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I was recently reading an article by Joshua Becker within which he described being out for a walk and then seeing a line of ants crossing the sidewalk that he was traveling on. He stated, “As I was watching, I noticed one ant carrying a leaf. And then I noticed another. And then another. The ants carrying the leaves were walking the same direction, and seemed to be keeping up, but the longer I watched, the more I noticed they were walking a little slower than the others… All I noticed was that some of the ants were walking peacefully while others were carrying a heavy burden. And it reminded me a little bit about life. Sometimes we walk peacefully. But other times, life requires heavy lifting.”

So, I’d like to ask you one question: Who’s doing the “Heavy Lifting” in your operation, and have you thanked them recently?

There is so much “buzz” today about the benefits of automation and the impact that will have on your labor force. I agree that it is clearly the wave of the future, and its benefits are astounding. But what if you can’t automate some functions in your operation or what if you feel you cannot afford to automate, i.e., it appears to be cost prohibitive?

In that case, you need to identify an alternative approach. Find those people in your work force who are an excellent example of what you want in every employee and use them as a model. If they have skills that you wish all your employees had, use them to teach the others by example. This process will improve the overall skill set of your Team, AND you will definitely build that employee up by literally recognizing his or her superior skills.

Likewise, the next time an employee comes to you asking for a raise, provide them with a check list of skills and ask them if they can do each and every one of those tasks. If they cannot do all of them, have them learn how to do the new tasks. Again, two things will happen. Your work force will be better trained, and they will then be worth more to your operation, allowing them to boost their income.

Do you know the future roles of your employees? Are there opportunities to grow and/or be promoted? This is huge for employees. I know you’ve been focused on your next expansion or banking issues, but remember that, just like a dog sled team, “The scenery only changes for the lead dog!” Help them define a clear path forward. As Luke Miller, DVM, recently stated at the Western Dairy Management Conference in Reno: “If you can’t trust your Team, it’s your fault, not the employees. You either hired the wrong person or provided them with no training, both of which are the fault of the employer.”

I suggest, while you are studying ways to automate your operation, think about the development of your best employees, as outlined above.

I will leave you with one final thought: Who do you need to thank for “doing some heavy lifting” in your operation?

Let’s take your business to the Next Level!

Author Andy Andrews, in his book entitled The Traveler’s Gift, explained that taking responsibility is the key to all success. I’m sure you’ve heard of the 3 R’s – Reading, Writing & Arithmetic. I consider “Responsibility” the 4th R!

Andrews suggests that the best path to a brighter future is to accept the responsibility for the problems you face. He added, “If I allow myself to blame these uncontrollable forces for my lack of success, I will be forever caught in a web of the past.” Instead, we should follow the famous Harry Truman mantra – “The buck stops here!” We are responsible for our own success.

Now, in all fairness, I don’t have any idea how much success you’ve enjoyed or the amount of pain you’ve endured in the process, but I do know one thing for sure. As Les Brown stated, “Wherever you are in life, you made an appointment to be there.” In order to take full responsibility for our lives and the related success, we need to stop & consider what to do.

First, build a plan. I’ve developed a successful consulting business over the last 23 years, and you know what? Clients and prospects still haven’t run out of challenges & problems to solve. Let’s face it. Problems are just part of life. However, back to the “plan” for your business & life:

  1. Determine where you want to go.
  2. What are the pluses & minuses of this idea? Anticipate the challenges you’ll face.
  3. Consider your “Why!” Usually, when I ask someone why they want to do something, they’ll respond with, “To make more money…”
  4. I’ll ask, “But why do you want to make more money?” To which they might respond, “To stay in business!”
  5. To which, I might say, “Why do you want to stay in business?” Now, getting somewhat frustrated, they might state, “because my son is in college, wants to come home & would represent our third generation on this farm.”
  6. Finally, I might ask, “Why does that matter?” Then, they will exclaim, “Having our son return and be successful as the third generation on this operation would make my Dad very happy, and, as hard as he has worked during his 85 years, I think he deserves that from us!”
  7. Guess what? While this process can be emotional and even somewhat frustrating, we have now identified your “WHY!” If you know your “Why,” the process of determining your “How” becomes so much easier.

Identify your “Why” and then determine your Action Plan, for as Andy Andrews states:

“In the future when I am tempted to ask the question ‘Why me?’ I will immediately counter with the answer: ‘Why not me?’ Challenges are gifts, opportunities to learn.”

I will leave you with one final thought: What is your Plan for next year?

Let’s take your business to the Next Level!

