Are You Using What You Do Know?

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I so enjoyed a recent podcast by Tyler Dickerhoof, as part of his ongoing series entitled the Impact Driven Leader. If you haven’t listened to his December 17, 2021 podcast, I highly recommend that you check it out. It has some excellent points!

My favorite point that Tyler shared was that, so often, “We can get so caught up in what we don’t know, that we are afraid to share what we do know.” This is so true for many of us. As Tyler explains, “Who loses when we do this? Everyone around us.”

Please allow me to provide you with some real-life examples from my own consulting work, where this principle really was exemplified:

  • One of my Clients was accused of overstating the numbers of heifers in his herd by 200 head. According to the bank’s appraisal staff, he was off by this amount. Of course, this “raised a red flag” with his lender at his loan renewal… We chose to speak up, and guess what? When they recounted the heifer numbers, we were right, but what if we hadn’t shared what we did know?
  • On another Client’s loan renewal, I had completed an Annual Budget that showed a relatively solid profit for the year we were projecting. Did I know with certainty that the Client would be profitable? Of course not. It was 12 months into the future. However, I did know will almost certainty that he would not lose $400,000, as projected by the bank. I found a huge error in their calculations, and voiced my concern. After realizing their mistake, the loans were approved, and the business moved forward successfully. What if I’d simply accepted their projections?
  • For quite some time, I’ve recommended that Dairy Clients consider milking their fresh cows 4X for the first 21 days of their lactation. This typically results in cows achieving higher peak production and then attaining higher levels of milk production throughout their lactation. Did I understand everything about this process and how it worked? No, but what if I hadn’t shared it with several of my Clients? It would have impacted their milk sales and resulting profitability.
  • For years, I’ve worked on getting Clients, particularly in the dairy industry, to diversify their operations. This has resulted in Clients expanding into Almonds, Pistachios, Wine Grapes, Olive Oil Production, Various Dairy Products and, most recently, Methane from their Digesters for Energy Production. Did I know that every one of these projects would succeed? No, but after extensive analysis and knowing that they could potentially benefit, I shared with them what I did know about the positives of diversifying their operations.

So, to answer the question above: Are you sharing what you do know, or are you so caught up in what you don’t know, that you’re afraid to share what you do know?

Let’s take your business to the Next Level!

Would You Consider Doing This?

One of the most enjoyable gifts I received for Christmas was a placard for my office by Marla Rae that shows a picture of a cow in the back of a pickup truck with a sign on the driver’s door entitled “Cow on the Prowl.” At the top of the placard, the following words are printed:

“Live like someone left the gate open!”

As we start a new year, this seems like good advice for each and every one of us. Is it time to consider new challenges in your business this year? What tasks, specifically, do you need to address? If there are one or two changes you could make in your operation, especially if they are not cost prohibitive, what would they be?

Have you set some new objectives for this year? If you are running a dairy business, how about striving to make 80 pounds of daily milk on your Holsteins or 60 pounds on your Jerseys? This will be a good time to do so, given the high projected milk prices this year. Why not capitalize on those improved prices?

Have you looked at the Dairy Revenue Protection Program for putting a floor under your future prices? How about the Dairy Margin Coverage program? Although milk prices will likely be higher, the pressure of continued high feed costs could still impact margins.

What does it really mean to “Live like someone left the gate open?” I think this means that we need to look at new possibilities, try some new tasks, and push forward with a good attitude, regardless of outside factors. Maybe it even means reaching some new levels of productivity or improving our banking relationships.

Again, regardless of what industry you are working in, do you know your costs of production? If you operate a dairy, what’s your Cost/cwt? If you run an almond orchard or a wine grape vineyard, what are your costs/acre to produce your crop. If you have a manufacturing facility making a product, what’s your cost/unit sold?

I’ve worked with numerous businesses for over 23 years to help them know their costs of production and improve these numbers. They are absolutely crucial to your success! Remember, if you measure this, you can understand it. If you understand it, you can control it, and, ultimately, if you can control it, you can improve it!

If you know your costs and the resulting profitability, you have some powerful options:

However, you know what the biggest benefit will be? If you live and operate “like someone left the gate open,” you will explore new options, consider & refine your current business pathways, and choose the best options for you. And that, my friends, is the most direct path to Success!

One final thought: If you were to live like someone left the gate open, what is your next step going forward?

Let’s take your business to the Next Level!

When Will They Ever Be Happy?

This is a question that a new Client, referring to his bank, asked me recently. My first thought was: Beautiful Dreamer… Then, I thought the better of it and shared the following ideas with him, simply because I felt he deserved a more solid answer.

