Wasn’t He Smooth?

I recently listened to a well known politician while I was in an airport, making promises about how if only we raised taxes further, we could do X, Y, and Z… I thought, this is crazy. A gentleman standing next to me said the politician was lying. I asked how he knew that, and he quickly replied, “…because his lips were moving!”

Ben Franklin had some thoughts on this, which I will share later.

So often, we get caught up in the “spin” and just can’t separate fact from fiction. While it is always great to be right in every one of our decisions, often we overlook the cost of unnecessary delays. Even if we don’t get everything 100% right, we will likely learn something from the process. If we delay every decision until we have “all the facts,” we will likely take most of the profit out of the situation.

Additionally, we run the risk of being like the gentleman who was looking for the prefect wife. He searched & searched for years and finally found her. She was perfect in every way, he thought. There was just one problem. She wasn’t looking for him…

Given the speed at which items change today, can we afford to spend excessive time over-analyzing every decision? On the contrary, build your plan on what you want to achieve, establish the steps you need to take to get there, set dates for their completion and TAKE ACTION!

If you follow this procedure closely, I believe that most of the time, you will reach your objectives. Simply take responsibility for these steps and move forward. You will likely experience the following:

“Well Done is Better than Well Said.”

Ben Franklin

Set some new, positive goals for the rest of this year, project their outcomes, and then measure the results as well. Do it now, and as I suggested previously, what will happen?

You will likely find new solutions, refine your processes and make additional, positive improvements. I’ll look forward to seeing you at the finish line!

Let’s take your business to the Next Level!

Can You Afford Not To?

I feel very strongly that one of the greatest advances of the Dairy industry during the past ten years has been the introduction of the Dairy Revenue Protection Program, also known as DRP. It has provided producers with a program that can establish a “Floor” under their milk prices by way of Put Options that are purchased on an amount of milk that is determined by the dairyman.

My timing of this information may seem premature, but I only hope I’m not too late with this information. Given the high milk prices we’ve seen in 2022 (& yes, before you remind me that feed costs have been terribly high, I understand that…), is there a point at which we start to negatively impact consumption? I’m pleased that it hasn’t happened yet, but it certainly could, going forward, particularly given that consumers, just like you, are being hammered by rising inflation.

I believe it’s always better to plan ahead on these types of tasks. How does the program work? Essentially, as I said earlier, you are purchasing “insurance” against calamitous milk price drops by acquiring Put Options that place a “floor” under the prices you receive. The premiums for these Put Options are paid for around the 15th of the month following the end of the quarter(s) of coverage.

If prices drop below your Put Option level established through DRP, you will get paid the difference, minus the premiums you owe. However, you have solid coverage on that portion of your milk against the effects of a disastrous pricing scenario.

On the other hand, what happens if prices increase above your DRP Put Option level? For example, what if you set an $18/cwt floor, and prices increase to $19.50/cwt? Well, unfortunately, your Put Options expire unused, and you do still owe the Put Option premiums 15 days after the period of coverage ends. However, the good news is that the price you received was higher than the coverage level you had set, which means that you should have some extra funds to cover the premium.

Remember, your objective is to provide you with a “Safety Net” against huge price drops. Please think back to the years 2000, 2003, 2006, 2009 and 2015-2018. Wouldn’t it have been great if you could have placed a “floor” under the price of at least a portion of your milk sold? DRP, which I believe can now be used in conjunction with the Dairy Margin Coverage (DMC) program, can protect against serious price fallouts.

If you understand your Break-Even Milk Price Levels & your detailed Costs of Production, this can provide you with a solid framework against serious Cash Flow difficulties. As always, if you measure something, you can understand it. If you understand it, you can begin to control it, and if you control it, you can improve it!

The real question is – Why Wait? Do it now, and as I suggested previously, what will happen? You will provide yourself with solid price insurance. And, that would be excellent!

Let’s take your business to the Next Level!

Have You Held Your Halftime Pep Talk Yet?

