Tag Archive for: Business Success

What Do I Do Now?

A lot of businesses, especially in the dairy industry, have run into cash flow problems during the past 18 months. Of course, this has also put negative pressure on their working capital position, i.e. the amount of short-term inflows of cash minus their immediate obligations for outgoing disbursements.

Much of this negative financial pressure could have been avoided, but sometimes politicians overlook the “unintended consequences” that can accompany their efforts at “vote buying…” Unfortunately, with the advent of excessive stimulus money, we were rewarded with increased inflation and higher interest rates from the Fed, as they attempted to rein in the effects of inflation.

As a result, most businesses were hit with higher costs, including labor. Of course, workers also need to survive financially, necessitating higher wages. Regardless, this is where we are currently.

So, “what do I do now” is a question many producers are asking today. Should I sell out while asset values are elevated to new highs? Will there ever be a better time to exit?

These are both great questions. However, I believe a better question to ask is this: “Is it sustainable? Can you cash flow, given the current & expected economic variables?”

For example, in the dairy industry of 2023, milk prices were average at best, and feed costs were exorbitant. Add to that the rising costs of supplies, repairs, labor and fuel, and we are in a perfect storm of negative cash flow and weakened working capital, as described earlier.

The problem is that for most businesses, they cannot borrow their way out of this, and even if they could, banks have been unwilling to provide the necessary refinancing needed. Thus, we need to look at the sustainability of these operations. I would invite you to look at the Cash Flow Analysis tools offered at https://success-strategies.com/shop/ to help you in your measurement. There you can run your YTD Cash Flow Analysis & complete some “What If” scenarios. For example, what if I could lower my labor expense by one Full Time Equivalent (FTE)?

If your operation is sustainable, at least at more normal Revenue & Expense levels, is it still something you want to do? Alternatively, do you want to exit and capture the Equity that you have built up over the prior years? Please take the time to truly consider your “Why?”

Believe me, if you know your “Why,” the “How” part becomes more straightforward. Is your “Why” for the family to continue for many more generations, is it to put your children through college or some other reason? This answer is crucial for you to reach.

To recap, to answer the question of “What Do I Do Now?”

  • Consider the business’ sustainability.
  • Really identify your “Why.”
  • Then, if you wish to move forward, study every Revenue source, potential new ones, and opportunities to diversify your operation.
  • Finally, study every cost & ask yourself, if I needed to cut my costs by 5% to reach break-even levels, could I do it? What would I reduce? Your answer will follow this process naturally.

This should provide you with methods to find financial relief for your business. What is the Next Step for you? Please let me know if I can assist you. You can reach me at john@success-strategies.com, and consider the following advice:

” Some men have thousands of reasons why they cannot do what they want to, when all they need is one reason why they can.”

Willis R. Whitney

Let’s take your business to the Next Level!

How Do You Spell Relief?

The last few years have been fairly challenging in terms of inflation, the resulting higher interest rates, considerably higher operating costs and only average revenue streams to offset these higher expenses. It’s been a classic “Cash Flow Squeeze.” I imagine that the sales of Rolaids are higher as a result…

While this has been challenging, we need to set a course of action that will be beneficial to you and your business. As prices received start to rebound and some costs begin to decrease, it’s crucial that we put a plan in place. Here are five suggestions:

  • Talk with your vendors about price relief or better payment terms. Remember, they only thrive if you survive. Customers going out of business are of no help to any vendor. Their policies, while they may seem tough, were put in place because of customers who went broke &, hence, left the vendor unpaid. The same policies were not necessarily set up for you, so communicate with your supplier.
  • Build your banking relationship through better reporting, closer monitoring of your cash flows and then communicating with your loan officer, rather than surprising them with unwelcome news at the last moment.
  • Diversify your operations when it makes sense. I know, someone is going to say that they diversified their operation by adding almond & walnut orchards to their dairy, and now they are all hurting. However, you must admit that this scenario is rather unusual. They will bounce back. Methane production may fit your dairy facility, positioning you to take advantage of the growing demand for energy.
  • Is expansion the answer? Greater efficiencies and economies of scale can be positive factors as your industry rebounds.
  • Are you following the advice of your CPA, your Attorney or other Consultants you use? Why pay for their advice and then do nothing? I believe that is the definition of insanity – doing nothing and then expecting different results.