You see, this new Client had not consistently provided his banker with on time reports over the prior two years. He felt he was “too busy…” Doing what, I thought?

He had no CPA Prepared Financial Statements, and he never provided them with a budget since he felt “that was their job.” As a result, he really didn’t focus on regular Cash Flow Analysis or measuring Inventories. It was simply a state of chaos!

If this describes you (or someone you know…) consider the following:

All Bankers must “serve two masters.” They have a difficult job. They are trying to provide you with what you need as a borrower, and they need to protect the assets of the bank (by not making a bad loan). It really is a tough role. Not impossible, just challenging. I know because I was a loan officer for two major banks. It was a role that I reconsidered after being held at gunpoint in a bank robbery…

In any event, it’s not our job to make your banker’s life and loan approvals more difficult! On the contrary, think about ways that we can make their lives easier:

  • Talk to them about what your objectives are for your business & life. They will likely be very interested to hear this information.
  • Provide them with a clear Annual Budget at the start of each year. This helps you both think about areas where you may need to tighten some details.
  • Do regular Cash Flow Analysis of your results vs. the budget in my prior point. Even if it isn’t “All Roses,” it certainly is better to know sooner. If a problem exists, you can start to fix it before it gets beyond repair!
  • Have regular CPA Prepared Financial Statements. These are crucial to bankers.
  • Complete at least Quarterly Herd & Feed Inventories to maintain your Loan to Value % at a reasonable level.
  • Hold Management Team Meetings with your Key Advisors.
  • Finally, meet with your Banker 1-2X per year. They will love touring your operation to see your progress and will also appreciate a meeting with you at their office occasionally.

So, to answer the question above, if you are doing these tasks, regardless of what type of business you are in, your Banker will be happy, and you’ll be the ultimate beneficiary of these sound efforts via an easier loan approval process! I’d be remiss if I failed to state that every business needs these items. If I can assist you with them, please let me know.

I will leave you with one final thought: Have you covered all of these items in your operation? What is your Plan going forward?

Let’s take your business to the Next Level!

Who’s Been Doing the Heavy Lifting?

I was recently reading an article by Joshua Becker within which he described being out for a walk and then seeing a line of ants crossing the sidewalk that he was traveling on. He stated, “As I was watching, I noticed one ant carrying a leaf. And then I noticed another. And then another. The ants carrying the leaves were walking the same direction, and seemed to be keeping up, but the longer I watched, the more I noticed they were walking a little slower than the others… All I noticed was that some of the ants were walking peacefully while others were carrying a heavy burden. And it reminded me a little bit about life. Sometimes we walk peacefully. But other times, life requires heavy lifting.”

So, I’d like to ask you one question: Who’s doing the “Heavy Lifting” in your operation, and have you thanked them recently?

There is so much “buzz” today about the benefits of automation and the impact that will have on your labor force. I agree that it is clearly the wave of the future, and its benefits are astounding. But what if you can’t automate some functions in your operation or what if you feel you cannot afford to automate, i.e., it appears to be cost prohibitive?

In that case, you need to identify an alternative approach. Find those people in your work force who are an excellent example of what you want in every employee and use them as a model. If they have skills that you wish all your employees had, use them to teach the others by example. This process will improve the overall skill set of your Team, AND you will definitely build that employee up by literally recognizing his or her superior skills.

Likewise, the next time an employee comes to you asking for a raise, provide them with a check list of skills and ask them if they can do each and every one of those tasks. If they cannot do all of them, have them learn how to do the new tasks. Again, two things will happen. Your work force will be better trained, and they will then be worth more to your operation, allowing them to boost their income.

Do you know the future roles of your employees? Are there opportunities to grow and/or be promoted? This is huge for employees. I know you’ve been focused on your next expansion or banking issues, but remember that, just like a dog sled team, “The scenery only changes for the lead dog!” Help them define a clear path forward. As Luke Miller, DVM, recently stated at the Western Dairy Management Conference in Reno: “If you can’t trust your Team, it’s your fault, not the employees. You either hired the wrong person or provided them with no training, both of which are the fault of the employer.”

I suggest, while you are studying ways to automate your operation, think about the development of your best employees, as outlined above.

I will leave you with one final thought: Who do you need to thank for “doing some heavy lifting” in your operation?

Let’s take your business to the Next Level!

Who’s Controlling Your Success?

Author Andy Andrews, in his book entitled The Traveler’s Gift, explained that taking responsibility is the key to all success. I’m sure you’ve heard of the 3 R’s – Reading, Writing & Arithmetic. I consider “Responsibility” the 4th R!

