps to better control their bottom line, allowing us to also improve their results.   I hope you find these examples 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.

Don’t Worry, Be Happy!

Remember the song entitled “Don’t Worry, Be Happy”? Humorous? Yes, you couldn’t help but smile when you heard it! Wish you could do so? Yes. Realistic? Probably Not! Steve Chandler, in his book 100 Ways to Motivate Yourself, states, “Don’t worry. Or rather, don’t just worry. Let worry change into action. When you find yourself worrying about something, [as so many in the dairy industry are today (my addition)], ask yourself the action question, ‘What can I do about this right now?’ And then do something. Anything. Any small thing.” Most of us worry about lots of things. Why? We think it will get better if we do. WRONG!!!!!! Chandler also says, “But when we worry, we don’t worry a thing to death, we worry it to life. Our worrying makes the problem grow. And most of the time, we worry it into a grotesque kind of life, a kind of Frankenstein’s monster that frightens us beyond all reason.” He suggests we take four problems – 5 minutes each – No more than 20 minutes! Not too much time to commit! I discussed the following four problems with a client recently:   * Upcoming Bank Meeting – –  How could I better prepare for Friday morning? –  What will my Loan Officer want to review/discuss?   * Deadline Environmental Report – –  What must be reported/measured? –  Did I need help? If so, from whom?   * A Growing Stack of Bills Facing Me – –  Open and sort them. –  Pay whom and by when? –  Set a day(s) to do so…   * Plans for my son at College – –  What do you want for him? –  What does he potentially want?

  • Set date to outline plans.
  • Set date to discuss this with his son, Bobby.

And all of this only took 20 minutes – WOW! *    Fear cannot coexist with Action! *    If you’re worried, take some Action Steps. *    Ask yourself, “What small steps can I take NOW?”   ** If you didn’t have a chance to use my new self-evaluation tool entitled the “Know Your Score,” which you can use at your convenience and at no cost by using the following link, here is another opportunity for you to do so (for a limited time):       http://knowyourscore.coach/scorecards/c36a14133f28f0d3edca51f685c161a4/surveys   As you take this evaluation tool, ask yourself two questions: 1.) What are my scores today? 2.) What do I want them to be in five years? I hope you find it helpful!

Oh, the Interesting Things People Say About Financing!

I’d like to share with you a story of two Clients in two different industries, who were in two very unique situations but both needed financing. One of them gave the bank all the information they requested and awaited a response, while the other Client stated that, “If they can’t get this loan done in less than 10 days, just forget them! I’m moving on!” Well, that approach is OK if you have lots a time to burn, but really, does it make sense to meet and fill out forms for 10 banks for two weeks each, racing through five months of time, only to find out that you’ve burned bridges with all of them? Wouldn’t it make more sense to meet with three or four of your top banking candidates and make certain that they can complete the type of financing you desire? I think so. In fact, I find that if we hold discussions with several banks at the same time and provide each of them with the financial information they need, we can be much more efficient in our approach to the loan process. While it still may take four weeks to get to the point of signing loan documents, we can be much more effective in completing this task, simply because each of them will likely want the same information. What will they probably need?

  • Three years of Financial Statements & Tax Returns for your business.
  • A current Personal Financial Statement for each owner of the business.
  • Cash Flow Projections for the current year, and possibly “in house” Interim Financial Statements if you are already part way through the current year when you apply.
  • A potential Loan Structure you desire, as outlined in your Cash Flow Projections.

Once you have submitted all of this information, be patient, for two reasons. First, banks are under a lot of pressure from the Fed and the OCC, as well as other regulators, to make only the most optimal loans. Doing so will require them to scrutinize every loan prospect very closely. With this in mind, work with the loan officers as best you can. Understand that they have a lot of people to report to, and often, they are not the final approver on your loan proposal. Another reason to be patient is that your deal is most likely not the only one they have pending at the same time. They get paid to produce results, so give them a chance… Actually, is this all that different from ten years ago? Not really. With all of agriculture being subjected to much higher levels of volatility, the anxiety levels of both lenders and borrowers have climbed a great deal, as have our expectations. You may be thinking – Hey, I have survived the downturns of 2003, 2006, 2009 and now 2015-16 – I must be good. You may be correct, but the same rules still apply. Is your “Burn Rate” stronger or weaker than it was 10 years ago? Work patiently with the banks, as outlined above, and I’m confident that success will come your way, and probably long before five months have passed. If I can assist you with your business financing 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.

