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.

GOALS… WHO NEEDS THEM?!

Dan Sullivan, founder of The Strategic Coach organization stated that “people do strange things when they have no future.” Since this is undoubtedly true, I have attempted to keep my Clients on the leading edge by providing them with a system for setting regular business objectives and keeping them as far away as possible from the dangers often encountered in their industry. The purpose of this article is to demonstrate a working model for completing this process – one that we can revisit as often as needed.   It might be best to start by answering five basic questions. Why take the time to set these goals and develop a Disaster AgendaTM? I often hear people refer to the goals they have set for themselves. When they do, they often say that they have them all firmly planted in their head. However, my experience has taught me that this just does not work as well. It is imperative that we get them down on paper since it makes us completely focused in our thinking about what we wish to accomplish. If you try to do this “just in your head,” you will find that it is too easy to get distracted by other issues, and we are all faced with distractions every day. Thus, commit them to writing, and your goals are much more likely to be reached. Even if you write them down and put them in a desk drawer, your subconscious mind will go to work on them.   How do you get started on this process? I believe that corporate America has done a great disservice in this area. During my time in corporate America, I constantly felt inundated with demands on my time. “Do this, do that, achieve the impossible! We know we didn’t provide you with your annual goals until April and they may be high, but you should have been planning for this type of production demand…” and so on. This is crazy! Why not set aside some quiet thinking time to establish new objectives for the next 12 months.   When to complete this is the best part. While it may be a “corporate sin” to set aside work time to do such planning, you will definitely be rewarded with better results. I cherish the two days each fall that I take to get away and set new goals and objectives for my business. Take advantage of this time to move your business forward.   What should your goals center on? Challenge yourself to set goals in areas that you can reasonably expect to make progress. Please note that I did not say “easily” expect to make progress. Your goals need to be challenging and set high enough to keep you excited about reaching them. However, they also need to be achievable. Otherwise, you will get frustrated with them and give up. You do not need that outcome!   I will leave the when and where part of the process up to you. As I stated earlier, I spend two days per year off site (to minimize distractions) planning my next year. Believe me; this really has paid off for my business. I normally complete this process in November of each year. This allows me to review what happened during the prior 10 months of the current year and also look ahead to what I want to accomplish in the next calendar year. I always do this off site, simply because I want to be able to focus on my objectives without any distractions. I believe the elimination of distractions is imperative to the success of this process, but you decide for yourself.   Now, let’s go one step further. I also work with Clients to develop a Disaster AgendaTM. What is a Disaster AgendaTM? It is a list of the three worst things that could happen in your business and how you would respond to them. When you complete this process, you accomplish several tasks:  

  • You will be better prepared if one of these crises actually does occur.

 

  • You are more likely to avoid these crises, due to your increased awareness of their potentially occurring.

 

  • If one of these problems, or something similar, does occur, you will have a response or action plan ready to go, yielding a quicker turnaround and saving you both time and money.

  Need some examples? Here are some that I have previously written about. They still make sense today, but think of three that fit your experience and your operation.  