Andrews suggests that the best path to a brighter future is to accept the responsibility for the problems you face. He added, “If I allow myself to blame these uncontrollable forces for my lack of success, I will be forever caught in a web of the past.” Instead, we should follow the famous Harry Truman mantra – “The buck stops here!” We are responsible for our own success.

Now, in all fairness, I don’t have any idea how much success you’ve enjoyed or the amount of pain you’ve endured in the process, but I do know one thing for sure. As Les Brown stated, “Wherever you are in life, you made an appointment to be there.” In order to take full responsibility for our lives and the related success, we need to stop & consider what to do.

First, build a plan. I’ve developed a successful consulting business over the last 23 years, and you know what? Clients and prospects still haven’t run out of challenges & problems to solve. Let’s face it. Problems are just part of life. However, back to the “plan” for your business & life:

  1. Determine where you want to go.
  2. What are the pluses & minuses of this idea? Anticipate the challenges you’ll face.
  3. Consider your “Why!” Usually, when I ask someone why they want to do something, they’ll respond with, “To make more money…”
  4. I’ll ask, “But why do you want to make more money?” To which they might respond, “To stay in business!”
  5. To which, I might say, “Why do you want to stay in business?” Now, getting somewhat frustrated, they might state, “because my son is in college, wants to come home & would represent our third generation on this farm.”
  6. Finally, I might ask, “Why does that matter?” Then, they will exclaim, “Having our son return and be successful as the third generation on this operation would make my Dad very happy, and, as hard as he has worked during his 85 years, I think he deserves that from us!”
  7. Guess what? While this process can be emotional and even somewhat frustrating, we have now identified your “WHY!” If you know your “Why,” the process of determining your “How” becomes so much easier.

Identify your “Why” and then determine your Action Plan, for as Andy Andrews states:

“In the future when I am tempted to ask the question ‘Why me?’ I will immediately counter with the answer: ‘Why not me?’ Challenges are gifts, opportunities to learn.”

I will leave you with one final thought: What is your Plan for next year?

Let’s take your business to the Next Level!

Tripwire – What to do when the Bank says “Sell?”

To start, I’d recommend that you listen closely. They may be correct. However, many times I have found them to be off track in their assessment, or as I like to describe them, “Often mistaken. Never in doubt…” In just the last 24 months, I can illustrate three cases where, in contrast to this “Sell, sell, sell” liquidation strategy, we were able to get things back on track financially, to the direct benefit of the Client.

However, in all three cases cited above, the bankers had some very valid concerns. So, in all fairness, the best first step is to listen to their concerns and, of course, then consider the alternatives to selling by answering the following questions:

  1. Can we turn this business around? Do you have enough Equity to get it back on track, in other words, is your business bankable? Quite often, in these turnaround situations, I find myself wishing I had been involved sooner, rather than feeling like Mariano Rivera, the famed “closer” who pitched for the New York Yankees for 17 seasons. The message here is clear – Don’t wait too long to make necessary changes.
  2. If the answer to #1 above is Yes, then consider what it will take. Are these reasonable requests? Can the bank help us with these items? This can often present a “Win-Win” situation where your business gets fixed, and the bank doesn’t take a financial hit either. Believe me, the last thing they want is to foreclose on anyone. That is a costly process, and no one wins on those…
  3. Can we & should we change the business’ debt structure? For example, can we move some of your Short-Term Debt over to Longer Term Real Estate Debt and still be within the normal Loan to Value parameters for the bank? Often, by doing this, we can improve your Cash Flow to smooth things out financially.
  4. Should we trade some assets? Assuming your facility is large enough and your labor force can handle it, could you do the following, for example?
    1. Sell 100 Heifers for $72,000 & Buy 60 Cows for the same $72,000?
    1. Milk these 60 cows @ 75 lb X $16.50/cwt X 365 days = $271K
    1. Assume that we incur added Feed Costs of 60% of Milk = $(163K)
    1. Now, we don’t need to feed 100 heifers @ $1.50 X 365 = $55K saved
    1. Net Result is that your CF improved by $163K, and your Loan to Value on the Herd Loan did not change, since your added 60 cows with a bank value of $70-75K and lowered heifer values by the same $70-75K value.
    1. However, you dramatically improved your Cash Flow, and you can always buy more heifers later. They are still making them…
  5. What other steps can you take? Are your Costs/cwt still in line with industry standards? If not, do something about them, and when the bank says to sell, be sure to consider all of your options. There is probably a way to make it all work. You just haven’t figured it out yet.

As Les Brown stated:

“If you set goals and go after them with all the determination you can muster, your gifts will take you places that will amaze you.”