Can’t, Can’t, Can’t…

During the last 18 months, I’ve heard a lot of people listing all the things they can’t do:

  • I can’t get my bank on board for the changes I want to make.
  • I can’t get production where I want it to be.
  • I can’t get my feed costs down.

I know that this period has been tough on both Cash Flow & Morale, but please allow me to offer a few suggestions:

  • Whatever the subject, whether you think you can or think you cannot, you’re correct!
  • Having said that, let’s shift our focus to what we can control.

What can we control???

  1. Our attitude. Legendary UCLA basketball coach John Wooden said it best – “Things turn out best for the people who make the best of the way things turn out.” Author Louis Mann said, “What happens to a man is less significant than what happens within him.”
  2. Our management impact. Are you surrounding yourself with the best advisors at this time? Your management team has a wealth of positive experience to offer you. They see the best and worst practices of other dairy operations. Take advantage of their availability and their knowledge.
  3. Cost controls. Have you reviewed every line item in your budget? High milk prices in years like 2014 can lead to increases in some expense areas beyond reasonable levels. Check your various costs and review your labor utilization.
  4. Develop a plan and meet with your banker. Having a plan in place is crucial! Develop a contingency plan to deal with potential pitfalls of the next 3 to 6 months. The industry is beginning to turn around and when it does, you must be prepared to capitalize on the next upturn!
  5. Business advisors George Ford and Gordon Lippitt summed it up best: “Some self-confronting questions: ‘Where do I want to be at any given time?’ ‘How am I going to get there?’ ‘What do I have to do to get myself from where I am to where I want to be?’ ‘What’s the first, small step I can take to get moving?’”

If you would like to complete a self check of your current thinking and even plan for better future thinking, just click on the following link http://success-strategies.com to reach our home page and take advantage of our new free tool “Know Your Score.” I hope you find it helpful!

DECISIONS, DECISIONS!