  • Environmental Pressure – This is an area that is worthy of some serious review. How will you respond if your dairy business is sued for potential damage to the environment, whether the claim is legitimate or not?  These types of lawsuits are not going away anytime soon!  Litigation is a costly process, particularly when you consider the legal costs and the expenses associated with capital projects “held hostage” in an unfinished state that does not lead to your intended increase in cash flows.  One solution might be to pursue the training that is available from various agencies.  This is time well spent.
  • Losing Financial Control – As the number of dairy operations in the US continues to decrease (76,630 in 2001) and average herd size keeps increasing, it is more critical than ever to maintain control over your operation’s finances. Regardless of industry, businesses often run into trouble when they expand in a rapid, uncontrolled manner.  The primary reason is they run out of cash.  One of the best preventative measures against this problem, as covered in prior columns, is to work within the guidelines of an ongoing strategic plan with detailed financial projections.  Another helpful item is to know your costs/hundredweight on a historical basis and for future projections.  Increasing the size of your dairy is no excuse to lose control over costs/cwt.  Visit us at financematters.solutions.
  • Inability to locate financing – This has been the case for many producers across the US as they attempt to expand their operations. This trend toward tighter lending standards actually began in late 2000.  In an effort to avoid a credit crunch, some borrowers have accepted excessive short-term financing when they should have focused on additional long-term financing.  Unfortunately, having the wrong loan structure always seems to “rear its ugly head” at the most inopportune times, e.g. during a period of low milk prices.  A potential solution: Grow your business with better financial records to help you maintain a loan structure that yields Debt Service Coverage of at least 1.25 times the level required to make your loan payments.  Having good financial information can go a long way toward avoiding unnecessary challenges in finding financing.
  • Loss of your Milk Market – I was visiting with a dairyman who had suffered the loss of his milk market due to a sudden change among the players in his area. It literally cost him in excess of $30,000 monthly for six months before he was able to get the situation under control.  What would you do?  Eventually, he was able to negotiate a better contract with a new buyer of his milk.  However, his losses in the short term were enormous and help remind us of the vulnerability we face as a “price taker.”  This could also occur if your herd was suddenly faced with a major health problem.  These potential cash flow shortfalls further reinforce the need for cash or available credit at all times.
  • Sudden Loss of Key Personnel – Whenever a key worker departs, particularly on short notice, it is essential to have a plan in place to cover for them, at least in the short term. These departures clearly illustrate the need for team development and the cross training of personnel at each key position. Attractive benefits, retirement plans, insurance and competitive pay help to avoid this type of crisis.  However, it still pays to have a backup plan in place.

  This list of potential crises is far from exhaustive, but hopefully it will stimulate your thinking as you develop your own “Disaster AgendaTM.” As Author Jim Taylor stated, “Plan for the future or you will have no future.” It can be crucial to your success levels!

Making the Best of Major Decisions

There is an epidemic going around America today. Thousands of people have a genuine challenge with simply making a decision.

Read more

The Search for Meaning

Throughout the crazy events sometimes surrounding us, it’s often difficult to find meaning – in effect, to make sense of things that are occurring every day. Victor Frankl was a survivor of the Auschwitz Concentration Camp in Nazi Germany. Many entered Auschwitz; few survived. Victor Frankl in his book entitled Man’s Search for Meaning explained that the key to survival was that people needed to do six things. There may be some guidance for us, too.

First, he said, “Realize that the game of life has changed.” Isn’t that applicable today with our worldwide economic situation? As Frankl stated, the old game is over, a new game has begun. That’s true for the dairy industry, as well. We’ve got to operate under a new set of assumptions because the old game is over. Be open to change – it’s already coming!

Second, every day, you must find something beautiful. For Victor Frankl, from his cell, he could see a mountain range. For us, maybe it’s a sunset.

Third, every day, you must find something humorous, something funny. For Frankl, it may have been the way one of the guards walked. As you face the stress of working through the current dairy downturn, find some humor each day. We all need it.

Fourth, every day, you must find something to be grateful for. Instead of focusing on what we’ve lost or what you don’t have, focus on what you do have; something you are grateful for!

Fifth, every day, you must find some way to be useful. For Victor Frankl, it was helping others by listening to them. What will it be for you? How can you be useful to someone or to our industry today?

Finally, every day, you must find something to help you prepare for the future – a big goal, for example.  We all need a bigger goal beyond this current experience. For Frankl, what kept him going was his goal to write his book: Man’s Search for Meaning.

As Dan Sullivan, founder of The Strategic Coach organization says, “All progress starts by telling the truth.” So, remember, as Victor Frankl stated, realize the game has changed. We’re in a new experience. The sooner we realize this, the sooner we’ll be able to rise above it. Also, don’t forget the other five steps to success:

Every day, find something:

  • Beautiful
  • Humorous
  • To be grateful for
  • Some way to be useful
  • A reason to prepare for the future – A Goal!

Try this today. I think you’ll be glad you did!!!

