Tag Archive for: Business Success

What Is Your Reason?

I recently reread an old book from my personal library, entitled The Goal, written by Eli Goldratt & Jeff Cox in 1992. I read this 34 years ago, and, assuming you can still find a copy, I would highly recommend it.

Essentially, it is a novel with a great story that revolves around a corporate turnaround, one where the players initiate a change of strategy previously characterized by poor planning, numerous bottlenecks in the manufacturing process and consistently late deliveries.

As you might expect, based upon the title, the managers in this process had a two-fold mission to improve their delivery of product, but also set higher goals by challenging prior assumptions. I know. This is basic “corporate blasphemy,” but “challenging the system” is what I’m well known for. Frankly, it has served me very well.

Getting back to The Goal, it has some very solid lessons for us. Foremost, we need to take old assumptions at face value and consider that there are other ways to achieve new goals and accomplishments. One of my favorite parts in the book included a complete challenge to management on their thinking.

To put this into perspective, I had a recent meeting with a Client who was considering the completion of a new Bed-Pack Barn for their dairy herd. It would give them a boost in their operation by getting the rest of their herd out of muddy lots in the winter & hot sun in the summer.

They run a great operation with milk production/cow/day consistently in the 80-85 lb range. Unfortunately, the managing partners are sometimes dissuaded by well-meaning family members from making investments in their business that are proactive.

They asked if I felt they should complete this process, especially considering that the cost is being funded mostly by government money. I stated, using a section on page 150 of the book, that there are only two reasons not to complete it.

  1. If there was no market for their product. This is not the case for them or the Cooperative they sell milk to.
  2. If they are determined not to change anything in their operation for the better. I don’t believe that’s the case. If so, I probably cannot help them succeed…

Consider the pluses of this change. First, their business would improve from higher milk per cow. Additionally, their banker should be happy as the appraised value of the facility increases with no added leverage from more debt, decreasing their Loan to Value %. Even animal welfare advocates should be happy, given the improved conditions for their cows.

While the completion of this project is pending, I believe this would be a positive step forward. Are you facing a similar dilemma? As you think your hurdles through, please consider the positives & the potential downsides, but do move forward. What reason do you have not to accept the challenge to succeed?

“Change can be tough. But the only alternative is eventual obsolescence.”

Michael Hyatt

Let’s take your business to the Next Level!

Yes, But Does It Fit the “Value Equation?”

My good friend Tim had one question whenever we went wine tasting with our wives: “Does it fit the value equation?” Essentially, was a Cabernet Sauvignon that we were tasting really worth $75-100 per bottle, or could we receive nearly as much satisfaction out of a $35 bottle? It was a sliding scale for us, but it provided us with a better understanding of what we thought about a particular wine. It also allowed us to share our thoughts with each other on wines that we tasted, without hurting the winemaker’s feelings.

Recently, I started thinking about how this fits many industry expenses, too, and Repairs & Maintenance came to mind for me. It is incredible how much it costs to fix any equipment today. May I suggest that you consider the “Value Equation” when you are looking at potential repairs?

I recently had a conversation with a Client who told me he was looking at a possible $90,000 engine replacement and was quite proud that he had run this tractor for 10 years. While I am not advocating taking on more debt, a comparable new tractor would cost him about $300,000. With the zero-interest option offered, he could pay for it over five years at $5,000 per month. Consider the value equation here. For $90,000, he could replace the engine on a tractor that had thousands of hours on it. It could have any number of other items that would break down over the next 18 months, while he was amortizing the $90,000 repair at $5,000/month.

While every decision like this should always be completed by comparing all the options, using the “Value Equation” here led me to think that spending $90,000 on an old tractor was insane, especially considering the potential for added breakdowns. I will share with you that he traded in the old unit and received $60,000 for it, offsetting one year’s monthly payments. He has been well-served with this decision. When you are facing similar decisions, consider the impact of considering the “Value Equation,” and if I can assist you, please let me know.

“There ought to be ways of reforming a business, other than by merely putting more money into it.”

Winston Churchill

Let’s take your business to the Next Level!

What If You Could?

Recently, I was thinking about a Client with whom I have worked for several years and, as I reviewed their financial results, I was thankful for the positive progress they had made.

When I first met with them, they were quite disappointed that their results were not very solid. In fact, their banker had already put them on notice that they were close to being shipped off to the bank’s infamous “Workout Group.” That is a department you definitely don’t want to end up in. While some may think that it’s a place where you work out your financial challenges, I assure you that it typically is a department where the participants “work your loans out of the bank,” and it is usually high pressure.

