Tag Archive for: Future Strategy

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!

What’s in Your Future?

Today, we hear a lot about the advent of automation in our business operations, especially with the introduction of Artificial Intelligence and other new technology. I find it interesting that Warren Bennis, professor of business at U.S.C., offered the following thought back in the early 1980’s:

“The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment.”

This sounds like a fully automated system. Are we approaching this point with the introduction of more and more automation & technological advances? Quite possibly.

My first Client to automate a major task was through using a robotic machine to push up feed throughout the day. I believe at the time it cost about $40,000. However, it replaced one full-time employee, paying for itself in less than one year. More significantly, it enabled them to complete a task that was not being completed consistently. As a result, the Client’s milk production per cow has climbed by ten pounds per cow per day, offering an even bigger payback.

Comparing the Labor costs on dairies with robotic milkers vs. conventional milking setups is eye-opening. Our experience is that it is 1/3 of the cost of the conventional setup. Additionally, there is little cost for the robot’s time, there is no overtime pay and they don’t require Worker’s Comp or Benefits coverage. I estimate that the payback on these units is easily within 5-6 years, to say nothing of the improved production, herd health and other benefits.

The point is this. Automation is becoming more and more available. Fortunately, it is surfacing where I hear the most common complaints from Clients – in the challenges of Labor.

My advice? Take positive action today and check out the payback on these automation options. Warren Bennis alluded to their benefits 40 years ago, and now we are there.

Are you prepared for this challenge? Do you have a plan for overcoming its obstacles?

I’d love to visit with you more about my work with other Clients on these areas and how you, too, can achieve an improved outcome. Please let me know if you would like some assistance at john@success-strategies.com.

Let’s take your business to the Next Level!

Are You Caught in the Great Meltdown?

Recently, I was reading a book by my Business Coach Dan Sullivan entitled The Great Meltdown. In it, Dan describes how our entire world is experiencing a “meltdown” in which bad news of high costs of Money, Energy, Labor and Transport (MELT) are wreaking havoc on many operations’ results.

Dan states that “the costs of MELT determine economic growth and progress or decline and collapse. Their combined, interactive costs are one simple, helpful indicator of the direction of economic performance in any market or industry. In short, when the cost of the four MELT factors goes up, progress goes down.”

He goes on to say that “when the MELT costs rise, there’s a dramatic separation between people’s circumstances.”

With that factor in mind, what’s your plan? As bank financing gets tighter (and more expensive, what are your options?

  • If borrowing Money becomes more challenging, can you shift some of your short-term loans onto longer term assets such as real estate? Loans with a longer amortization period can help immensely with your cash flows, by lowering your monthly payments.
  • Energy has become more expensive for all businesses. Part of this has been caused by government restrictions on oil exploration in the U.S., and part of the increase is a result of the transition, successful or not, to new forms of “green energy.”
  • On Labor, we all know that the cost is increasing (just to keep up with inflation), but what about productivity? Are we making gains there? The cost per hour is unlikely to drop in the short term, so unless the “productivity” per hour jumps, we will be faced with some genuine problems…
  • The cost of all Transport has been rising as result of both the Energy & Labor costs climbing. This has become clearer as we require 5 days to simply deliver a letter that used to arrive in two days and as we observe that the time & costs of getting equipment parts has grown considerably.

As you consider these challenges, do you have a plan for overcoming them? This is not a task that can be overcome in one meeting. However, I do believe that if you measure these items, you can better understand them. If you understand them, you can undoubtedly gain more control over them, and if you can start to control them, you will be able to improve them.

I’d love to visit with you more about my work with other Clients on these areas and how you, too, can achieve an improved outcome. Please let me know if you would like some assistance at john@success-strategies.com, and please consider the following advice:

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

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!

What If Perfect Came Along?

I have recently met with a number of bankers about refinancing one of my Clients. One of them said the deal was too big for them to finance alone, another one said the deal was too small for his bank, and a third one said the industry was too challenging for him today.

Wow! I felt like I was trapped in a Twilight Zone sequel to Goldilocks & the Three Bears! You know: the porridge was too hot, too cold; the bed was too hard, too soft… I understand that parts of our economy are quite messed up right now, and I hope we all remember that in November…

However, we need to balance the risk & return equation. As I have said previously, if the proposal is completely risk free, there is normally little or no return. Why would any bank want to finance a deal with no return? I’d suggest that we look at the potential risks and determine if we have enough mitigating factors to offset that same risk.

Otherwise, lenders, looking for the “perfect deal” could end up like the gentlemen who was looking for the “perfect wife.” He searched and searched for years, and at long last, he finally found her. There was just one problem. She wasn’t looking for him… The same could be true in lending relationships.

I believe it would be far better to complete the necessary analysis and due diligence to see if we can find those mitigating factors to offset the potential risks. Some examples include: a.) Hedging on the Client’s selling prices, such as DRP & DMC for dairies. b.) Contracted prices on many of their inputs, such as feed or fuel. c.) Fixed interest rates, when appropriate. d.) Does the borrower have a plan for success? e.) Do they have  a system in place to measure their monthly cash flow results? f.) Are they planning to grow their business in order to become more efficient?

Life goes on, and I will keep searching for the most optimal lender for this Client. Who knows? Maybe I’ll be like Goldilocks and find the one that is “just right.” By the way, if you run a dairy operation and want an easier way to track your cash flows, check out our Success Strategies Advantage™ software today at www.success-strategies.com.

Let’s take your business to the Next Level!