Would You Be Ready?
We’ve talked previously about setting goals! There are benefits to being prepared for crises that can occur in your business. We need to have a plan in place for these types of challenges.
Futurists Jim Taylor and Watts Wacker, in their book The 500 Year Delta, stated that every business should develop a “Disaster Agenda”. While all of us are faced with negative challenges and nobody wants to dwell on them, we would be well served if we have given these situations some forethought. This is true for a crisis that might occur in any part of your operation: herd health, nutrition, facilities, management, or finances.
A Disaster Agenda is a list of the three worst things that could happen to your business, along with what your planned response would be. How do you accomplish this task? By seeing the world as it is; not by trying to wish the bad away, but by acknowledging some things will happen to you and your business. They might even be events we consider to be unreasonable today.
Step “out of the box” on this job. Need some examples? What if your dairy is hit with a serious disease and you lost 1/3 of your herd? What if your milk co-op runs into financial trouble and is forced into bankruptcy? What if one of their largest customers enters Chapter 11 and is unable to pay them? Unlikely? Perhaps, possible? Absolutely? This is what completing a Disaster Agenda can do for you. It will help you to be better prepared.
When you follow this process to completion, you will accomplish several tasks:
* You will be better prepared if one of these crises does occur.
* You are more likely to avoid these crises, due to increased awareness.
* If something similar does occur, you will have a response or action plan set to go, yielding quicker turnaround and saving you time and money.
My client was planning to expand from 400 cows to 800 cows since he had a son who was soon returning from college. We began hearing rumors about how his bank was a candidate for merging with another lending institution. What if his bank gets bought and new ownership wants to reduce their dairy lending? Having a positive, long-term history with his lender, we decided to consider other potential sources of funds for the expansion project and got offers from two other lenders with loan structures suitable to his needs.
As it turned out, his former bank did sell, and the new ownership did decide to reduce their ag lending portfolio. What could have happened if we had not planned ahead…Jerry could have lost a lot of time and money in revising his plans at the last minute! Developing a similar contingency plan in your operation is definitely in your best interest!