I’m not sure where the months have gone, but we are already half way through this year! Wow! With that point in mind, I have a question for you. Have you held your halftime pep talk with your Team yet?

In other words, after the first six months of this year, it’s definitely time to review what has occurred thus far, and, perhaps more significantly, what we may need to do in the second half?

To review the first half, there are two basic questions: What’s been working? -and- What has not? What items that you have set as goals and then measured are ahead of plan? Where are you falling short of your expectations for the year thus far?

More significantly, what can we do differently to shore up those shortfalls? Are there solid adjustments that we can make to your plan for the year? How costly will those changes actually prove to be?

Ultimately, are there new goals that we should pursue? For example, maybe there are new objectives that have now come into clearer focus and we should pursue. Are there some previously set hurdles that now, with this additional insight, appear to be out of reach? That is okay. These are also part of your halftime game adjustments. There is no shame in making these necessary adjustments. In fact, it would be an absolute shame if you didn’t make them, especially if you know they could help your operation.

No game is over until the final buzzer goes off, so as you proceed through the rest of the year, be sure to continue to measure all items, simply because if you measure something, you can understand it. If you understand it, you can begin to control it, and if you control it, you can improve it!

Also, if you set some positive, new goals for the second half, you’ll need to project their outcomes, and then you will want to measure those results as well. I assure you that your Banker will be… The real question is – Why Wait? Do it now, and as I suggested previously, what will happen?

You will likely find new solutions, refine your processes and make additional, positive improvements. And, that would be excellent!

Let’s take your business to the Next Level!

WWDD?

Recently, I attended the Data & Innovation Summit in Sioux Falls, South Dakota to learn more about technology being developed for the Dairy & Agricultural sectors. It was truly a fascinating event with a great deal of knowledge shared. I would highly recommend that you attend this conference in the future.

One of the best quotes that was presented was from W. Edwards Deming (and, hence, the title, WWDD, “What Would Deming Do?”), who was known as one of the Founding Fathers of Total Quality Management:

“In God we trust. All others bring data.”

W. Edwards Deming

Now, Deming was no ordinary individual, considering his focus on quality management and his 14 Key Principles related to the topic. In fact, he was instrumental in the development of Japanese manufacturing management and their exceptional focus on quality control.

One question proposed by Chip Donatone of IYOTAH Solutions, “Is Data the new oil?” In other words, does it have great value? Of course, as a producer, he added, “If you can’t measure it, you can’t manage it.”

However, what if we could integrate all of the information from your dairy operation into a single dashboard? This is being developed by several companies, including Chip’s firm. Think about the possibilities for your dairy operation of tying in all facets, including, but not limited to, Robotics, your Feed Manager, Breeding Information, your Milk Processor Information, and even your Financial Information. Stay tuned. I may have a tool for this in the near future!

Imagine a bright future for our industry, characterized by forward thinking producers who have developed & implemented tools that have provided them with vastly improved control over their results. That is one of the biggest benefits I see for all of us through the implementation of additional data!

The real question is – Why Wait? Develop this information now, and as I have suggested previously, what will happen?

You will likely find new solutions, refine your processes and make further improvement. That, my friends, is a positive thing!

Let’s take your business to the Next Level!

When Should I Start This?

Recently, I read an excellent quote from author Joshua Becker in his book Things That Matter, which stated:

“If we wait to be healthy, perfect, and prepared in every way, we’ll never accomplish anything. Everything valuable that has ever been done was done by someone with flaws and wounds.”

So, having read this, what’s the message? Do it now. In my last blog, I discussed what to do if you are feeling stressed about inflation and its impact on so many rising costs, and who isn’t worried about these challenges?

What action steps can we take, starting today? As I explained in my prior blog, let’s begin with controllable items. Recently, I had a Client who suggested that everything is so high right now, he can’t do anything… Really? I quickly pointed out that there was one guy in his operation who was essentially contributing nothing. “Yes, but if I tick him off (by suggesting that he work…?), he might leave.” And, I asked, how would that be a loss? If he isn’t contributing anything, wouldn’t we at least be saving his salary in the budget?

