Tag Archive for: Planning

How Can I Decide?

Ah, the art of decision making. It can be a genuine challenge today for several reasons. Sometimes, we have too much information. Often, we are afraid we might make a mistake (Oh, heavens…). In both cases, we can simply become overwhelmed and keep people from making much-needed decisions.

Here is my suggestion to you: Don’t delay! Realize that you have 9-10 other decisions to make today, and there will be more tomorrow. Having stated that fact, here is a process I like to use:

  • Determine the objective, i.e. where do I want to go?
  • Identify the challenges as much as possible.
  • How can I overcome these hurdles, knowing what we know today?
  • Consider what the best & worst outcomes could potentially be & can you live with them?
  • Choose your best option and “pull the trigger.”

Realize, of course, that none of us gets every decision correct, but as I said previously, you probably have 9-10 other decisions to make today. Deferring action to another day can often have other implications. Please allow me to share an example with you.

Six months ago, I had a dairy client who was completing an expansion of his operation. He had just added another free stall barn and needed to buy more cows to complete his growth process. Young cows were then $2,000 each, and he said “That’s ridiculous. I could have bought those last year for $1,500. I think I will wait.” Fast forward six months, and they are now at least $3,000, if you can even find any to buy… In hindsight, he could have bought them for $2,000 per head and then sold their calves for $600 each, netting his cost at $1,400 apiece, essentially less than ½ of today’s cost. He would also now be selling their milk at $22-23/cwt, rather than being short on his overall milk sales.

This is just one simple example, but it is a good one to illustrate why we cannot delay decisions. Everything keeps moving at such a rapid pace. How do you decide? Look at your goal, consider potential challenges, select what you believe is the best option (based on some market research, not just your neighbor’s opinion), and then pull the trigger!

Ultimately, have a plan, study your options and make it happen. No one ever built a statue for anyone who didn’t take action! 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’s go invent tomorrow rather than worrying about what happened yesterday.”

Steve Jobs, Apple Co-Founder

Let’s take your business to the Next Level!

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!

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!

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!

Have You Made This Change Yet?

So many people seem to be on a “treadmill” today. Occasionally, I feel that way, too, especially the last three years. I’d suggest what I believe has directly caused this, but you might accuse me of being “too political.”

Perhaps a better approach might be to follow the advice of the January 24th article in Inc magazine by Marcel Schwantes entitled “Science Says Your Overall Happiness Comes Down to 3 Timeless Strategies.”

The article goes on to say that “Happiness will enhance your health, improve your focus, and improve your job performance.” Sounds good so far…

What are the three strategies the author outlines?

First, “schedule downtime.” In the technology dominated culture we live in, it’s very challenging to “get away.” We are always on call… Schwantes suggests that every 80-120 minutes we should schedule ten minutes of down time i.e. a break. Some even suggest that you leave some “time gaps” in your daily schedule – GASP!!! I used to despise these gaps when they occurred, but then I started to realize that they help me to catch up, compose myself and get better prepared for the next event or meeting.

Next, “reward yourself by giving.” Sounds crazy, doesn’t it? Schwantes states that “the emotional rewards of giving are more significant when giving is connected to others.” If you make an anonymous donation, it will be less fulfilling than giving funds to a “cancer- stricken friend’s GoFundMe Campaign.” This social connection will provide you with a boost of happiness.

Third, “shift your mind toward optimism.” Remember, that it’s always darkest right before the dawn. These are stressful times we are living in, so it’s more essential than ever to be optimistic and set future goals for yourself. Change is always scary, simply because it is unknown. I met with a banker recently about a Client’s financial challenges and had to remind myself that this same loan officer has “predicted 5 of the last 2 recessions…”

No, that was not a typo. He worried about way too many items. He literally would not provide them with the funds they needed today, despite their $1.5 million in profits from 2020-2022. His reasoning? “I’m concerned about 2023 results now.”

In summary, life goes on, and we will figure it out. I’m looking at this as an opportunity to follow these three steps and boost the happiness of both my Client and me. Let’s go out and make it a great year!

Let’s take your business to the Next Level!

What If Stuff Happens?

There is a process that I like to complete each year with my Clients, usually in the early months of the year. I call it the “Goals & Disaster Agenda” process.

The Goal setting part of the process is fairly self-explanatory. Most of us are familiar with that process. If not, please look back at my prior blog. As entrepreneur and author Grant Cardone stated in his book The 10X Rule, “I suggest that you become obsessed about the things you want; otherwise, you are going to spend a lifetime being obsessed with making up excuses as to why you didn’t get the life you wanted.”  His statement is quite clear.

However, the development of a “Disaster Agenda” is perhaps a new concept for you. In this, we list the three worst things that could happen to our business in the next 12 months. Just in case you think this is overly zealous, consider some possibilities: Your bank gets acquired and the new management team doesn’t want to finance you any longer. You lose a key employee to a competitor. Inflation increases and, hence, interest rates go higher. These are all genuine possibilities.

The key is not to “dwell” on these concerns, but rather to consider what may occur. More significantly, give some thought to what you would do in response. The best reason for doing this is, of course, if it actually happens, you will be better prepared. Likewise, if something similar takes place, you have already given consideration to your potential action steps.

As a result, you will definitely be better prepared and less likely to get caught off guard. In the infamous words of Yoda in the movie Star Wars: The Empire Strikes Back:

“Named must your fear be before banish you can.”

I hope you find this process helpful, as you plan for greater success this year!

Please check out the Success Strategies Advantage™ software today at www.success-strategies.com today.

Let’s take your business to the Next Level!