This brief list provides you with several ways to find financial relief for your business. What is the Next Step for you? Please let me know if I can assist you. You can reach me at john@success-strategies.com, and consider the following advice:

“Everyone who got where he is had to begin where he was.”

Richard L. Evans

Let’s take your business to the Next Level!

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How Do You Prefer to Spell It?

I was recently thinking about two words that are quite similar. Those words are Creative and Reactive. They contain the same letters but have different meanings. In business, as in life, they represent vastly different approaches.

Let me provide you with some real-life business examples:

  1. Your bank emails you and suggests that your Inventory Report is late. You react by finally submitting it to them. The creative approach would be to already have submitted the report. Hence, in response to their request, you forward the completed report that you’ve already submitted 2 weeks earlier. Check mate!
  2. In a reactive state, you wait until you have substantial Accounts Payable past due over 120 days and then attempt to figure out how you will ever get them caught up… A more creative approach might be to discuss the tight cash flows with some of your vendors to see if you can get better payment terms or talk this over with your banker, in anticipation of upcoming budgetary challenges. Then, you will be prepared through a credit line increase or a possible real estate refinance.
  3. A reactive borrower waits until interest rates are supposedly at the absolute lowest point, even though the Prime Rate has been at 3-3.5% for 15 years. A creative borrower looks for a fixed rate that he can live with, in terms of his budget, and gets it locked in before rates climb 5.50%, as they have during the past two years.
  4. A reactive person asks, “Why put pricing options in place? Why spend the money for options when prices are so good?” A creative person considers putting a floor under his prices as a form of insurance to protect his margins in good times and in periods of low prices, rather than just in times of calamity.
  5. A reactive businessperson simply calls 911 when a worker gets hit with a heart attack or other serious ailment & hopes for the best. A creative one sets up protocol to not only call 911, but they also have employee meetings where workers can learn about safety issues and even learn CPR.
  6. Going back to fixed rate loans, when rates were lower & times were better, the reactive person suggests they can always fix rates later. The creative borrower watches rates closely, because you never know when an industry can be hit with a downturn, low revenue streams or higher input costs, as we have seen during the past 24 months. He fixes rates when it makes the most sense, not in the middle of  a cash flow squeeze when banks may be reluctant to offer new financing.

As you consider these comparisons, which one best describes you – Reactive or Creative? This is a crucial question for you to address. Your future success depends upon it. Please let me know if you would like some assistance at john@success-strategies.com, and consider the following advice:

“You, too, can determine what you want. You can decide on your major objectives, targets, aims and destination.”

W. Clement Stone

Let’s take your business to the Next Level!

What If They Left?

About five years ago, I suggested that banks were making it more difficult to acquire operating lines of credit, especially in the dairy industry. In fact, I predicted that within ten years, they may not offer these credit lines.

I wish I had been wrong, but the reality is that it is becoming more challenging to acquire these lines of credit, especially given the challenging profitability levels throughout agriculture these past several years.

In all fairness to the loan officers who provide these lines, they have a tough role to play. They are caught in a difficult balancing act of serving the needs of their bank customers for loans, while also protecting the assets (loan dollars) of the bank from default.

What can you do? If you can acquire these lines of credit, be prepared to provide monthly inventories & position reports. Does this sound like a lot of work? It may be, but it also represents the best way to protect your Balance Sheet. One of the biggest shortfalls I’ve observed in operations with financial challenges is negative Working Capital.

For example, the past 18 months have seen high prices for feed & commodities, hurting the profitability of dairies, and pushing their Loan-to-Value % up on their lines of credit. This may also have happened with dairy operations on their Herd Loan LTV %, as they bred with more beef semen and thus maintained fewer dairy heifers. The resulting feed costs are lower, but LTV % may suffer.