What can we control? Fixed interest rates? I’ve been cautioning Clients to start locking in long term rates for over a year. Fuel costs? We can’t completely control the cost per gallon, but if the price is continuing to rise this summer and you know you’ll need fuel for this year’s cropping program, why not “pre-buy” it now? Can you contract some other costs? This may result in thinner margins, but isn’t that better than negative margins? Remember, we cannot always hit a “home run,” but singles win games, too.

As I explained previously, we need to measure all items, simply because if you measure something, you can understand it. If you understand it, you can begin to control it, and if you control it, you can improve it! This process can also assist you to plan for long term capital expenditures, especially if they can further improve your efficiencies and cash flow results. The real question is – Why Wait? Do it now, and as I suggested previously, what will happen?

You will likely find new solutions, refine your processes and make further improvement. What then? Let’s celebrate at the finish line!

Let’s take your business to the Next Level!

How Can I Manage this Inflation?

Recently, I read an excellent article from Dave Ramsey, CEO of Ramsey Solutions about the correlation between the current financial stress being caused by rising inflation and people’s mental wellbeing. It led me to conclude that my Clients are facing the same challenges, perhaps on an even larger scale, as business owners…

Dave pointed out that costs are definitely rising and, as a result, so is the stress level among people all over the country. Wow, I thought, we are seeing this first hand with the dramatic rise in commodities & fertilizer in agricultural operations, to say nothing of labor & fuel costs being at all-time highs!

And then he made my day by saying the same thing I’ve been sharing with Clients for the last 24 years! “Having worked with people in financial stress for 30 years, my team and I have figured out that there’s more anxiety from the unknown than from the bad news. It’s a weird thing, but when you write items down, they no longer have the same power over you. What this means right now, in this discussion, is sitting down and doing a budget and looking at everything, no matter how difficult or unpleasant the facts are right now, and no matter who caused the problem at hand.”

I am so thankful for Dave Ramsey’s statement. I have been pushing Clients in this one area for many years. You will recall that I’ve said numerous times previously that if you measure something (in this case your Budget or Cash Flow), you can understand it. If you understand it, you can begin to control it, and if you control it, you can improve it! Additionally, though, I think Dave Ramsey makes an excellent point, and that is this: If you have a clearer understanding of your Budget position, whether it is positive or negative, it holds less power over you, i.e., your life is less stressful.

Now, that doesn’t change the fact that if you are losing money every month, you need to start taking action, because, as my Business Coach Dan Sullivan says, “All progress begins with telling the truth.” Then, once you know what the facts are, you need to build a plan to overcome your challenges. Identify your major obstacles, select potential courses of action to take to overcome them, and then build a plan to implement these steps.

These steps will undoubtedly lead to items you need to change. Don’t resist these changes. Remember the definition of insanity, doing things the exact same way and expecting different results… As author John Delony suggests, “connect with someone for an outside perspective, make a list of the things you can control and the things you cannot control,” and get after the items that you can control, because, as Dave Ramsey points out, “When you control the controllables – that’s when your hope starts coming back.”

What will happen? You will probably identify new financial solutions, refine your processes and make continual improvement. What could be wrong with that? Nothing! If I can assist you with this process, please let me know!

Let’s take your business to the Next Level!

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It Worked How Well?

Have you ever stepped back from your operation and suddenly realized that some tasks, frankly, just weren’t being done, either correctly or often enough? I have. In fact, we probably all have at some point.

I first realized this, as a result of a Strategic Coach workshop exercise I completed with my business coach Dan Sullivan. It was entitled: “It worked so well, I quit doing it.” In my case, I realized that there were a few tasks that had previously been completed by a member of our Team who left. After her departure, none of us had picked up this task. For a while, it literally worked out just fine. However, we took this task for granted and simply quit doing it. Eventually, the problem with this approach surfaced, and I realized where we had gone wrong.