COMING UP WITH THE NECESSARY CASH

One of the most common problems faced by many businesses 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. Since 2008, this has been compounded by the Sub Prime Mortgage mess and its related financial issues! This certainly has magnified the importance of maintaining a solid banking relationship.

Whenever one of my clients or a prospective client I am working with gets turned down on a loan proposal, it is imperative that we review the facts and explore “why?”

  1. Has your business been profitable in the past?
  2. How reliable are the numbers in your financial reports to the bank? Are they CPA prepared?
  3. What do your current cash flows look like? Have you completed some projections? Do the projected trends look positive or negative?
  4. Realizing I have mentioned this before: What are your plans for the next 12 months?

Business magnate and motivational speaker W. Clement Stone stated, “If you employed study, thinking, and planning time daily, you could develop and use the power that can change the course of your destiny.” This is worthy of consideration for any business.

I have 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 of the bank. If your lender is not willing to explain their reasons, there are other financing sources around. Sometimes a change in scenery is good for both parties.

  1. Financial History of Losses: This can be countered by a plan to implement changes.  Suggest changes in your operation that make economic sense! Make sure you are making changes to get back to profitability.
  2. Lack of a Clear Plan: Author Basil Walsh said, “An intelligent plan is the first step to success. The man who plans: a) knows where he is going, b) knows what progress he is making, and c) has a pretty good idea when he will arrive.” Have a defined plan and established goals for your business!
  3. Maybe they are RIGHT! This possibility is tough to accept, but maybe we need to consider other options. Every successful business plan should also contain a clearly defined exit strategy to be implemented if necessary.

A banking relationship is crucial to your success! Be prepared to show improvement in your operation’s results and to illustrate a clearly defined plan with solid historical numbers and sound cash flow projections in order to acquire the financing you’ll need!

Are You Always Running Out of Time?

This article is based upon the teaching of author Steve Chandler, whose work I admire and follow closely. However, the story is also based upon an actual Client relationship of mine.

On our way to an important bank meeting, my client turned to me and said, “I wish I had more time to prepare for this – I’ve been so busy I didn’t do a thing for the meeting.” “Are you kidding?” I asked. Busy? Doing what? So we analyzed it: 84 hours per week at the dairy, 21 hours firefighting, and 18 hours in meetings!

In a typical week, the rest of his time was spent playing defense – filling out numerous forms, answering many “urgent” requests, and returning calls. He was spending about 6 of the 18 hours in meetings, listening to others talk about what they’re going to do or have recently done. He spent about 45 minutes actually doing work on new projects he’s currently involved in. And he spent exactly 15 minutes a week on inventing his next breakthrough steps.

WOW!!! This is frightening! Is this why this client entered the dairy business? Hardly. What’s the solution?

*    Better Time Management – Perhaps

*    Better Prioritization – Probably

*    More Delegation of Decision Making – Definitely

*    More Outsourcing – No Question! Especially in the areas of government and environmental reporting.

The reason it’s scary is because if you do the math of what his business actually gets paid for, it’s precisely the opposite of the way my Client was spending his time. When he goes on vacation, those minutes of “urgent emergencies” just sit there, and nothing particularly horrible happens. And in the rare weeks when he doubles his big-thinking time, he’s likely to come up with an insight that will pay the bills for the next six months or even a year.

As author Seth Godin says: “So, do you really think you’re too busy to work on something remarkable? In fact, you’re actually too busy to do all that (non-urgent) emergency stuff.” Think about it!

Ahead of the Game!