What’s the answer? Monitor these items every month, and if you see a deteriorating trend, do something about it. This is all part of protecting the Balance Sheet of your operation. This, combined with a regular monthly Cash Flow Analysis, will build your business profitability and also boost the relationship you have with your banker.

This tripod of developing a stronger Balance Sheet, protecting your Cash Flow, and growing your bank relationships will help position you for greater success.

As you consider these challenges, do you have a plan in place? Please let me know if you would like some assistance at john@success-strategies.com, and consider the following advice:

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”

Winston Churchill

Let’s take your business to the Next Level!

How Would They Know?

In a recent interview in www.golf.com, Michael Phelps, the U.S. swimmer who won 23 Gold Medals, offered some great advice for business success. He said that one of his keys to success involved having one big goal and then breaking it into smaller steps. He feels it is important to establish this process & work through it consistently.

He also suggested that we need to avoid “over-thinking” this process. The best way to accomplish that is to only focus on the items that you can control. Another key benefit of this focus is that the key employees in your operation would be provided with their “next steps.”

If you died or were totally paralyzed in an accident tomorrow, would your Team know what to do next? My approach with Clients is to establish an Objectives & Challenges chart to clearly outline two items:

  • Your Top 3 Objectives this year.
  • Your 3 Biggest Challenges to overcome.

Once you’ve identified your Top 3 Objectives, work with your Team to identify the most prominent obstacles to each one, potential strategies, who will work on this and a deadline for its achievement. Then track your progress regularly. Are you getting closer to the goal? If yes, fantastic! If not, what needs to change?

On the 3 Biggest Challenges side of the equation, list the most optimal strategic response to these issues, who is best suited to implement those steps, and then establish a deadline for doing so.

If you would like a copy of the Objectives & Challenges format that I use with Clients, just email me a brief request for O&C Form. You can reach me at john@success-strategies.com.

Whether you use my format or one of your own, your results will undoubtedly be improved vs. simply going with the flow of life. As Carl Frederick stated:

“Knowing where you’re going is all you need to get there.”

Let’s take your business to the Next Level!

Are You Waiting for the Easy Bus?

Recently, I was listening to a short speech by Kara Lawson, Head Coach for the Duke University women’s basketball team where she explained to her players that life can be challenging.

Yet, the best lesson that she shared was that it is always better to accept that life can be challenging and then move forward with a plan to make it better. Lawson describes this process as learning to “Handle Hard Better!” However, she points out that this requires a mental shift on our part. Instead of complaining, as a Client of mine did recently, about how the bank was being unreasonable, the feed company was becoming aggressive, and the IRS was being difficult, we need to make this mental shift to handling hard better.

Let’s face it. Life is full of challenges for all of us. If you could hear the noise just outside my office right now, you would realize how I know this first-hand. Our contractors were preparing to put the roofing material over our patio cover yesterday, but we received 4” of rain suddenly, and that did not work out too well for the tongue & groove boards underneath. So, they are currently replacing the warped boards. As a result, I am learning how to handle hard better.

Matthew McConaughey says, “Life is not easy.” He adds that “it never was, it isn’t today, and it never will be.” As a result, he recommends that we get over it & get on with it. This advice certainly aligns with Kara Lawson’s speech.

Finally, Coach Lawson cautions her players (& us) to not be “waiting for the easy bus.” She adds that when we stand around, doing nothing, just waiting for the easy bus to arrive, nothing good happens. In fact, unfortunately, the easy bus never comes. That is why we need to learn to “Handle Hard Better!” Let’s heed her advice this year and remember:

“The two most important days in your life are the day you were born and the day you find out why.”      Anonymous

Let’s take your business to the Next Level!

Are You Playing by the Rules?

I recently reread Tim Ferriss’ first book entitled The 4-Hour Workweek and noted a special recommendation that he made. It was based upon an old Chinese Proverb, which advised us to always know what we are getting involved in ahead of time and went something like this:

  • Always know the Rules of the Game.
  • Know the Prize for which you are competing.
  • Know when the Game Ends.