Regardless, this Client was not very profitable, and, due to their losses, they were approaching a level of debt leverage that would make them unable to acquire additional financing…” Thus, I asked them the following question: “What if I could guide you to become more profitable and lower your debt/cow? Would you be interested?”

Their first thought caught me a little off guard. They asked if my assistance would be free. After assuring them that I was not with the Red Cross, we started serious discussions about how we could achieve these goals. My first task was to establish what they specifically wanted to accomplish and then, after evaluating what their current position was, start building a plan to move them forward.

Part of the process included a restructuring of their debt load. Of their total debt, far too much was on short term loans, and way too little was against their real estate, which was quite highly valued. Following the restructure, we got them involved in positive budgeting. After developing their budget, we tracked their actual results against it every month. As I have said before, if you measure it, you will better understand it. If you understand it, you can control it, and, of course, if you can control it, you can improve it. This is true with any item, including Cash Flow.

Once we had this process moving forward, we initiated a program with the help of their Nutritionist to boost their milk produced per cow. With the optimal nutrition in place, they started milking fresh cows 4X/day, at the beginning & end of each milking shift. With more cwts of milk produced, we lowered their cost/cwt, always a good thing to do.

Finally, I convinced them that with their higher production and improved herd health, they might want to expand. Making more total cwts, just as with their higher milk per cow, helped them to spread fixed costs out very nicely. Incidentally, the milkers still got their shift done in the same amount of time, even with the 150 added cows.

Voila! Just like magic, all these changes assisted this Client to succeed at a higher level. So, if you are having some challenges in your business, consider “What If I Could…?” I would be happy to assist you with the process!

“Let our advance worrying become advance thinking and planning.”

Winston Churchill

Let’s take your business to the Next Level!

What Do We Do Now?

In my last blog, I discussed being willing to pay the price for success and what it will take if you want to consistently move to higher levels of achievement.

At the start of each of my Management Team & Finance Team Meetings, I like to begin by asking the following question: “What project or challenge is on the horizon for your operation this month?”

I recall an interesting meeting with a Client who told me he was behind with his feed company, the feed company was pressuring him to get caught up, and he needed to decide what to do.

Of course, he had two obvious options. He could panic or he could simply hide out, but neither of them seemed like particularly good choices. However, I suggested to them that they had two other positive options available to them.

  • They had a low fixed interest rate on their real estate loan, and it matured in two years. Given their low Loan to Value on that real estate loan, why not put a note payable behind the existing loan? It could mature in two years, at which time they would refinance the real estate loan anyway, either with their current lender or someone else. They could even keep the added loan payment small by amortizing it over 20 years and having it mature at the same time as the existing real estate loan.
  • The second option that they had revolved around the 10% “excess” heifers they were carrying. By selling these extra animals, they could generate $300-400,000 of cash and lower their feed expenses by raising less heifers. Most important, they would still have sufficient replacements to maintain their herd size.

The significance of this discussion lies with the fact that, while they had a challenge to overcome, they met it head on, and we identified options we could use to reach a greater level of success.

Option #1 was possible because we had been pushing the Loan to Value downward by making the regular monthly payments and, whenever possible, adding assets to the real estate that boosted its value. This provided us with the opportunity to acquire the second loan we needed.

Option #2 was available to us due to having an excellent breeding program and then always focusing on the question: “Based upon our financials, what challenge or project do we need to focus on this month?”

What is your approach in situations like this? Please let me know if I can help you. You can reach me at john@success-strategies.com, and consider the following advice:

“There ought to be ways of reforming a business, other than by merely putting more money into it.”

Winston Churchill

Let’s take your business to the Next Level!

Are You Willing?

As you move through this year, it is important that we consider the following question. Are you willing to pay the price for greater levels of success? I assure you that this is a question worth answering, because it will provide the very foundation upon which your entire year can be built.

What exactly do I mean when I ask, “Are you willing to pay the price?” Let me begin by explaining that none of us reaches 100% of our goals, but as the legendary hockey player Wayne Gretzky stated, “You will always miss 100% of the shots you don’t take.”

So, with this in mind, let’s operate on the assumption that you do want to succeed at an even higher level. What will this require? My first step is always to lay out a plan. What is it you are trying to achieve, who is involved and when do you want to hit your goal?

Futurist Jim Taylor was even more blunt about this process when he stated, “Plan for the future, or you will have no future.” When I work with Clients on their goal achievement, I follow a process called SAVE™. This is an acronym for Simplify, Analyze, Visualize and Execute.

