Tag Archive for: Future Strategy
There seem to be a lot of downtrodden businesspeople these days. They are discouraged about inflated costs, high interest rates and difficulty getting employees to perform.
When things get tough, “Cost Cutting” often becomes the mantra. To an extent that is fine. However, we cannot simply save our way to prosperity by only cutting costs. If it were true, all we would have to do is reduce our expenses. On the contrary, I suggest that you only cut costs to the extent that it does not hurt the performance of your business.
In 2009, I watched some dairy producers cut back on feed costs to offset the greatly reduced milk prices. While that may have looked okay in the short term, in the long term, it really stymied their operation’s performance. When milk prices rose again, they were not prepared to respond, and cows did not come back into their maximum production very quickly. They were lackluster, at best. Profitability suffered for at least another year.
We are going through another trying period of inflation, high interest & tighter margins. With that in mind, let’s limit our cost reductions to the items that do not directly impact productivity of your business.
Motivational speaker Les Brown tells the story of how, early in his career, he had wanted to be a DJ, a disc jockey. An experienced adult told him that he had to be hungry & ready to take action. He went to a radio station in Miami and was rejected for a DJ position numerous times.
However, on the advice of his mentor, he studied and practiced being a DJ, because he was advised that it was far better to be prepared & not have a job, than to be unprepared when an opportunity did come along. One afternoon, his chance surfaced when another DJ was drinking heavily and could not finish his show. Les Brown stepped in, completed the show, and, as the saying goes, “The rest is history.” However, what would have happened if he, not having a current opportunity, had just not bothered to be prepared?
My point is this. Be prepared. These challenging times with high inflation and higher interest rates won’t last forever. Tough times don’t last, but tough people do!
Watch your costs and adjust them where you can. Just don’t stifle your operation’s productivity in the process, and you will be prepared for success, i.e. “Ready for the Big Dance” when better times arrive, instead of sitting on the sidelines, wishing you were more prepared.
“You gotta be hungry!”
Les Brown
During a recent trip to Florida to participate as a judge in the North American Intercollegiate Dairy Challenge contest, my wife and I had a unique experience. On the way to Florida, we stayed in the Nashville, Tennessee area and were on our way out of our hotel when we faced a daunting challenge.
As we were entering the elevator from our third-floor room, she handed me the car keys and suggested that I should drive. That was great, except during the handoff, we didn’t quite connect, and the keys went sliding across the hallway. In fact, it was worse than you might imagine.
The keys slid across the hallway and fell down the elevator shaft. Oops! First, the good news – we had a second set of car keys with us, so we were not “car disabled” for four days. However, my Bride quickly reminded me that our house keys were on that set of keys, along with her nice leather key FOB that we had purchased during a trip to Italy…
Please recall that in prior blogs I have advised you to first outline the objective – in this case, recover the keys.
Then, identify the hurdles and find ways to get around them:
· Hurdle #1 – It was Sunday afternoon, and no elevator company is open on Sunday, so we talked with the Hotel Manager and were advised that the maintenance man might be helpful.
· Hurdle #2 – The maintenance man was off until Tuesday… Our solution was to talk with him ASAP Tuesday morning. Unfortunately, he had car problems and came in later than usual. Eventually, he was unable to assist us…
· Hurdle #3 – While constantly checking with the Manager each day, no one had any suggestions or results for us. Remember – Stay the Course!
· Hurdle #4 – We asked the Manager Wednesday morning if she had heard back from the elevator company. She claimed she had never said she would call the elevator company, but “Let me check with them today.” Sheesh…
· Hurdle #5 – We needed to head to Florida for the contest I was supposed to judge. Our departure was scheduled for Thursday morning…
· Hurdle #6 – In response to our request, the Manager said getting the elevator company to come out and recover the keys from the elevator shaft may cost up to $300. Ouch! However, we reasoned, it might cost that much to duplicate our car key and change the door locks on our house.
· Hurdle #7 – Always the waiting! We set out and took care of other business that was necessary that day. We felt we had initiated the necessary steps to reach a successful outcome.
Lo and behold. When we returned to our hotel on Wednesday evening around 6 pm, the keys were in an envelope at the front desk with no charge from the elevator company. Wow!
