How Do You Measure Success?

Are you thriving in your business or simply surviving? This is a crucial question to answer, especially as we move through years that are financially challenging. As I mentioned in a prior blog, the rising costs of doing business will always make it more difficult to reach your Break-Even Levels.

Add to this the increase in interest rates and a few additional regulatory items, and suddenly you are facing some genuine barriers to your success. In my last blog, I stated if you measure your costs, you can understand them. If you understand them, you will be better able to control them, and, of course, if you can control them, you can improve them.

Reaching your Break-Even Levels can then become more attainable, but there is even more to this success process than what may be initially obvious. What else can we do to improve your profitability?

  • Boost your efficiencies. If you can make improvements in your operation by streamlining tasks or even automating them, results can improve. I have several dairy clients who have automated the processes of pushing feed up in front of their cows, using a robot. It’s an important job that just, frankly, wasn’t being completed often enough. The robot completes this simple process 10-12 times per day, boosting milk production per cow, and never takes a vacation, calls in sick or has a Workers’ Comp claim…
  • Look at potentially cutting unnecessary costs. Are there certain tasks where you find yourself defending the old way of doing things? It is crucial that we look at ways that we may be able to reduce or even eliminate steps without impairing our results. Can some processes even be combined in your operation?
  • Are there tasks, once again, that can be automated? As we look at the rising costs of labor, or perhaps more significantly, the challenges of even finding enough employees, this is worth looking into. I have another Dairy Client who has automated the process of milking his cows. Installing these robots helped him reduce his labor costs by a substantial amount and will pay for themselves in a relatively short time frame, and that was before the minimum wage & overtime rules were updated for next year. As the minimum wages rises, the pay scale of these skilled workers will increase, too, making the payback of the robots even quicker.

Are you positioned to succeed? Being on your “A Game” requires fine tuning your efficiencies, as discussed above, and then developing a Budget that can help you navigate tough times, any slowdown in the economy and rising interest rates. Measure your Actual Results vs. this Budget, and make the changes necessary. I have seen this process work for my clients for the past 24 years. If I can assist you on this process or in seeking increased efficiencies, please contact me.

Let’s take your business to the Next Level!

Could This Be the Answer for You?

If you are like most business people, you have probably been feeling your profit margins tighten as we have gone through this year. If not, you are truly living a “charmed life…” Frankly, I believe most of us have been feeling this effect, given the ridiculous prices of fuel, fertilizer, and general repairs, both at home & in our businesses.

What’s driving this? I believe it’s a combination of foolish policies and terribly poor planning on the part of those in charge of setting our country’s direction. What is the answer?

It’s rather “Spartan,” but I suggest you “prepare for battle.” Not literally, of course, but rather from the perspective that you must be on guard in terms of costs. For example, I’ve been hearing that our costs of doing business will likely be rising in 2023. Really? I guess the same folks doing these measurements have not noticed that the cost of flights has already doubled and fuel is up at least 50%…

Most importantly, do you know what your costs of production truly are? Recall that I have shared many times that if you measure your costs, you can understand them. If you understand them, you will be better able to control them, and, of course, if you can control them, you can improve them.

This is crucial, because it forms the very basis of Break-Even Analysis. This is true for any operation, regardless of its size. Break-Even Analysis takes your Revenue & Expenses and then tells you what items you need to change, with all other items remaining the same, to reach your Break-Even Level, the point at which you will not lose money.

It is far better to be on the leading edge of this than to be playing “catch-up.” Why wait? If I can assist you with this process, please contact me at your earliest convenience. As industrial magnate Charles M. Schwab stated: “Keeping a little ahead of conditions is one of the secrets of business…”

Let’s take your business to the Next Level!

What Can We Do?

I received an interesting email about my last blog about how courage can be contagious. With that in mind, I wanted to provide you with some thoughts that motivational coach Brendon Burchard shared recently.

He pointed out that people who are facing self-doubt typically do one of two things. They either “stop dead in their tracks” or use this event as a “trigger to kick it in!”