During the last 23 years of my consulting work, there have been times when my life has seemed like a cross between two of my favorite movies, Catch Me If You Can and Up In The Air. Here’s a quote from the Actor Christopher Walken in Catch Me If You Can that I believe you will find appropriate for our discussion that follows:

  • Two little mice fell in a bucket of cream. The first mouse quickly gave up and drowned. The second mouse, wouldn’t quit. He struggled so hard that eventually he churned that cream into butter and crawled out. Gentlemen, as of this moment, I am that second mouse.”

My question for you is this: As you face industry challenges or ones that are specific to your operation, which one are you?

I’ve been called crazy for doing some of the work that I’ve completed these past 23 years, but you know what? I love doing this work. Is it challenging and occasionally frustrating? Yes. Can it be difficult at times? Yes, but if it was easy, everyone would be doing it and take all of the profit out of the process.

How do I do this? I recently reviewed my records and discovered that I’ve completed 73 financial turnarounds with Clients since 1999. That’s a lot of change! Some of these rescue missions have taken 1-2 years; others have taken 5 years or more. Some of them, following their financial recovery, decided it was time to exit their industry. The great thing on these was that they were positioned to sell out and walk away with sufficient proceeds to live the rest of their lives successfully. That news helps me to sleep at night.

So where are you in your current operation? Many industries, especially on dairies today, are facing some dire outlooks, but it doesn’t have to be that way. As the saying goes, “The best time to plant an oak tree was 20 years ago.” However, the next best time is today.

Here are some thoughts for you as you think about this question of what should happen next:

  1. Begin with what I call the Discovery Process. Where do you want to go and Why? If you can answer these two questions, step #2 is easier.
  2. Complete an analysis of where you are today, in terms of assets, debts and overall cash flows. This information provides the building blocks for your success plan.
  3. Outline and discuss the challenges that you will face in your next steps. My next blog will be focusing on just that topic.
  4. Evaluate what Cash Flows will be required to make it all happen successfully.
  5. Talk to your banker. Please don’t tell me this is too tough… I’ve faced off with large banks where the Client owed $6 million and had almost no collateral. What could we do? We simply built a repayment plan and worked through it successfully. The one thing I knew going in was that there was a solution. They just hadn’t identified it. If they had, my input wouldn’t have been needed. My saying that I was sure there was a solution may sound arrogant to you, but trust me. After you’ve completed 73 of these turnarounds, you start to understand that the answer, indeed, is out there. We just have to dig it up!
  6. Once you determine your plan of action, track your Cash Flows and always know where you are throughout the year. I treat CF Analysis the same as MacDonald’s founder Ray Kroc did the hamburger. Recall what he said? “I didn’t invent the hamburger. I just took it more seriously than anyone else.” It’s the same for me with Cash Flow Analysis!

Once again, are you drowning or climbing out of the bucket of cream? If I can assist you, please let me know. I’m happy to help.

Let’s take your business to the Next Level!

Are you actually preparing for what’s next? I’m not talking about post Afghanistan, after our summer temperatures abate, or after Apple stock goes over $200/share. I’m talking about your business. Business Coach Brendon Burchard stated that “we are always preparing for something.”

Yet, are your current routines and thinking creating the future that you want in your life and business? Author Dennis Waitley talks about us getting stranded on an island called “Someday Isle,” where the weather is perfect, and we have no challenges in our business or life, that which he actually interprets as “Someday I’ll…”

You know, Someday I’ll: 1.) Get my employees to do all the necessary tasks without being reminded. 2.) Have all of my taxes paid. 3.) Have none of my expenses increasing at an alarming rate… The list goes on.

I’d like to review what I’d explained in a prior blog, released on May 25, 2021:

Several years ago, my Business Coach Dan Sullivan of the Strategic Coach organization offered an excellent idea for everyday use. It’s called the WinStreak®, and it’s available as a free app that you can download on your phone.

It provides a simple, but powerful, way to accumulate more “wins” in your business and life. At the end of each day, you list your three greatest accomplishments for the day. It will also ask you to list the three largest objectives you intend to accomplish tomorrow.

The payoff is that instead of dwelling on the tasks you didn’t do or the items that you didn’t complete, it helps you to focus on what you have done, as well as what plan to achieve tomorrow. I’ve been doing this for at least three years, and it has helped me focus on what really matters.

Along the same line, you can summarize the three best things that happened this past week and, if you had a chance to relive this same week, what would you do differently?

The key is that, as we move forward in business and life, let’s focus on preparing for what’s next. Will we ever know with certainty what is going to unfold as we go through the week? Probably not. However, just the very process of reviewing what went well, and what we can do to make next week even better, will help prepare us for a brighter future.