I love the following quote from General Eric Shinseki of the U.S. Army: “If you don’t like change, you’re going to like irrelevance even less.” What is he saying? We’ve got to keep up with change! Be like the Boy Scouts, who are always ready to – “Improvise, Adapt, & Overcome!” Every producer has lots of new challenges: Higher Feed Expenses, Rising Insurance Costs, and more Government Regulations. We are in a constantly changing industry environment where decisions we made five years ago are not necessarily as effective as they previously were. It is time for each of us to take back the reins of the decision-making process and adopt a more proactive approach moving forward. Management consultant Peter Drucker stated that, “The best way to predict your future is to create it.” Yes, you’re saying, but how can I do that, since I’m a “Price Taker” when it comes to my milk price, and under the present circumstances? I’ll tell you how – get out from under those circumstances. Change your thinking. Alter your approach. It has been said that if you keep on doing what you’ve been doing, you’re going to keep getting what you’ve been getting…I contend that simply may not be true. In some cases, your results could be worse! So, what do we need to do?

  • Embrace change as you encounter it. Of course, we all like the familiarity of our normal day-to-day processes. At times, I am guilty of this, too. However, when things are changing as rapidly as they are in the dairy industry today, we run the risk of getting “run over” if we simply stand still.
  • You are thinking that you just finished restructuring your bank debt and have most of your vendor payables caught up (hopefully). You’re asking: “Can’t I stop and take a break?” My advice: Do so at your own risk.

Take the time to check all of your efficiency measures, and I do not mean just your costs/cwt. These are important, but be sure to look closely at other measures such as cows milked/hour, pounds of milk shipped/full time worker, the average age of your first lactation females at calving, and feed efficiency (pounds of energy corrected milk/pounds of dry matter fed). Improving these items could save your business. Think about it!

How Does He Do It?

In this blog, I thought I’d share some thoughts on efficiency.  The efficiency measure I want to discuss, though, is one tied to the conversion of assets into bottom line profits. Dairymen often ask, “I’m milking 600 cows and netted about $800 per cow last year.  This year I’m not even breaking even.  How does that young guy down the road with 3,000 cows and $6,000,000 of debt make it?”  After I ask them to clarify how they know that he has $6,000,000 of debt, I usually explain that the answer lies within the realm of productivity per unit or efficiency.  Another way to explain it is to look at their costs per hundredweight (cwt.) as measured by the leading accounting firms in our industry. The dairy industry is a volume business, marked by the need for efficient conversion of assets into bottom line profits.  Whether we like it or not, producers are “Price Takers” not “Price Makers.”  Dairymen ship their product to their cooperative or other processing company without knowing what they will get for their milk.  Unlike a “Price Maker,” such as an auto dealer who might be able to hold his inventory until he gets the price that he wants from a buyer, a dairyman sells a highly perishable product and thus needs to ship it for processing as soon as possible.  Unless he has the ability to process it into a storable form, such as cheese, and then sell it later, he must take what the market offers him on any given day.  That makes him a “Price Taker.” Thus, a dairy operation has two primary ways to influence its profit levels, either by increasing its volume of milk sold or by lowering its costs of production.  The following equation is one that I like to use to explain dairy profitability: Profit = ((Revenue/cwt. – Variable Costs/cwt.) X Number of cwt.) – Fixed Costs

  • Primarily the volume of milk sold per cow determines revenue.
  • Variable Costs include expenses that vary with the number of cows milked such as feed, some labor, supplies, repairs & maintenance, veterinary & breeding costs.
  • Fixed Costs include rent, debt repayment, most insurance, and professional fees.

What’s the message?  Spread your fixed costs (and some of your variable costs) over a larger number of hundredweights or cows and watch your profits increase. Perhaps a numerical example would help:                         >> Year 1 <<                                    >> Year 2 <<                                     600 Cows        3,000 Cows           600 Cows     3,000 Cows Milk Revenue/cwt.      $14.00             $14.00                         $11.50             $11.50 Less: Variable Costs   <10.75>           <10.05>                       <10.75>           <10.05> Less: Fixed Costs          <1.25>             <1.15>                         <1.25>             <1.15> Net Income/cwt.         $  2.00             $  2.80                         $ <.50>            $  0.30 X  200 cwt./cow         X  200             X  200                         X  200             X  200 X  Number of cows    X  600             X 3000                        X  600             X 3000 Net Income                 $240,000         $1,680,000              $(60,000)      $180,000 As you can see in the previous example, the larger operation does a fairly good job of spreading their fixed costs as well as reducing some variable costs per hundredweight.  Thus, it is apparent why the larger operation has the ability to service substantially more debt in a given time period.  Of course, in our current industry environment, dairies of all sizes will find it more difficult to make ends meet.  Regardless of herd size, all producers should keep a close watch on their costs per hundredweight.  These should be monitored on a regular basis both internally and via the accounting numbers from your CPA. To summarize, however, former General Electric CEO Jack Welch said it best when he advised:

  1. “Face reality as it is, not as it was or as you wish it were.” In essence, do the right things in your management system for the right reasons, but don’t waste time on those tasks over which you have no control.
  2. “Change before you have to.” This will assist you to stay ahead of the curve of change and position you to compete at a higher level. No doubt about it – You’ll be glad you did!

The realization is now – Written by Marketing Expert Seth Godin

*** I wanted to share a copy of Seth’s article with you, simply because I believe it has a fantastic message, one that could serve as a sound directive to get our country back on track in so many ways. I hope you enjoy his thoughts, which fit almost every 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’s 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 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. I regularly hear from people who say, “enough with this conceptual stuff, tell me how to get my factory moving, my day job replaced, my consistent paycheck restored…” There’s an idea that somehow, if we just do things with more effort or skill, we can go back to the Brady Bunch and mass markets and mediocre products that pay off for years. It’s not an idea, though, it’s a myth. Some people insist that if we focus on “business fundamentals” and get “back to basics,” all will return. Not so. The promise that you can get paid really well to do precisely what your boss instructs you to do is now a dream, no longer a reality. It takes a long time for a generation to come around to significant revolutionary change. The newspaper business, the steel business, law firms, the car business, the record business, even computers… one by one, our industries are being turned upside down, and so quickly that it requires us to change faster than we’d like. It’s unpleasant, it’s not fair, but it’s all we’ve got. The sooner we realize that the world has changed, the sooner we can accept it and make something of what we’ve got. Whining isn’t a scalable solution.” I urge you to join me in making the changes we need to in order to succeed and prosper!

Developing a Future Course for Your Business

You’ve probably heard about the Harvard Business School study regarding the value of having clearly defined goals and a written plan designed to achieve them. 3% of the study’s respondents had a “written, specific plan” for what they wanted to achieve. 10% of them had a “general set of goals” with no definite plan. 60% of those surveyed had only “survival goals” that would allow them to live day to day. The final 27% had “no goals”. When the study was completed 20 years later, people in the 3% group with definite written goals had out produced the 10% group by over ten times. In fact, this 3% group had amassed greater wealth in those 20 years than the entire other 97% of those surveyed! Am I advocating that you should simply do this planning to obtain more money? No. Maybe your goal is to give more money to charity. Whatever it is, write it down. A written plan will provide you with a tool against which you can compare your actual results! Please allow me to outline several other good reasons to consider developing a written strategic plan for your dairy business. First, the process of developing your plan forces you to focus on what you and your team want for your business. I am confident that you will be much more pleased with the results you obtain if they are in line with what you desire: Think it through and write it down. Second, a written plan will help to keep you on track because it will serve as a guide for you to purchase everything you need to meet your business objectives and it can keep you from buying anything you don’t need to succeed. This is important in the area of large capital expenditures. Invest only in the expenditures you truly need. Let someone else purchase items not necessary to you meeting your goals. Having a written plan doesn’t mean you can never deviate form it. Like any good system of guidance, it is intended to keep you on track. It must also be flexible, allowing you to adjust to rapidly changing business environments, milk markets, or feed prices. This is particularly true as we enjoy ever improving technology, which gives us more accurate, up to date information, equipping us to make better decisions. One final reason to include a written plan in your quest to reach the objectives you’ve set for your dairy business is that you are busy. You need a plan to stay on track. Your written plan will provide you with the guidance system you need to ask, “How will this impact us getting closer to our goals?”  Being prepared to answer a question like this one will allow you to save time, save money, and avoid headaches!