Just as when we run into any problem or new challenge, we need to Simplify it by breaking it down and answering what was behind it, how do we overcome it, what is our ultimate objective and finally who can help us win with this hurdle.

Then, we Analyze all the variables involved with it. Are there problems to overcome, and what is the cost & return of doing this? Then, begin to Visualize the outcome that you desire. Finally, we need to Execute, and this is a step that people often have difficulty completing. Why? This is simply because other people (parents, siblings, friends, or neighbors) dissuade them from moving forward.

I am not suggesting that you totally ignore them. However, unless they have been in the exact same position that you are and all other factors are precisely the same for you as they were for them, I suggest you consider their advice and then move forward if you have followed the four steps above and believe you can succeed.

Let me provide you with an example. I recall a case where our Client’s dairy herd was producing 72 lb of milk/cow per day. He wanted to get in the 80-85 lb range consistently. What did it take? Following a change of Nutritionists, it necessitated grooming the free stall beds daily, adding more water troughs for the herd, adjusting the breeding program to move his herd’s Days in Milk to a more consistent level of 160-170 days year around and then culling his herd more heavily, which was a blessing with the recent higher beef prices… And he got there in a relatively brief period of time!

What is the Next Goal or Challenge you want to achieve? Please let me know if I can help you. You can reach me at john@success-strategies.com, and consider the following advice:

“The future belongs to those who see possibilities before they become obvious.”

John Sculley, Former Apple & Pepsi CEO

Let’s take your business to the Next Level!

Are You Being Reasonable?

During my career, I have often been described as “unreasonable” by some Bosses, numerous Bankers, and some of the so called “Industry Experts.” While they might not agree with my approach, it has really served my Clients well, allowing them to try innovative approaches & reach new goals.

As George Bernard Shaw stated:

“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.”

I could not agree more. In fact, “trying times” require trying novel approaches. Please remember that today’s greatest inventions were yesterday’s crazy ideas. Some examples include the cell phone, the internet, artificial intelligence & numerous other items.

In order to maximize your results, what changes do you need to consider? I know that there are likely some items or changes you’ve been thinking about making in your business. This may be the most optimal time to implement them. To reduce costs or boost revenues more, what changes do you need to consider today?

These may not even be directly involving you. Here is a procedure I learned from Dan Sullivan of the Strategic Coach organization. “What do you enjoy most? Least? Is there someone in your organization who might thrive with this task that you most dread?

Likewise, can you add equipment, software, or Ai to achieve some tasks? Begin your thinking by following my recently trademarked process that I have used for 25 years. This “SAVE™” process stands for Simplify, Analyze, Visualize & Execute. It has worked extremely well to maintain our focus on what matters most.

In fact, during the past 10 years, our Clients have boosted their Revenues by 32% while limiting their cost increases to 17%, leaving them with considerably improved bottom lines. Additionally, in 27 years, we have not lost any Clients, except to retirement and death (unfortunately).

If you’d like to explore this SAVE™ process for your business, please contact me at john@success-strategies.com and remember:

“Let our advance worrying become advance thinking and planning.”

Winston Churchill

Let’s take your business to the Next Level!

Where Are They Now?

During the past 27 years, I have been blessed with the opportunity to work with hundreds of agri-businesses, specifically on their financial progress and, in some cases, their complete turnaround, in terms of how they operate.

Initially, we go through some basic questions about what is currently happening in their business and what they would like to see in 3-5 years. Ninety-five percent of them state that they would like to be more profitable.

I always explain that this will require three steps. We need to know:

1.)   Where are they now? In other words, we examine their profitability and cost structure. This is especially important now, given the recent rate of inflation. Do they have the optimal debt structure in place, one that best serves them well and maximizes overall Cash Flow?

2.)   What items can we change? Are there improvements that are possible regarding costs? If you are shipping milk or other food products, are you achieving “quality bonuses?” Is your work force being optimized? Their performance can certainly influence quality levels.

3.)   What must we change? Earlier this year, I worked with a Client who truly was the definition of insanity. You know, being unwilling to change anything and then expecting different results! Their costs were high, their producing units were lower and, as expected, their feed program was awful. Results? Equally terrible!

When we run into challenges like this, my most difficult challenge is convincing people to make changes, and, as I stated in #1 above, the first task is to measure results. If you measure them you can understand them. If you understand them, you can control them, and if you can control them, you can improve them!