As I read those words, I started thinking about how they also apply to business dealings.

For example, before you enter any loan agreement with your bank or another institution, it’s critical that you know what the “Rules of the Game” are. What is expected of you in maintaining a satisfactory loan relationship? What are the loan covenants? What can happen if you don’t fulfill all of the covenants? Is there a reasonable remedy that you can provide if this occurs? I would expect that after last year’s challenging financial results, there will undoubtedly be some covenant violations…

Knowing what the prize is at the end of the “game” can be helpful, especially if you are being faced with profitability and covenant challenges. Sometimes, borrowers can let their pride get ahead of the potential prize at the end of the game. Often, this can lead to getting over-extended on loans in terms of Debt Service Coverage. Hence, the need for accurate Cash Flow projections & ongoing measurement (https://success-strategies.com/).

Finally, know when the game ends. When has your objective been reached? Perhaps, more importantly, know when enough is enough… Obviously, the game ends when you pay the loan off in full, but what happens if you run into problems before the loan is paid in full? Will your banker work with you to resolve the challenge you are facing? This is always good to know ahead of time, because, as some borrowers are facing today, their bank’s workout group has become more of a “kick-out group.” While it is admirable to get refinanced elsewhere, the current lender does not need to make it a painful process or one lacking support.

On the contrary, let’s put strategies in place to assist the borrower to make the necessary changes, possibly sell some assets and get themselves back on track financially. This is never an easy process and as George Bernad Shaw suggests below, it may not even seem reasonable, but it is definitely worth pursuing:

“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.” George Bernard Shaw

Let’s take your business to the Next Level!

Are You Familiar with the Seven Laws of Success?



Recently, I read an article by Joshua Becker entitled
“The Seven Laws of Success.”

In it, he stated:

“Success, in my opinion, is
controlling what I can (my actions) and dedicating my life to the right things.
If I can do that, I’ll be pleased with how I choose to live. And I will
consider my life a success – regardless of the results.”



To accomplish that objective, the author lists his Seven
Laws of Success:



·      
“Choosing Our Own
Values – Rather than chasing the latest fads in life or in business, let’s
focus on what is most important now. Former Notre Dame football Coach Lou Holtz
calls these WIN’s – i.e. “What’s Important Now.”



·      
Aligning Resources
with those Values – This process will guide us to always focus on what really
matters. It will assist us to stay on course and target the items that are essential
to our life and business success.



·      
Not Measuring Life
with Someone Else’s Ruler – This is essential when we make business
comparisons. While it may be helpful to compare your business with others in
your industry, it is even more crucial that you compare yourself with how you
have done historically. This will help propel you to higher levels of success
& avoid the “trap” of comparing yourself, unrealistically, to other
operations that may be far larger or newer than yours.



·      
Committing to
Continuous Growth – This is applicable to our businesses & our lives. We
can always strive to be better. It is what Tony Robbins refers to as CANI,
Constant & Never-Ending Improvement.



·      
Controlling Your
Attention – It is so easy for us to get distracted by outside variables.
However, it is imperative that we focus on what really matters and, more
significantly, on the items we can control.



·      
Living for Others –
Here, he is referring to being selfless and striving to help others. For
example, build your business to serve your Family, your Church or your
Community.



·      
 Doing the Next Right Thing the Best Way We
Know How – As Theodore Roosevelt stated, ‘Do what you can, with what you’ve
got, where you are.’” This will undoubtedly lead to success. Lou Holtz added
that you should always “Do what’s right. Do the best you can. And treat others
the way you want to be treated.” That sounds like a real success plan to me!



Let’s take your business to the Next Level!

What If We Changed Our Approach?

I was recently reading an article by Charles Hugh Smith entitled “Five Themes Will Decide This Decade.” Frankly, it was scary to read these themes, but he may be correct.