What was the key to our success? Perseverance. Even when we had doubts, we stayed on the task at hand, and kindness & success eventually prevailed. The same holds true for you and your business endeavors. Stay focused. Stay engaged with your goal, and you will get there!
I recently finished reading a new book by Dan Heath entitled Reset. It is an excellent book, and I would highly recommend it. The book contains a tremendous amount of change management and outlines methods we can use to make huge improvements in our processes.
One area where I hear the most complaints from Clients is “Labor Challenges.” Heath points out that “there is no emergency, only choices.” The key to making improvements on labor or any other issue, he suggests, is to identify “Leverage Points & Restack Resources.”
In one business, for example, the management team was having difficulty with employee motivation. As a result, they shared a questionnaire with employees that asked four questions that they could answer anonymously:
· What makes a good workday for you?
· What makes you proud to work here?
· When we are at our best, what does that look like?
· What are any impediments to your performance?
Then, in response, the same management team addressed these issues quickly, especially the small ones. For example, the coffee machine did not always work properly. It was relatively low cost and got replaced right away. They leveraged this item (at a reasonably low cost, too).
Additionally, they put three clear, plastic boxes at the place where their employees exited at the end of their workday. One box had orange ping pong balls, one had white ping pong balls, and the third one was empty. As they left work, the employees were asked to put orange ping pong balls into the empty box if they had experienced a difficult or unreasonably challenging day with conditions that needed to improve. If their day was solid, they were requested to place a white ping pong ball into the empty box, likewise giving management some immediate feedback on the day.
If you think about it, this process was very practical and provides a good example of participative management by asking the employees: “What matters to you?” It identified leverage points that were important to the crew and allowed management to “restack resources,” often at very low cost, to create a better outcome.
Give this some consideration in your operation, and if I can assist you with this, please let me know.
“People often say that motivation doesn’t last. Well, neither does bathing – that’s why we recommend it daily.”
Zig Ziglar
I recently had a conversation with a good friend of mine about having him start a new business. Of course, he was concerned about numerous items – recent events with Ai, continued concerns about inflation and high interest rates.
I suggested that he focus on what he wanted to achieve with his customers and, as the saying goes, not “let the smoke get in your eyes.” While the recent concerns about Ai are relevant, I cannot let that stop me from moving forward with my life and neither can you. In fact, the advent of Ai will likely assist many businesses to streamline their operations and become more efficient. Recent Ai events were probably a “wake up call” for the U.S. tech industry…
Now, regarding inflation and its effect on the Federal Reserve Board raising interest rates to slow down our economy, we have had inflation for a long time. Why do you think the “purchasing power” of the U.S. dollar has decreased so much over the last 50 years?
Instead of worrying about the impact of these forces, I suggested that he spend more time focusing on what he wanted to do for customers. Additionally, consider what he needed to get started. Let’s consider these outside forces and then focus on the positives of what he could offer.
In the book “Start Up Nation” authors Dan Senor and Saul Singer state that “Without start-ups, the average annual net employment growth rate (1980-2005) would actually have been negative. Economist Carl Schramm, president of the Kauffman Foundation, which analyzes entrepreneurial economics, told us that ‘for the United States to survive and continue its economic leadership in the world, we must see entrepreneurship as our central comparative advantage. Nothing else can give us the necessary leverage.’”
So, after shifting my friend’s focus, I suggested he consider the following. If he knew that he could not fail, what would he do? Once identified, that is where he is most likely to succeed.
What is the Next Step for you? Please let me know if I can help you. You can reach me at john@success-strategies.com, and consider the following advice:
“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!
As we begin a new year, I believe it is crucial that we identify what our primary objectives are for the coming 12 months. I understand that the challenges of inflation, higher interest rates and general over-regulation of most industries today have helped to create a sense of malaise.
However, in the words of Greco-Roman Philosopher Epictetus:
“The more we value things outside our control, the less control we have.”
In other words, focusing on these items can create a sense of helplessness. This is a myth. You have more control over your outcomes than you give yourself credit for. While all of these variables can impact your results to some extent, you have the ability to boost your outcome.