You, too, can stun the world with the items you discover and the objectives you achieve. However, this will require you making this day, this week, this month an “intense time,” one characterized by proactive thinking about how you can make your outcome even better than you ever imagined. You are going to be operating your business & leading your life anyway. Why not make it more prosperous and enjoyable?

My question for you is this: What one task or achievement, if you accomplished it this year, would generate a genuine sense of accomplishment and extreme momentum to carry you into the future?

Knowing this one thing will keep you off of ‘Someday Isle!”

Let’s take your business to the Next Level!

Of course, the answer is “Yes!” We all do, but now that I have your attention, let’s talk about the opposite position. Do you have any good habits?

Once again, the answer is “Yes.” Of course, you have some good habits. I do as well. I track my weekly results on multiple key measures, I call my adult children at least weekly, my son and I are going through a Napoleon Hill study weekly for all of 2021, and I try to sleep eight hours per night.

Do I succeed all of the time on each of these items? Not quite. However, I typically get very close to 100% on these and several other measurements each week. One of the most positive discoveries I’ve made throughout this process of developing these habits is that I have created a “System,” through which I am able to typically complete them in a timely manner, and if I skip a day on any of them, I actually notice the difference in my performance or outcome.

These are some of my business and personal habits that are creating positive outcomes. Now, I’d like you to think about some in your life and business. Please allow me to give you some examples from a recent Client meeting I had.

This Client, a mid-sized dairy operation, has had a solid history of profitability over the years, but their milk production had plateaued, and, on some days, it had even fallen off considerably. During our discussion, it became clear that, with the labor challenges all operations are currently facing, several tasks just weren’t getting completed consistently.

Free stall beds were not getting raked daily, and feed was not being pushed up regularly. Now, we wouldn’t consider skipping a day of milking the lactating cows in the herd, and we wouldn’t skip breeding cows for several days. So, why skip the other management routines that are so crucial to high production?

The primary problem in both of these areas was a lack of training. With all of the employee turnover this Client had experienced over the past two years, new employees were not always aware of what they should have been doing. It took some training and teaching one employee how to drive the tractor to push up feed, but it is now working.

What was the key to this improvement? A “System,” based upon a foundation of good habits. Raking the free stalls daily, pushing up feed every three hours, 24 hours per day, and several other managerial tasks are what will help take your operation to even greater success.

Create your list of tasks (habits) that need to be completed to develop a system in your operation today. When you make a concerted effort to do this and get it written down, you, too, will notice it when any of these items gets overlooked. However, when you’ve created a “System” of good habits, you will then know exactly what to do next!

Let’s take your business to the Next level!

This was the question I was asked when I met with Jerry for the first time. Our discussion was by phone, but I can imagine the look on his face when he asked me this. The question that I had asked him was “What are your Break-Even Levels?”

Surprisingly, this is one of the most important items to know in any business. However, it is also probably one of the least understood concepts. Essentially, it is the Price Level or Cost of Production that needs to be achieved in order to not lose money, if all other variables remain the same.

Looking at the Chart below:

Actual        
12 Month Totals
Feed Expense/Cow/Day  $                    5.93
Feed Expense/Cwt  $                    9.21
Net Milk Price/Cwt  $                  15.86
Income over Feed Cost  $                    6.65
Breakeven Levels  Breakeven Levels
Milk Price (Net)  $                  15.54
Feed Expense (cow/day)  $                    6.14
Feed Expense (per cwt)  $                    9.53
Production (#/cow/day)                      76.45

This producer is feeding his cows for $5.93/cow/day and has been making money. You can also see that his Feed Expense per cwt is $9.21, which, given his Net Milk Price/cwt of $15.86, provides him with an Income over Feed Cost of $6.65/cwt.

Next, you can see his Break-Even Levels in the bottom half of the chart. If all the other variables stay the same, his Feed Cost per cow/day could rise to $6.14 and he would still break even. We know that he is currently making $0.32/cwt, because we know that this is the amount that his milk price/cwt could decrease ($15.54 minus $15.86/cwt) or his feed cost/cwt could rise ($9.53 minus $9.21/cwt) and still allow him to reach break-even.

What value is there in knowing this? I’m glad you asked. Knowing this will allow him to understand what changes he can make or, in the case of cost increases, what increases he can withstand and still not lose money. This information is also very useful to him in understanding where he may want to set his price floors within programs such as the Dairy Revenue Protection Program. This program, for example, is designed to assist producers to place a profitable floor under their milk price. Knowing your break-even levels is the only way to use this type of program successfully. This is what makes knowing your Break-Even levels so significant. Can I help you with this?