As Brendon explained, “the first phase is when a Crisis Happens.” This is normally when people start seeking safety and security. They may even do crazy things, like ‘hoarding toilet paper,’ as some people did at the beginning of the COVID-19 pandemic.” Remember?

“The second phase is when people start to cope with the crisis. If you are in the Stress Management Mode, you may begin feeling self-doubt, become overwhelmed and start asking the question – ‘Why am I going through this?’” A better approach would be to use this challenge as an opportunity to get prepared!

“The third phase is to start realizing that you need to overcome this challenge and build positive progress.” In other words, as I stated in my last blog, commit to a plan. Outline the necessary steps, recognize the hurdles you may face & how you’ll overcome them, determine who will implement the necessary action steps, and put a deadline on these tasks. Otherwise, they will simply remain a “dream,” not something you’ll actually bring to fruition.

This will take some time but, once again, you will probably find new solutions, refine your processes and make additional, positive improvements. And, please remember what my Business Coach Dan Sullivan said about this: “The are no unreasonable goals; just unreasonable deadlines.

I’ll look forward to seeing you at the finish line!

Let’s take your business to the Next Level!

Can Courage Really Be Contagious?

Is courage actually contagious? Can you literally catch it? In the book “Courage is Calling” by Ryan Holiday he states that “… courage, like fear, is contagious. One person who knows what they are doing, who isn’t afraid, who has a plan is enough to reinforce an outnumbered army, to buck up a broken system, to calm chaos where it has taken root.” Sometimes, all it takes is one person with courage. Someone who isn’t afraid to face defying odds.

It reminds me of several of the financial turnarounds I’ve been directly involved with over the past 24 years. I’ve been faced with some fairly difficult situations with Clients where we faced off with multiple bankers and attorneys, attempting to persuade them that the financial projections I had developed could work, as planned.

I’ve discovered that you can truly make a difference when you exhibit courage. The reason behind this is that when you exhibit courage, you also make others brave in the process. You literally instill courage in them, too. Calmness can then spread, and that, in turn, leads to higher levels of confidence.

From the same book, I’ll share the story of “Texas Ranger Bill McDonald, called in by the authorities in Dallas in the early 1900’s to break up an illegal prizefight. When he arrived, the mayor was aghast. ‘They only sent one ranger?!’ he asked. ‘You only got one riot, don’t you?’ McDonald asked.” In essence, one person with courage can make a majority.

With this mind, what steps are required?

  1. Determine your ultimate objective.
  2. Recognize that there will, undoubtedly, be some challenges you will face.
  3. Determine the “Steps” you need to take.
  4. Set some deadlines for the various “Action Steps.”
  5. Decide who will initiate the various actions. If we don’t establish deadlines and decide who will do these tasks, then the objective simply becomes a dream, one that never gets completed.

What can you do if you follow these steps? Anything you set your mind to completing!

As I’ve said before, 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!

What to do in Tough Times?

I recently listened to an excellent podcast from motivational speaker Brendon Burchard about how to deal with “tough times.” Life in America has historically been good, but I know many people are concerned about things like inflation, rising interest rates, government decisions and, of course, the rising stress levels associated with all of these challenges.

Here some solid suggestions from Brendon on how to deal with these challenges, especially since we don’t always know when they might arise:

  1. Raise Your Ambition Level – This is a key element of being on your “A” game, essentially “showing up!” I believe that when we actually raise our ambition level, we become more focused and benefit from additional clarity. While your competitors or those providing you with this “challenge” are still developing their game plan, you can be one or two steps ahead of them, already having considered numerous “What If?” scenarios. Many challenges come from bureaucrats, and I have found that they hate nothing more than someone who is “prepared for them…”
  2. Reframe Doubt – Brendon emphasizes that we need to overcome pessimism. As he states, “Doubt is calling you to rise, not stopping you!” Everyone has doubts. This is normal, so take a closer look at the situation and consider how you might handle it differently than just having doubts. For example, if you were having success in this situation, what would have to have happened? Trust me. The more you practice this process, the more it will become natural for you and the more you will meet with greater success levels.
  3. Reset Your Habits – Challenges like we are facing today require us to boost our Daily Focus. Just as I wrote in my prior blog, better habits and increased discipline will take you a long way toward achieving your objectives. Again, the best way to overcome bureaucratic obstacles is to succeed in spite of them. That, my friends, will take you to the Next Level!