We never want to be an example of “insanity,” as I said above, doing things the same way and expecting different results. As I review the results of our Clients these past 10 years, I observe the following. Their Revenue has increased by 32%, & their Costs have risen by 17%. That represents the answer to the question in the title above: Where Are They Now? More significantly, it clearly shows that measuring their results every month has achieved two tasks. 1.) They boosted their existing income results and sought out new revenue sources. 2.) While they were faced with cost increases, they maintained their jump in expenses at a level that was less than their revenue improvements. How did they do that? Simply, by measuring and fine tuning their monthly cash flow!

My question for you is – “Where are you now?” If I can assist you with this, please contact me. This is challenging and is not a time for excess pride. It is a time for action.

“There ought to be ways of reforming a business, other than by merely putting more money into it.”                Winston Churchill

Let’s take your business to the Next Level!

Help is on the Way!

Two months ago, as I was traveling to World Dairy Expo in Wisconsin, I headed east on I-80 and noticed a semi-truck & trailer coming across the median toward our vehicle. Holy smokes! Fortunately, we were protected by the wire cables that separated the two sides of this interstate highway.

I called 911 right away to give the operator the mile marker where this accident had happened. After thanking me for calling it in, she exclaimed that “Help is on the way…”

Given the current milk pricing in the dairy industry, as well as the additional deductions being assessed by some cooperatives to shore up their Balance Sheets, many producers are likely hoping for the same thing… that help is truly on the way! Prices have been slammed to levels we haven’t seen for years.

What to do?

1.)   No, do not “put your head in the sand.” Survival will require your full attention.

2.)   Instead, realize that feed costs are at a very nice low point, keeping overall costs down. Additionally, your cull cows for beef and the calves you are selling are at lofty price levels.

3.)   However, even if these two items stay at their current levels, how long can you manage the upcoming low milk prices? Knowing your Break-Even levels will help.

4.)   Additionally, while our primary focus has been on milk prices, remember that there are a lot of other variables to consider.

5.)   What else can you adjust? Are you maximizing your milk production levels? Are there some costs that you can reduce? While we never want to cut costs to the point where it would hurt cow performance, is it time to look at multiple sources of commodities, i.e., initiate some price competition?

6.)   Is your labor force being fully optimized? Can we increase their productivity? When did you last bid out your insurance? How about Worker’s Comp and Supplies? Today, your very survival may depend on these reductions.

This is a time for action. Don’t delay. What’s your first step?

“The world has the habit of making room for the man whose words and actions show that he knows where is going.”                      Napoleon Hill

Let’s take your business to the Next Level!

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Can You Be Trusted?

How do we build trust with others, especially if they have previously taken advantage of us at some point?

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What Are My Options?

In uncertain times, having options can be very beneficial, but what are they actually? Well, options come in many forms. You can buy them to set a floor under the price of a stock you are buying or selling. You can also use them to put a floor under the price of farm commodities such as milk, soybeans, corn, or wheat. Essentially, they provide you with insurance against a fallout in the prices you receive.

At the risk of sounding repetitive, they are a tool that provides you with genuine “options.” You effectively have some real choices. You can choose, for example, to sell at the price set by the option if prices have fallen below that level. If the market price is higher than the floor set in your option, you simply take the higher market price and let the option expire unused.

This is probably an oversimplification of the process, but it will give you an idea of how they work in the agricultural markets. They work just like insurance on your house. You only exercise the option if you have a “fire,” so to speak.

One of the biggest complaints I often hear about options, especially in the dairy markets, is that the options are too expensive. Really? If you honestly believe that, talk to a producer without a “floor” under his milk prices who just received $15/cwt for his milk. It’s not a free ride, but it provides you with some comfort that you are not going to get slammed with huge losses because of the prices received. It certainly beats being at a price that is $4/cwt below your break-even level…

Another objection is that if you set these up and don’t exercise the options, you have “simply wasted your premiums.” Well, well. Isn’t that interesting? Since they are another form of insurance (against price fallouts), I have one question for you. If you buy house insurance (& I hope you do) and then your house doesn’t burn down, do you call your agent up and complain that you really didn’t need the insurance? Of course not.

Likewise, with options, the only reason they will go unused is if you get higher market prices. So, your profits should be fine. Why complain about the cost of that “insurance” you put in place on your selling prices. The key here is to consistently use options to protect yourself against price volatility. Then, you won’t be saying, “Oh, if only I had…”

What action have you been putting off in this area? If I can assist you with this, please let me know.

Let’s take your business to the Next Level!