When we had a change of personnel, we did not train the new hire sufficiently. This often happens in business. So, what did we do?

We developed “Task Worksheets” that clearly outlined all the Key Tasks that needed to be completed on a regular basis. These were created by the person who was responsible for this task. Then, if someone left or got promoted, we had no issues with tasks being completed properly. All we had to do was refer to these worksheets, and if we had questions, we talked about them. Sometimes, this even helped us to refine our processes and make them better.

If you want to land in your industry’s top 10% for profitability or some other measure, you will need to:

  • Perfect & streamline your processes, assuring that they get done, no matter what.
  • Once these processes are in place, automate as many as you possibly can (feed pushing, report generation, other repetitive tasks).
  • Then, when you feel you have it covered, look for more tasks that you can outline a procedure for and, if possible, try to automate them. How? Gather your Team, ask them (because they typically know best), and then experiment.
  • Identify potential problems, ask what could go wrong, and then build a plan to avoid or overcome these issues. As Astro Teller of Google Works explained last month at the Abundance 360 Conference, “Celebrate learning, and celebrate the process, not just the outcome. Judge yourselves on experimentation, not outcomes.” This will result in optimal steps and more positive outcomes.

What will happen? You find new solutions, refine your processes and make continual improvement. What’s wrong with that? Nothing! Let’s celebrate at the finish line!

Let’s take your business to the Next Level!

What Was He Implying?

Recently, I had a meeting with a Client and his banker, designed to update the bank on our progress to date and our plans for the next 12 months. Usually, I find these sessions very beneficial for both the Client and his bankers. This one was somewhat tense, as I had expected it would be, given that I had rejected all of the bank’s “recommendations” for this operation…

Let’s look at three of them:

First, they felt the Client should sell his heifers to raise capital and pay down debt. Really, I thought, and what will they use for replacements? Perhaps they could buy them, but based upon what we’ve seen on the prices of springers & fresh two-year olds these past several months, that would have been costly.

Next, they suggested that he sell his entire herd and just plant trees. This has merit over the long term, but if the client sold his entire dairy herd and planted trees on all of his farmable acres, what would his revenue source be during the next 4-5 years while these trees were coming into full production. This also would require a major capital expenditure and addition of debt. How could they service the interest on this new debt?

Finally, the bank suggested that we sell part of the Client’s land to reduce debt. Their Loan-to-Value on the real estate was 40%. Wow! In hindsight, we would have missed the upturn in land values for properties like this that have multiple sources of water.

Upon rejecting these shortsighted suggestions, we were immediately reminded about how lucky we were to have their financing… He suggested that the dairy industry was such a train wreck waiting to happen, so we should get out while we can. I wonder if I should forward him a copy of the Daily Dairy Report, showing $24-25/cwt milk prices? Yes, feed is high, but margins should still be solid.

At this point, I borrowed a line from former Vice President Mike Pence in the 2020 VP Debates and stated, “You’re entitled to your own opinion, but you are not entitled to your facts.” So, what was he implying?

  1. That this was a short-term game? Perhaps it was for the bank, but not for my Client. They were in it for the long haul.
  2. We didn’t know what we were doing? Since this discussion, heifer prices are up, and I’m glad we are not having to buy any. Trees are great, but I’d hate to be buying feed on the open market today with its high prices.
  3. Land values are up, and, as result of this and the solid herd management that has been put in place, several other banks are now interested in this credit relationship.
  4. Why decrease debt levels if your Loan-to-Value percentages are in line with positive industry standards and your performance is steadily improving? I don’t know.

This Client’s performance is trending upward and is on track to exceed our projections for this year.

Please allow me to leave you with this: Are you receiving the most optimal financial advice? If I can assist you on this, please feel free to contact me.

Let’s take your business to the Next Level!

Have You Ever Been Caught in the Gap?