Want to learn more? I’d like to invite you to join me for our upcoming Next Level Thinking™ workshops later this year, within which, I’ll continue to focus on the benefits of this type of proactive thinking. We’ll be doing this through Zoom Group Sessions.

Let’s take your business to the Next Level!

In my last blog, I suggested that one of the key steps to achieving successful results in your operation is measuring your Net Cash Flow each and every month. I am such a firm believer in this process and its numerous benefits, that I complete it monthly for every Client.

Why am I such a huge believer in the benefits of this process? Yes, it provides us with a clear indication of whether you are making money or not, but it also has other benefits. It will help you steer clear of any financial “surprises” such as getting to the end of a quarter, or worse yet, the end of a financial year, only to be shocked by how much a particular expense item went up. Rather than being forced to explain this to your banker, wouldn’t it be better to catch this sooner and correct it before it becomes an issue? I see this as one of the largest benefits of regular Cash Flow Analysis.

If you think about it, this type of financial hurdle will also be easier to correct if we catch it early. If some expense is out of line six months into the year, it can present a real challenge to get it back into alignment before year end.

In the Cash Flow Analysis that I provide my Clients, there are other items that can prove to be beneficial. The Variance from Budget can clearly be good information to have at hand, i.e., how large of a problem is this variance.

I also feel it is helpful to know what your Break-even levels are for milk pounds per cow per day, feed costs and milk price. Essentially, these tell you how much improvement you need to make to get back on track financially. This information can be essential to your overall game plan and success.

I often see this demonstrated when producers go from 70-72 pounds per cow per day to levels above 80 pounds. Sometimes they worry that their feed cost per cow per day may go up fifty cents, say 6%. However, at any given milk price, your revenue should increase by 11% (80/72 e.g.), representing a healthy marginal improvement.

Additionally, as you make more hundredweights of milk, you will also notice another benefit. The Cost/cwt for every one of your Fixed Costs will also improve. This can provide you with a considerable improvement to your Net Margin, and that, my friends, is the name of the game, when it comes to Cash Flow Analysis.

If you would like to learn more about Cash Flow Analysis and take full advantage of this process, just shoot me an email stating “NLT Workshops,” and I will be sure to include you in future invitations.

Let’s take your business to the Next Level!

I recently had an excellent discussion with one of my Clients about how the last 12 months had turned out. As many of you know, early 2020 presented an incredibly challenging time with the onset of COVID-19 and its extremely low milk prices, particularly during the second quarter.

However, he had maintained his production levels, despite the fear in the markets, and it had paid off. He was solid on his Cash Flows and the details of his herd management, but then at end of his year, he seemed to “take his foot off the gas…” Maintenance of his facilities seemed to fall short of their normal levels, and milk quality started to suffer.

When I asked what had happened, he seemed a little defensive. However, helping people stay on their “A Game” is part of what Clients pay me for. Then, he informed me with the following: “John, I’m tired. My employees are exhausted. These last 12 months have been very taxing.”

Believe me when I say that I did, indeed, understand. I had overcome several serious Client challenges on the banking front, facing off against some of the most ridiculous financing challenges I have seen in 23 years of consulting. However, I worked with my Team and my Clients to overcome those hurdles.

You know what made the difference? We “played all four quarters!” Every game is won or lost in the fourth quarter. You can plan an excellent game for three quarters and then lose it in the fourth quarter. Guess what? It is no different in the dairy business. You must play all four quarters each & every year. Defeat and its willingness to take you down is on call all the time, just waiting for you to let up the slightest little bit!

I want to encourage you to “fight the good fight,” and I mean all year long. Here are some suggestions for “winning the game” by playing all four quarters:

  1. Complete regular monthly Cash Flow Analysis, not just occasionally, but each & every month. My Clients see this information from me every month. There is no better way to stay ahead of the game. While I am an advocate of regular quarterly CPA prepared Financial Statements, a lot can happen in 91 days. I want to catch any expense items that are getting out of control before they get “beyond repair.”
  2. Regular Management Team Meetings – These should be held with your Financial Advisor, Nutritionist and Key Employees on a regularly scheduled basis. As I said earlier, you have to play all four quarters to “win the game.” However, you also have to have a winning team, all of whom are pulling in the same direction. If they are out of sync with you or each other, this can create real challenges to your overall success.
  3. Regular Finance Team Meetings – These can be crucial to making sure that your Team stays on track. Measuring your Cash Flow monthly is one thing, but making sure that your Team is aware of challenges that arise is crucial. How can we expect them to keep costs in alignment if we never share our concerns with them?
  4. DMC & DRP – These programs are, simply stated, a “form of insurance.” Like any insurance program, they provide you with a safety net against any severe downturn, in this case a falling milk price, which, of course, can wreck your Cash Flow. Think of these safety nets as an investment, not a cost. Just as you would not call your insurance agent at the end of a year & and complain about the premiums you had paid, although your house didn’t burn down, you likewise shouldn’t complain about these premiums. Both DMC & DRP are a form of financial insurance.