In the article, he listed the five themes as Sclerosis, Dysfunction, Debt Saturation, Power Asymmetry and Nobody Trusts Anyone. He describes Sclerosis as a power grab by a few people in our society, regardless of its impact on the rest of us. He suggests that this problem cannot be solved, but I believe it can be cured at the polls.

His second theme was Dysfunction, a state where nothing works, and there appears to be no self-correcting systems. Have you mailed anything recently? This is being compounded by the third theme, Debt Saturation. No matter how much money we throw at a problem, things do not seem to improve. Are we headed there with our current government borrowing?

His fourth theme revolves around Power Asymmetry, where we start to feel like we have little control over anything. That is challenging, but the saddest theme he included is a society where Nobody Trusts Anyone. This has been partly created by the Covid pandemic and the way it was handled. However, as he points out, the ultimate problem with low trust is that it can create a stagnant economy, which may be happening right now, accompanied by inflation. This combination is known as “Stagflation.”

My suggestion? Let’s change our approach to each of these themes:

  • On Sclerosis, let’s be more entrepreneurial. That is what made this country great, and what will move us forward again. As an entrepreneur, I feel much more in control of my destiny, and you will, too.
  • Likewise, when your future depends on making things work, rather than just levying more taxes, being more entrepreneurial is the best approach to becoming more functional.
  • On Debt Saturation, let’s start borrowing less. That is how it works for all of us with our home budgets, and it works very well.
  • To obtain more power over our decisions, it pays to be more entrepreneurial. I can attest that I feel more “in control” today than I ever did when I was working for banks…
  • Finally, if we want to build more trust, I suggest that we follow the advice of my Business Coach Dan Sullivan of the Strategic Coach organization. He offers his best “Referability Habits” as follows:

“Referability, in all places and at all times, depends upon four crucial habits:

  • Show up on time.
  • Do what you say.
  • Finish what you start.
  • Say please and thank you.

 Although these seem like common sense, a surprising number of people in this world, including entrepreneurs, do not practice these four habits.”

I think you will agree that we need a new approach to our current challenges.

Let’s take your business to the Next Level!

What If Your Business Was 10X Greater?

Recently, I was talking with a friend of mine about the possibilities of growing our respective businesses ten times. Many people would say’ “No way! That will only increase my stress levels…”

On the contrary, business coach Dan Sullivan, co-founder of The Strategic Coach organization, offers the following:

“The most stressful thing any entrepreneur can do in the 21st century is to try to stay where they are and hold onto what they already have. Stop where you are, and things will only get more confusing, isolating, and frustrating.”

I imagine that many of us have experienced that feeling, as we have faced the combined challenges of industry stagnation, inflationary cost increases and higher interest rates. However, Dan, who has been my business coach since 2003, suggests that there is a way to break out of this. Adopt a 10X mindset, allowing you to become the cause of change in the world, not the target of it.

Before you write this concept off as being ridiculous, stating that you don’t want to grow your business to 10X its current size, please consider the following idea. What if you grew it by 5 times with half of your current labor or other inputs? I have done that during the past 10 years.

Would you like to know how? I hope you do! Technology has been the answer for me. We have automated so many tasks that we can get more work done in less time than we had previously completed. What technologies should you consider using to boost your efficiencies?

Author and speaker Grant Cardone is adamant about one point on 10X growth. He stated that there are likely numerous ways to double the size of your business, but there are only one or two ways to grow 10X. The good news is that you won’t waste time studying items that don’t really produce big results! Instead, you can focus on the few concepts that really do produce greater success, yielding much faster progress!

To conclude, here are three questions from Dan Sullivan to consider:

  • “What 10X improvement will simplify everything else in your company the most? How and why?” Is it automation, robotics, or other possibilities?
  • “What new 10X capability will free you most from being commoditized? How and why?” In other words, what could differentiate your company?
  • “What’s the one 10X breakthrough you can achieve that no one else in your industry would ever think about? Why?” Think about this concept, and I’ll see you at the finish line.

Let’s take your business to the Next Level!