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!

You Want to Know My What?

This was the question I was asked when I met with Jerry for the first time. Our discussion was by phone, but I can imagine the look on his face when he asked me this. The question that I had asked him was “What are your Break-Even Levels?”

Surprisingly, this is one of the most important items to know in any business. However, it is also probably one of the least understood concepts. Essentially, it is the Price Level or Cost of Production that needs to be achieved in order to not lose money, if all other variables remain the same.

Looking at the Chart below:

Actual        
12 Month Totals
Feed Expense/Cow/Day  $                    5.93
Feed Expense/Cwt  $                    9.21
Net Milk Price/Cwt  $                  15.86
Income over Feed Cost  $                    6.65
Breakeven Levels  Breakeven Levels
Milk Price (Net)  $                  15.54
Feed Expense (cow/day)  $                    6.14
Feed Expense (per cwt)  $                    9.53
Production (#/cow/day)                      76.45

This producer is feeding his cows for $5.93/cow/day and has been making money. You can also see that his Feed Expense per cwt is $9.21, which, given his Net Milk Price/cwt of $15.86, provides him with an Income over Feed Cost of $6.65/cwt.

Next, you can see his Break-Even Levels in the bottom half of the chart. If all the other variables stay the same, his Feed Cost per cow/day could rise to $6.14 and he would still break even. We know that he is currently making $0.32/cwt, because we know that this is the amount that his milk price/cwt could decrease ($15.54 minus $15.86/cwt) or his feed cost/cwt could rise ($9.53 minus $9.21/cwt) and still allow him to reach break-even.

What value is there in knowing this? I’m glad you asked. Knowing this will allow him to understand what changes he can make or, in the case of cost increases, what increases he can withstand and still not lose money. This information is also very useful to him in understanding where he may want to set his price floors within programs such as the Dairy Revenue Protection Program. This program, for example, is designed to assist producers to place a profitable floor under their milk price. Knowing your break-even levels is the only way to use this type of program successfully. This is what makes knowing your Break-Even levels so significant. Can I help you with this?

Want to learn more? I’d like to invite you to join me for our upcoming Next Level Thinking™ workshops later this year, within which, I’ll continue to focus on the benefits of this type of proactive thinking. We’ll be doing this through Zoom Group Sessions.

Let’s take your business to the Next Level!

Have You Ever Been Here?

Imagine this scenario. It’s your 50th birthday, and your friends have surprised you by blindfolding you and then taking you to a “maze.” They have dropped you off inside this maze, blindfolded, and the next step is up to you. Thus, you reason, I need to find my way out or else I’m going to miss my birthday celebration…

Given your current situation, alone, perhaps a little confused, wanting to head to your own birthday party, what’s the one thing you know? If you said, “I got into this maze, and I know that there is a way out,” then you are on the right track.

Have you ever been in an ugly financial situation, possibly one that looks like there is no way out? I’ve been there many times with new Clients that were close to giving up. In fact, it’s often where our new Clients come from, a point of desperation. However, I am happy to tell you that it doesn’t really matter where you start; what matters is where you end!

If you ever find yourself in an ugly financial situation, consider the advice of the character Gimli in the Lord of the Rings movies. Do you recall what he said? “Certainty of death. Small chance of success. What are we waiting for?” Take courage!

Whether you are trapped in a maze, caught in a difficult financial situation or simply feeling overwhelmed by some decision you are facing, realize that in each of the situations, there is a way out!

What to do next?

  1. Decide where you want to go. Clear your mind of the various challenges you are facing, and decide what outcome you would like to see.
  2. Define that outcome clearly in your mind. Our mind doesn’t necessarily know the difference between what is challenging or realistic, easily achieved or extremely difficult. However, in order for you to reach the desired objective, you need to clearly state what you want to achieve.
  3. Once you decide what you want to accomplish, outline your Action Steps and set some dates for achieving these steps. Objectives without a deadline are often nothing more than a dream.
  4. Finally, go forward and achieve your goal, adjusting your course, as needed.

So, where do you want to go? Follow the advice of author & speaker Les Brown who said, “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.”

Can I help you? Just shoot me an email stating “NLT Workshops,” and I will be sure to include you in future invitations, as outlined below. Let’s take your business to the Next Level!

Want to learn more? I’d like to invite you to join me for our upcoming Next Level Thinking™ workshops later this year, within which, I’ll continue to focus on the benefits of this type of proactive thinking. We’ll be doing this through Zoom Group Sessions.

Are You Taking This Seriously?

In my last blog, I suggested that one of the key steps to achieving successful results in your operation is measuring your Net Cash Flow each and every month. I am such a firm believer in this process and its numerous benefits, that I complete it monthly for every Client.

Why am I such a huge believer in the benefits of this process? Yes, it provides us with a clear indication of whether you are making money or not, but it also has other benefits. It will help you steer clear of any financial “surprises” such as getting to the end of a quarter, or worse yet, the end of a financial year, only to be shocked by how much a particular expense item went up. Rather than being forced to explain this to your banker, wouldn’t it be better to catch this sooner and correct it before it becomes an issue? I see this as one of the largest benefits of regular Cash Flow Analysis.

If you think about it, this type of financial hurdle will also be easier to correct if we catch it early. If some expense is out of line six months into the year, it can present a real challenge to get it back into alignment before year end.

In the Cash Flow Analysis that I provide my Clients, there are other items that can prove to be beneficial. The Variance from Budget can clearly be good information to have at hand, i.e., how large of a problem is this variance.

I also feel it is helpful to know what your Break-even levels are for milk pounds per cow per day, feed costs and milk price. Essentially, these tell you how much improvement you need to make to get back on track financially. This information can be essential to your overall game plan and success.

I often see this demonstrated when producers go from 70-72 pounds per cow per day to levels above 80 pounds. Sometimes they worry that their feed cost per cow per day may go up fifty cents, say 6%. However, at any given milk price, your revenue should increase by 11% (80/72 e.g.), representing a healthy marginal improvement.

Additionally, as you make more hundredweights of milk, you will also notice another benefit. The Cost/cwt for every one of your Fixed Costs will also improve. This can provide you with a considerable improvement to your Net Margin, and that, my friends, is the name of the game, when it comes to Cash Flow Analysis.

If you would like to learn more about Cash Flow Analysis and take full advantage of this process, just shoot me an email stating “NLT Workshops,” and I will be sure to include you in future invitations.

Let’s take your business to the Next Level!