Let’s take your business to the Next Level!

Have You Ever Seen This?

Of course, you have. We all have witnessed this scenario. The banker is unhappy with the “problems” at the farm site, and one of the partners looks at the others and says, “You got us into this mess. Now, you can get us out of it!”

As I saw in a recent YouTube video, it’s time to quit playing the “Blame Game!” Instead of acting like the U.S. auto industry of the 1960’s and 1970’s, where every problem was considered someone else’s fault, until the Japanese practically overtook the entire industry, let’s try another approach to turnaround situations.

While it’s always better to avoid banking & financial problems because no one enjoys them, we need a system to do so. In every one of my 73 financial turnarounds to date, at least one item needed to be improved. Usually, it centered around a “lack of communication” between the partners, owners, managers, vendors &/or bankers…

My recommendation? Instead of playing the “blame game,” why not do the following? Meet regularly and discuss your challenges. I’ve met with every one of my Clients each month for the past 23 years. Believe me, that’s a lot of meetings, but you know what? They have kept each other better informed, and, as a result, been in a position to make more informed decisions. Did we get every decision correct? Probably not, but just like in Major League Baseball, if your batting average is high enough, you will succeed and probably participate in the All-Star game!

When you meet, always, always, always have an agenda! Not a hidden one, but rather, one that keeps you all on focus throughout your discussions. Tangents are so easy to get caught up within, and they are never productive…

Focus on one item at a time, if possible, and find a solution. So often, we (and sometimes bankers, too…) want to solve five issues at once. However, this process will dilute your focus and delay your progress on any of these challenges.

My experience has been that, once I get the biggest problem solved and stick to the process, the others start to look less intimidating. My advice to you is this: As Author Brendon Burchard so often states: “Honor the Struggle.” I think you’ll be glad you did!

Let’s take your business to the Next Level!

Are You Drowning or Climbing Out?

During the last 23 years of my consulting work, there have been times when my life has seemed like a cross between two of my favorite movies, Catch Me If You Can and Up In The Air. Here’s a quote from the Actor Christopher Walken in Catch Me If You Can that I believe you will find appropriate for our discussion that follows:

  • “Two little mice fell in a bucket of cream. The first mouse quickly gave up and drowned. The second mouse, wouldn’t quit. He struggled so hard that eventually he churned that cream into butter and crawled out. Gentlemen, as of this moment, I am that second mouse.”

My question for you is this: As you face industry challenges or ones that are specific to your operation, which one are you?

I’ve been called crazy for doing some of the work that I’ve completed these past 23 years, but you know what? I love doing this work. Is it challenging and occasionally frustrating? Yes. Can it be difficult at times? Yes, but if it was easy, everyone would be doing it and take all of the profit out of the process.

How do I do this? I recently reviewed my records and discovered that I’ve completed 73 financial turnarounds with Clients since 1999. That’s a lot of change! Some of these rescue missions have taken 1-2 years; others have taken 5 years or more. Some of them, following their financial recovery, decided it was time to exit their industry. The great thing on these was that they were positioned to sell out and walk away with sufficient proceeds to live the rest of their lives successfully. That news helps me to sleep at night.

So where are you in your current operation? Many industries, especially on dairies today, are facing some dire outlooks, but it doesn’t have to be that way. As the saying goes, “The best time to plant an oak tree was 20 years ago.” However, the next best time is today.

Here are some thoughts for you as you think about this question of what should happen next:

  1. Begin with what I call the Discovery Process. Where do you want to go and Why? If you can answer these two questions, step #2 is easier.
  2. Complete an analysis of where you are today, in terms of assets, debts and overall cash flows. This information provides the building blocks for your success plan.
  3. Outline and discuss the challenges that you will face in your next steps. My next blog will be focusing on just that topic.
  4. Evaluate what Cash Flows will be required to make it all happen successfully.
  5. Talk to your banker. Please don’t tell me this is too tough… I’ve faced off with large banks where the Client owed $6 million and had almost no collateral. What could we do? We simply built a repayment plan and worked through it successfully. The one thing I knew going in was that there was a solution. They just hadn’t identified it. If they had, my input wouldn’t have been needed. My saying that I was sure there was a solution may sound arrogant to you, but trust me. After you’ve completed 73 of these turnarounds, you start to understand that the answer, indeed, is out there. We just have to dig it up!
  6. Once you determine your plan of action, track your Cash Flows and always know where you are throughout the year. I treat CF Analysis the same as MacDonald’s founder Ray Kroc did the hamburger. Recall what he said? “I didn’t invent the hamburger. I just took it more seriously than anyone else.” It’s the same for me with Cash Flow Analysis!