You may recall the concept of the Gap and the Gain from a prior Next Level Thinking blog that I published on March 15, 2022. I’d like to explore this concept further because I believe it can impact many of us in both our businesses and lives.

As Dan Sullivan, the creator of the Gap & Gain Concept and Co-Founder of the Strategic Coach organization, stated, it’s similar to walking toward the horizon for 30 minutes and then looking toward it. You will feel like you’ve made no progress at all (the Gap). However, if you look back and see how far you’ve progressed in comparison to where you started, you will experience what he describes as the Gain. The same principle holds true in your business.

Similarly, if you start contracting some of your costs (feed & fertilizer) or some of your revenue streams through programs such as the Dairy Revenue Protection program or other Hedging Strategies, you can get caught in the “Gap” where you are looking at where you’d ideally like to be and then get frustrated with your current progress.

On the contrary, if you observe how far you’ve come today in comparison to where you started two years ago, your primary focus will be on the progress you’ve achieved, instead of “utopia.” This will help you avoid encountering unnecessary frustration.

Dan goes on to explain that some people who are very successful have great lives and are quite satisfied, while others in similar circumstances are very unhappy. “Why is that? The key is in how they look at life. The brain has a great ability to see a vision of how things could be in the future. The trick is to use that ‘ideal’ as inspiration, and not to measure your progress against it, because it will always continue to change and evolve as you do.”

He adds: “In order to feel happy about your achievements, you need to measure them against where you’ve started from. This will keep you out of ‘The Gap’ and constantly living in the positive zone – ‘The Gain.’ When you measure your progress against your starting point, you will always have a sense of success, satisfaction, capability and confidence.”

I would agree that your best approach will be to always measure your progress against where you started. Then, celebrate your “Wins” along the way, too, and realize that you are, indeed, making gains. Before you know it, you’ll be across the finish line of success!

Please allow me to leave you with this: Are you being caught in the Gap?

Let’s take your business to the Next Level!

Are You Caught in an Uncertainty Trap?

I recently came across a quote from my Business Coach Dan Sullivan, which I feel is appropriate for our current times:

“Entrepreneurial confidence lies in the willingness to look for the certainty and uncertainty in every situation.”

                                                Dan Sullivan, Co-Founder of The Strategic Coach

I believe you’ll agree that there is a great deal of “uncertainty” in our lives right now, but are you spending adequate time identifying both the “uncertainties” and the “certainties” in your business and life? While we need to give sufficient study to both areas, we need to be careful we don’t get caught up in just those that are uncertain. If we do, we will be subjected to freezing up our thinking, and, in general, that is not a positive outcome.

Beginning with items of certainty, I suggest that you identify them and consider how you can integrate them into your business operation. However, if they are truly “certainties,” there is no need to dwell on them. Simply consider how they can help you, and then address the “uncertainties” that you are facing.

To start, recognize that these are areas that you are unsure of, so we need to consider multiple possibilities or potential outcomes that could occur.

  1. List your objective, i.e., your best possible potential outcome and set a date for its completion. Remember, a goal without a deadline will likely remain a “dream.”
  2. Next, list all the potential obstacles you are facing. Some of them could be those same uncertainties. Then, outline potential strategies you could use to overcome them, as well as who, specifically, will implement the strategies you’ve listed.
  3. Once you’ve refined your steps, take Action on them!
  4. Will you call 100% of these steps perfect? Probably not, but as Motivational Speaker Les Brown stated, “All you can do is all you can do, but all you can do is usually enough!” The problems arise when people start taking shortcuts and don’t actually do all they are capable of doing…

Follow these steps, completely & thoughtfully, and you’ll be able to master the process of Strategic Planning. When you do, many of the prior “uncertainties” will become more certain, effectively providing you with “Stepping Stones” to greater levels of success!

I hope you find these recommendations helpful in your business. If I can assist you further with this process, please contact me. It’s one I use with Clients on a regular basis.

Please allow me to leave you with this: Are you caught in an uncertainty trap?

Let’s take your business to the Next Level!