I hope you’ll consider playing all four quarters this year, even the frustrating ones, because that is the only way for you to WIN!

If you would like to learn more about these concepts, just shoot me an email (john@success-strategies.com) stating “NLT Workshops,” and I will be sure to include you in future invitations.

In previous articles I have often stated that if you measure something, you can understand it. If you understand it, you can control it, and of course, if you have the ability to control something, you can then improve it!

Please take a moment and consider the possibilities of this acronym – MUCI… Its benefits are unlimited. Just think about any item that you measure in your business. Again, if you take time to measure it, you undoubtedly will better understand that item. If you understand it, you will be more empowered to gain control over it, i.e., adjust it to your advantage. Finally, once you fully understand this item and gain some control over it, you will have the ability to improve it. That is where the fun and excitement begin!

We recently ran a summary of our Dairy Clients and their results for the last four years. We have been measuring Cash Flows on some of them for over 15 years now, but we simply looked at the last four years on each of them to obtain a comparative set of results. Now, these operations are quite variable in terms of revenue, but the most noteworthy observations include the following:

  1. Every one of them has experienced upward pressure on many of their expenses, particularly Labor, Supplies and Repairs & Maintenance Costs.
  2. However, all of them have boosted their bottom-line results, some by as much as $3.00 to $4.00/cwt of milk. Part of this is a direct result of improved cost controls, and in several cases, it was due to actually putting some items out for competitive bids… Imagine that!
  3. With a couple Clients, we were able to “discover” additional sources of Revenue they had overlooked previously. In one case, this, combined with a decrease in their interest expense, boosted their bottom line by over $3.00/cwt, vastly improving their Break-Even levels!

Ultimately, to answer the question in the title above, this is “What’s Up.” This same resource is available to you in your business, regardless of your industry. My Business Coach Dan Sullivan states that: “Our eyes only see what we are looking for…,” and that’s what makes this process so valuable. It can definitely boost your profitability and better equip you to use tools such as the Dairy Revenue Protection program, using your actual numbers rather than just plugging in industry averages.

If you would like to learn more about this tool and take full advantage of this process, just shoot me an email stating “NLT Workshops,” and I will be sure to include you in future invitations, as outlined below. Want to learn more? I’d like to invite you to join me for our upcoming Next Level Thinking™ workshops later this year, within which, I’ll continue to focus on the benefits of this type of proactive thinking. Let’s take your business to the Next Level!

Jean-Baptiste Say was a French Economist who lived from 1767-1832. He was best known for his Theory of Markets and their relationship to entrepreneurs. His Law of Markets holds that supply creates its own demand. For example, before the cell phone was created, did we know that we needed one? Not likely. However, once the i-phone or Android versions were created, our demand for them has grown immensely.

He goes on to expand his theory by generating three primary questions, as outlined by my own Business Coach Dan Sullivan, Founder of The Strategic Coach:

  1. “As an individual entrepreneur, what are your personal resources that can quickly be taken to a higher level of productivity?”
    1. In essence, are you using your expertise/skill set to your maximum advantage? Are you spending 100% of your time “in the business” doing daily activities, or are you investing part of your time “on the business” planning your future course, as well as tracking your YTD progress both financially & in terms of business efficiencies?
    1. The interesting thing is that, regardless of your business size, the most optimal approach can yield large dividends, whether your revenues are $4 million or $20 million annually. I’ll have more on this in my next blog.
  2. “As an entrepreneurial company, what are your organizational resources that can quickly be taken to a higher level of productivity?”
    1. Are your people being maximized? Is automation a possibility for your operation? I had a Client whose fruit packing facility was able to go from 10 to 4 employees with only partial automation. I also had a dairy Client whose milk barn automation, using robotics, allowed them to go from six milkers down to just two plus a part time relief person.
    1. The paybacks on these changes were huge, while also relieving the owners of considerable management time & effort.
  3. “What are your… resources that can be quickly taken to a higher level of productivity?”
    1. Can your land & buildings be used differently? Do you even have some that are currently idle?
    1. With some simple changes, can we generate higher levels of productivity?

Take some time this week to think through some of these potential changes in your business. While some of them can be scary, the results you can achieve are often just what your business may need to get to the “Next Level!”