Once again, are you drowning or climbing out of the bucket of cream? If I can assist you, please let me know. I’m happy to help.

Let’s take your business to the Next Level!

Are You Preparing for What’s Next?

Are you actually preparing for what’s next? I’m not talking about post Afghanistan, after our summer temperatures abate, or after Apple stock goes over $200/share. I’m talking about your business. Business Coach Brendon Burchard stated that “we are always preparing for something.”

Yet, are your current routines and thinking creating the future that you want in your life and business? Author Dennis Waitley talks about us getting stranded on an island called “Someday Isle,” where the weather is perfect, and we have no challenges in our business or life, that which he actually interprets as “Someday I’ll…”

You know, Someday I’ll: 1.) Get my employees to do all the necessary tasks without being reminded. 2.) Have all of my taxes paid. 3.) Have none of my expenses increasing at an alarming rate… The list goes on.

I’d like to review what I’d explained in a prior blog, released on May 25, 2021:

“Several years ago, my Business Coach Dan Sullivan of the Strategic Coach organization offered an excellent idea for everyday use. It’s called the WinStreak®, and it’s available as a free app that you can download on your phone.

It provides a simple, but powerful, way to accumulate more “wins” in your business and life. At the end of each day, you list your three greatest accomplishments for the day. It will also ask you to list the three largest objectives you intend to accomplish tomorrow.

The payoff is that instead of dwelling on the tasks you didn’t do or the items that you didn’t complete, it helps you to focus on what you have done, as well as what plan to achieve tomorrow. I’ve been doing this for at least three years, and it has helped me focus on what really matters.”

Along the same line, you can summarize the three best things that happened this past week and, if you had a chance to relive this same week, what would you do differently?

The key is that, as we move forward in business and life, let’s focus on preparing for what’s next. Will we ever know with certainty what is going to unfold as we go through the week? Probably not. However, just the very process of reviewing what went well, and what we can do to make next week even better, will help prepare us for a brighter future.

You, too, can stun the world with the items you discover and the objectives you achieve. However, this will require you making this day, this week, this month an “intense time,” one characterized by proactive thinking about how you can make your outcome even better than you ever imagined. You are going to be operating your business & leading your life anyway. Why not make it more prosperous and enjoyable?

My question for you is this: What one task or achievement, if you accomplished it this year, would generate a genuine sense of accomplishment and extreme momentum to carry you into the future?

Knowing this one thing will keep you off of ‘Someday Isle!”

Let’s take your business to the Next Level!

Do You Have Any Bad Habits?

Of course, the answer is “Yes!” We all do, but now that I have your attention, let’s talk about the opposite position. Do you have any good habits?

Once again, the answer is “Yes.” Of course, you have some good habits. I do as well. I track my weekly results on multiple key measures, I call my adult children at least weekly, my son and I are going through a Napoleon Hill study weekly for all of 2021, and I try to sleep eight hours per night.

Do I succeed all of the time on each of these items? Not quite. However, I typically get very close to 100% on these and several other measurements each week. One of the most positive discoveries I’ve made throughout this process of developing these habits is that I have created a “System,” through which I am able to typically complete them in a timely manner, and if I skip a day on any of them, I actually notice the difference in my performance or outcome.

These are some of my business and personal habits that are creating positive outcomes. Now, I’d like you to think about some in your life and business. Please allow me to give you some examples from a recent Client meeting I had.

This Client, a mid-sized dairy operation, has had a solid history of profitability over the years, but their milk production had plateaued, and, on some days, it had even fallen off considerably. During our discussion, it became clear that, with the labor challenges all operations are currently facing, several tasks just weren’t getting completed consistently.

Free stall beds were not getting raked daily, and feed was not being pushed up regularly. Now, we wouldn’t consider skipping a day of milking the lactating cows in the herd, and we wouldn’t skip breeding cows for several days. So, why skip the other management routines that are so crucial to high production?

The primary problem in both of these areas was a lack of training. With all of the employee turnover this Client had experienced over the past two years, new employees were not always aware of what they should have been doing. It took some training and teaching one employee how to drive the tractor to push up feed, but it is now working.

What was the key to this improvement? A “System,” based upon a foundation of good habits. Raking the free stalls daily, pushing up feed every three hours, 24 hours per day, and several other managerial tasks are what will help take your operation to even greater success.

Create your list of tasks (habits) that need to be completed to develop a system in your operation today. When you make a concerted effort to do this and get it written down, you, too, will notice it when any of these items gets overlooked. However, when you’ve created a “System” of good habits, you will then know exactly what to do next!

Let’s take your business to the Next level!