You can control your results, and it helps to have a plan. Can you control every step? Of course not, but once you have set your objective, decide what your first step will be.
And isn’t this a great time of year to start outlining your objectives for the year?
Along with your first step, identify the potential challenges you will face and what your response will be to each one. Be sure to get your Team involved as you lay out the plan. Their support will be instrumental to your success.
Then, as you move forward, start to identify each of your next steps and refine your plan accordingly. Ultimately, the combination of your belief and a sound planning process will assist you to “Make It Happen!”
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:
“A good plan is like a roadmap: it shows the final destination and usually marks the best way to get there…”
H. Stanley Judd
Let’s take your business to the Next Level!
What are the qualities of a Visionary Entrepreneur? This was the leading question asked at my most recent Strategic Coach workshop. It is actually an interesting and thought-provoking question.
Some of the answers that participants offered were “the ability to see future opportunities, an ability to plan the future, and using your imagination to think about the future.” These are all great answers. The Oxford Dictionaries describes visionary as “the ability to think or plan the future with imagination or wisdom.”
As we start a new year, what ideas do you have in mind to dramatically improve your current operation? Are there areas in your current operation that should be boosted? If so, what will be required to achieve this level of improvement? Does it require an investment in people, equipment or other items? Start by listing these necessities and then consider their level of payback. Does the required investment make sense for you?
On the other hand, would you be better off designing a completely new vision for the future? In either case, you need to see it, build it and articulate it to your Team and your Lender. Their feedback and support will prove invaluable to you.
As I have stated many times before, being visionary will require you to:
- Identify what, specifically, you want to achieve.
- Develop an outline of how you can best accomplish the desired result.
- Recognize the potential challenges you will face, and yes, there will be some.
- Formulate your strategy to overcome these challenges.
- Move forward with the first step and develop a system to track your progress.
- Adjust your course, as needed.
All of us are visionary, to some extent. The key to your success is developing your ideas, maintaining a system to measure your results and then adjusting your course as new challenges arise.
What is the Next Step for you? Please let me know if I can help you. You can reach me at john@success-strategies.com, and consider the following advice:
“The only limit to our realization of tomorrow will be our doubts of today.”
Franklin D. Roosevelt
Let’s take your business to the Next Level!
Whenever you stay in business for a long time, the day will arrive when you must consider, for many potentially different reasons, whether you wish to stay in the business or leave.
Many agricultural producers are in this situation today. It could be due to their advancing age, a recent lack of profitability, health concerns, high interest rates or a combination of these variables. The lack of available credit from banks is also putting pressure on producers, as most lenders continue to seek the perfect business to lend money to.
If you are faced with this situation, here is what you should do. Literally, get away and THINK. Your next step is a big decision, so you want to make sure you make a wise, well-informed choice. Despite what your first boss told you when you were 15 years old, it really is not a crime to get away and think…
Consider what you would do: 1.) If money was not a limiting factor. 2.) If you could operate your “dream business.” 3.) If you had all the financing and Family support you desired. Then consider if you possess the health, stamina and desire to move forward with your plan. Saying “Yes” or saying “No” are both acceptable answers. Just be certain that saying “No” isn’t just because you were scared to do so.
In the movie “The Art of Racing in the Rain,” the main character was hesitant to enter a car race, and his driving coach stated: “There is no shame in competing and then losing the race. There is only shame in not entering the race because you were afraid you might lose.” That is excellent advice for all of us.
One final point in considering whether you should stay in your current operation is to look at the tax implications with your Accountant or Tax Adviser. Please do not execute your plan without considering the tax implications, especially if you decide to completely exit your industry. Is it better to go now or after December 31st?
Once you know these implications, you can refine your plan for success. Additionally, if you continue your business, consider this thought. If you knew you could not fail, what is the next action you would take? Recognize that there will be obstacles. That’s why so few people run their own businesses. Overcoming hurdles is not something they want to deal with.
Be sure to set some deadlines for action and move forward. Today is an excellent time to establish your plan for the new year!
What is the Next Step for you? Please let me know if I can help you. You can reach me at john@success-strategies.com, and consider the following advice:
“Let our advance worrying become advance thinking and planning.”