What challenges are you facing today? Here are my recommendations:

  1. Rest up, if necessary, and then Show Up! Face the challenges head on. You can overcome them!
  2. Doubts are normal. What to do? Think your game plan through and move forward. That’s what progress is all about.
  3. Focus – As Mr. Miyagi said in “The Karate Kid” movies, “Focus, Daniel son, Focus!” This is always good advice and something we should strive to implement.

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!

Are You Fighting DF?

I recently read an excellent article by Julia Ubbenga about “Decision Fatigue” and how it’s impacting a lot of people in their lives. I suspect you know what I am referring to. With all the negative news that surrounds us, it is probably difficult not to be somewhat fatigued… If you are running a business, or even if you are not, you are being bombarded with challenges created by inflation, rising interest rates and sometimes oppressive rules being created by government appointees who have no level of accountability.

If you are getting fatigued with the many decisions and challenges being faced, this article provides us with some insight about what we can potentially do to overcome this. Here is a summary of the author’s thoughts about how to decrease decision fatigue:

  1. Simplify your wardrobe – I know this probably sounds silly, but if you look at some of the most accomplished people in society, they don’t appear to spend a great deal of time choosing what they wear every day. Steve Jobs of Apple and many other successful leaders maintain a simple wardrobe and don’t waste time making clothing decisions every day. If you can’t do this, at least select your outfit the night before.
  2. Practice a morning routine – Ubbenga states, “Implementing routines and rhythms into your day is key to reducing decision fatigue.” My morning routine includes a workout, meditation, Bible study and usually a walk or run. If I don’t get to complete these tasks, usually due to catching an early morning flight, my day can start out less smoothly. For this reason, I am quite adamant about maintaining this morning routine. I feel that it gets my mind on a more positive track!
  3. Reduce clutter in your environment – I know a lot of us have a challenge with this one. I do, too, occasionally. However, the reason I know this is crucial is simply that every time I get my desk organized, I not only feel better, but also tend to be more productive.
  4. Apply the Rule of 3 to your “to do” list – Experts in productivity agree that the magic number of priority items on a daily “to do” list is three. You can list 10 items that you want to complete as you end each day, but I believe it is imperative that you then start your day be selecting the three most important ones to complete. For me, part of the answer is learning to say “No.” As my business coach Dan Sullivan states, “Learning to say Yes is what got you out Egypt, but learning to say NO will get you to the Promised Land.” Ask yourself – of these 10 items what three, if they were all I completed today, are most crucial?
  5. Slow down your schedule – This is a big one for me. I used to get annoyed when my schedule had to change, normally for reasons beyond my control… However, I have learned to use these changes to my advantage. Maybe I can use them to catch up on a task that I hadn’t completed yesterday or even get a jump on an item that I had planned to do later in the week such as follow up calls. Often, this creates new, positive opportunities for me.
  6. Simplify your meal routine – “Studies show that the average American spends 40 minutes per day thinking about food. That’s more than 240 hours (10 days) a year.” Are you kidding me? I find my day is more productive, especially when I’m traveling, if I simplify the process. Give this simplification process a try, and just eat healthy.
  7. Ask yourself what decision would be best for your brain – Ubbenga states that “Prioritizing and optimizing brain health will help reduce decision fatigue.” Try asking yourself, when you are facing a decision, “What’s best for my brain right now?” I often ask myself – Is this the best thing/approach for me right now? The more I do this, the better, and less stressful, my decisions seem to become. As the late Wayne Dyer said “Our lives are a sum total of the choices we have made.”

All of these seven points can assist us to reduce “decision fatigue.” While the stress relief of this process is, in itself, beneficial, I think the greatest benefit comes from developing an ability to make better decisions, and that will assist you in getting to “Next Level Thinking!”

The real question is – Why Wait? Start this now, and as I suggested previously, what will happen? Many good things!

Let’s take your business to the Next Level!

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!