We are all faced with numerous decisions every day. Simple as it sounds, your daily decisions begin with deciding what time you will be getting up in the morning, what you will wear and what you might have for breakfast. Then, I would suggest, the big decisions need to be made: What cows need treating today? Should I add another employee? Can I afford that new tractor? Sometimes you can defer these decisions. However, often they need to be addressed immediately. The problem with delaying decisions is best summarized by Adam Hanft in his article entitled “The Risk of Doing Nothing” in the December 2002 issue of Inc. He was discussing the absence of action on the part of Montgomery Ward (remember them) as Wal-Mart grew from 125 retail stores in 1975 to become one of the largest companies of any kind in the world. Mr. Hanft reviewed how Folgers and Maxwell House did little or nothing as Starbucks redefined coffee as an “experience,” rather than just as a beverage. He added that “there were numerous points along the way where any of these companies could have broken the continuum of paralysis – but at each point the consequences of change were judged greater than the risk of doing nothing.” He goes on to say: “That’s what’s so insidious about the absence of action: no single decision to delay or defer ever appears monumental at the time. Inaction also takes time for the contours of its dumbness to be revealed, so it rarely punishes current management; only the future gets mortgaged.” So how and where does this fit within the realm of your dairy operation? This is an excerpt from my 2005 book entitled A Roadmap for Success. See if, perhaps, you can find yourself in this story: “3:00 a.m. Your herdsman approached you earlier today about an offer he has received. He has been approached about taking his 200 cows and 140 heifers (about 20% of your total herd) and moving them to another dairy where the owner is getting up in years and would like to take on a partner in an effort to fill his new facility. While your herdsman is not anxious to leave, this represents a positive opportunity for him. He will make considerably more money and will immediately become a partner in both the herd and the land & facility at the new place. He has been a great herd manager for you. He has been a solid team player, loyal and conscientious. You wonder if you could even find an equal replacement. You are adamant in your statement to him that “this is just not the way things work around here.” You really hate to see him go, particularly since your cash flow seems quite tight. However, he has offered to stay, but only if you provide him with a $45,000 retention bonus so that he can purchase a new home not far from your operation. He feels that will help compensate him for the “proposed” ownership plan that you started talking about 15 years ago… You rationalize that you could simply borrow the $45,000 on your herd loan, but it’s the principle of the matter, you reason. Perhaps you can discuss this with your banker when he (or they) arrives later today. 3:10 a.m. To divert your mind from this, you start thinking about the value of your ranch or farm. It is a great place to operate, you reason, one where you hope to continue your business for a long time. After all, you do have two sons who are in Junior High now and whom have expressed an interest in continuing the operation. However, you are hearing rumors of many changes in the neighboring regions. There are new homes being built just nine miles east of you. While these developments are planned to go only eastward from where they currently are, the winds from your farm location could create a problem for these residents. You and one of your neighbors had resisted establishing an “agricultural zone” 10 years ago, thinking that might prevent your land from being bought for development in the future. Now, he is in financial trouble with his bank and has his place on the market for $500,000 less than you paid for yours four years ago. 3:30 a.m. The dairy again: You have had some inquiries or you haven’t had them… The most successful A.I. firm in your area has inquired about your availability. Either way, you worry that if you leave now, what will that mean for the future of your sons in this business? If you hold out, will you be leaving a lot of money on the table? Could this industry implode if you hold on? Will your sons really want to come home after five and six years of school, respectively, plus another four years of college? How could they possibly even know at this point? After all, they are only 14 and 13 years of age. You try to go back to sleep. 3:50 a.m. Your banker has been calling to follow up on a letter that was sent to all of his borrowers. The “directive” you received by mail two weeks ago sits like a rock in your stomach. They expect you to come with up with five-year goals for your dairy, along with a five-year plan for achieving them. You have been told that you will need to provide marketing plans for your milk, an outline of feed needs and potential contracts, an overview of labor laws and your compliance with them, and a Nutrient Management Plan and any plans for future business growth or an exit strategy. While this all may not seem like such an unbearable task, they have informed you that their new Division Director (since being acquired by another Super-Regional Bank) will be reviewing your quarterly results to determine if you are staying on plan. Unfortunately, you are already familiar with this Director. In fact, you have had a “run in” with her at your prior lender six years ago. You recall that she seems to have had an unrelenting memory for most of your earlier discussions.” Does this producer have some decisions to make? Yes, absolutely. Can he put these decisions off? Sure. However, he enters a whole new arena of risk if he does. How long can he keep his herdsman if he does nothing? What about the future of his dairy operation? Can it continue successfully? What if the bankers show up and he is not prepared to discuss his plans for the next five years? Sometimes, you just have to make a decision without delay. Are you going to get them all right? No, none of us does. However, the good news is that you don’t have to make the best choice every time – just most of the time. Even Warren Buffet makes some poor decisions, but I think you’ll agree that, on the whole, he has made a lot of great ones. When you are faced with an important decision, I suggest you use the following practice, which was introduced to me by CPA Albert Nunes from the accounting firm Genske Mulder and Company. Ask yourself these four questions:

  • What is the best thing that could happen if I do take this action?
  • What is the worst thing that could happen if I do take this action?
  • What is the best thing that could happen if I don’t take this action?
  • What is the worst thing that could happen if I don’t take this action?

If you go through this process and then, if at all possible, sleep on it, you will probably come up with the best decision for you. A lifelong friend of mine introduced me to the abbreviated version of this decision model in 1976. He said to ask myself: “What’s the worst thing that could happen if I take this action? Can I live with that outcome? If so, go for it. If not, then I better rethink my intended course of action.” Whether you opt for the longer version or choose the abbreviated one, put these steps into practice today. Even in difficult economic times, you need to make tough decisions. You cannot keep your finger on the “hold button.” If you do, at best you risk being left behind. At its worst, this can lead to an economic disaster. Just put your self in the situation of the Client described above in the banking scenario. What if he ignores the bank’s request for an action plan? He could potentially lose his financing or even worse. Ironically, I wrote my book in 2005, but this scenario is a good description of what some producers are facing today. Never allow yourself to be put into that type of situation.