Winston Churchill
Let’s take your business to the Next Level!
After eight years in the banking industry and 26 years of consulting on finance & strategy with Success Strategies, Inc., I have concluded that achieving positive cash flows in your business revolves around several key items.
First, I absolutely believe that if you measure it, you will understand your cash flow far better. If you understand it, you can manage to get better control over it. Undoubtedly, if you gain better control over it, you will be positioned to improve it. While this set of principles may sound simple, it can be rather evasive at times. Additionally, you are constantly being faced with changing variables or factors that, sometimes, you were not expecting.
Regardless, all success in this arena begins with measuring your cash flow. We have a software tool for the dairy industry called the Success Strategies Advantage™. It will measure your financial results and provide you with a budget that is based upon your region of the country, i.e., the “Averages” of various Revenue sources & Costs per 100 pounds of milk. In a moment, I will explain what other tasks it can fulfill for you.
Second, you must know your Break-Even levels. In other words, what could you change on your multiple Revenues or Costs, while all other variables remain the same, and still not lose money. This is extremely valuable information to have at your fingertips. Why?
Well, if you are losing money, your Break-Even numbers will tell you what you need to change in order to stop losing money. Another approach would be to ask yourself, “What are potential items I can increase (on the Revenue side) or decrease (on the Expense side) to achieve a Break-Even level and, better yet, start making money!
I have had Client situations where we have literally boosted revenue and/or cut their costs $1.00-2.00/cwt, and the program clearly showed us where they were spending too much money, in comparison to other producers in their region of the country. Would that help your operation to be more profitable? Absolutely! It would in most businesses.
Using the program, you can also run some “What If” scenarios to measure the potential impact of adding more cows in your dairy herd, boosting their production per cow or adding new equipment or automation tools that can lead to lower costs. This knowledge can assist you to make better decisions. If you have a more solid grasp of what you are investing in and the potential impact of that item or variable, you can feel more confident about the choices you are making.
Hopefully this overview has been helpful to you. I would urge you to check out the Success Strategies Advantage™ software at www.success-strategies.com and start a free trial. It’s on our Home Page – just look for the Milk Cans.
What is the Next Step for you? Please let me know if I can help you. You can reach me at john@success-strategies.com, and consider the following advice:
“Success… seems to be connected with action. Successful men keep moving. They make mistakes, but they don’t quit.”
Conrad Hilton, Entrepreneur
Let’s take your business to the Next Level!
I recently spoke at the Amelicor Corporation’s Conference in Las Vegas and while I was there, I saw someone win $1,000. I asked him what he would do with his winnings, and he responded that he would probably just gamble it away….
It reminded me of the story about the three lottery winners who were asked what they intended to do with their monetary awards. One said he would buy his parents a new home, because they had been so good to him. The second winner said she would quit working and take a trip around the world. The third one said he would probably just keep farming until he lost it all!
While gambling might be fun for some people, it is no way to run any business. Frankly, you already assume numerous risks every month, including weather risks, health challenges, and rising costs due to inflation. Why be subjected to price risks, too?
If you are running a dairy or other agricultural operation, consider using Put & Call Options to reduce your price risk. As I explained in Las Vegas, the Dairy Revenue Protection program can lower your price risk by putting a “floor” under the prices you receive. If market prices drop, you are covered. If prices stay high, you lose the premium you have paid, but the good news is that you can likely afford it, since your prices were higher.
Sometimes I hear producers complain that they “lost the premiums paid for their price coverage.” However, I remind them it is a form of insurance, price insurance in this case. When their house doesn’t burn down, they certainly don’t call their agent and suggest that “they really didn’t need the fire coverage.”
Of course not. To not be covered would be way too risky. In fact, banks won’t finance a house or business property that is not properly insured. The day may be coming when banks are unwilling to finance your business without sufficient price coverage. The current trends are certainly in that direction.
Please don’t get too comfortable with assuming excessive price risk. Think about it.
What is the Next Step for you? Please let me know if I can help you. You can reach me at john@success-strategies.com, and consider the following advice:
“Successful people don’t control events; they control their response to events.”
Dan Sullivan, Co-Founder of The Strategic Coach
Let’s take your business to the Next Level!
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